GVSU staged a half-day fraud conference in both March and November to give accounting students a chance to solve hypothetical financial crimes under the guidance of special agents with the IRS Criminal Investigation Division.
Forensic accounting and criminal investigation is a relatively unknown career in the field of accounting, said David Cannon, assistant professor of accounting in GVSU’s Seidman College of Business and coordinator of the conference.
“The big thing from my perspective is that students see that accounting skills are applicable in settings that they wouldn’t have anticipated,” he said. “This is an area where the equivalent of an accounting degree is required to become a cop, so to speak; they carry guns and they carry badges. Students also learn skills that will be valuable to them if they become auditors later on.”
In both conference sessions, 35 students worked in teams of five to investigate hypothetical fraud cases — scenarios inspired by actual IRS investigations. Each team was assigned an IRS agent who served as a coach. GVSU faculty, IRS agents and other volunteers played the roles of witnesses, bad guys, tipsters, law enforcement officers and magistrates, among others.
Each team launched its investigation based either on a scrap of evidence, an informant’s tip, an eye witness account, or information provided by the local police. From there, they proceeded to gather evidence, review tax records, talk to witnesses and build their cases.
The IRS uses seven simulated scenarios in the student fraud program, including that of a business owner skimming funds from his company, a bar owner who’s keeping two sets of accounting books, a multi-filer tax scheme and a drug trafficking scheme.
One team at the Grand Valley conference, for instance, caught drug dealer “Roger Pothead” (a.k.a. David Cannon) red-handed in the middle of a drug transaction. Students listened in on the bust via two-way radios while a special agent wearing a wire bought the drugs and promptly arrested Mr. Pothead.
Another team rooted out real estate magnate “Peter Painter” for falsifying his tax returns.
The fraud program gives student access to federal law enforcement tools of the trade, including surveillance equipment such as wires, miniature cameras, portable radios, telephone voice messages and Internet records. They also have immediate access to subpoenas and search warrants — and handcuffs, too.
“This is a once-in-a-lifetime experience for accounting students to use their skills in ways they haven’t contemplated,” Cannon said “Accounting skills are the foundation of a follow-the-money approach to investigating crimes.”
Public Information Officer Stephen Moore of the IRS Criminal Investigation Division’s Detroit office developed the program.
“We developed the program in part to just educate the schools and public about what we do for a living, and in part as a recruiting tool,” Moore said. “I asked myself, ‘What would I want to go through as a student?’
“I didn’t want to stand up and just lecture about my job, so I thought it would be fun to role-play. We ended up developing four scenarios, and asked Adrian College if they would let us use their campus as a test ground.”
As the law enforcement end of the IRS, Moore’s division is the only law enforcement agency that requires 15 credit hours in accounting. So when the agency recruits it has to recruit accounting majors. In that respect, he said, criminal justice students don’t usually qualify for jobs in the criminal investigation division.
“What’s interesting is that with forensic accounting making the news in big corporate cases like Enron, all federal law enforcement agencies are looking for accountants. We’re all recruiting accounting majors now.”
As Moore sees it, the fraud conference program gives students an opportunity to apply what they’ve learned from books and lectures in a nearly real-life situation. They have to interview many people to get to the root of the crime, and Moore feels students take away a lot more through that kind of interactive learning experience.
The first Student Fraud Conference was held in 2005, and it has since been repeated 16 times in Michigan, Texas, Pennsylvania and Massachusetts. All but four of the conferences have been staged in Michigan. Typically, a conference involves 40 students and 18 special agents or retired agents, Moore noted. The Michigan Association of Certified Public Accountants, which co-hosts the conferences, helps the IRS select schools for the program.
“In Michigan we have to kind of select the schools because there’s such high demand,” Moore said. “The response has been overwhelming. But we just can’t do it more than five times a year because it takes so many agents away for the day.”
GVSU student Erika Robinson, who attended the November conference, said it was “a once in a lifetime experience” that gave her a chance to see what criminal investigators do on a daily basis.
GVSU’s first fraud investigation conference was limited to GVSU students, but the university opened the second conference up to students from Albion, Aquinas and Calvin colleges.
“The most important thing that I learned is that you have to see things for yourself before you can pass judgment,” Robinson said. “Most people hate or are afraid of the IRS, but if they were given the chance to participated in the Student Fraud Conference, it would give them a better appreciation of the IRS.”
Nick Farr, and MBA student at GVSU, attended the March conference and said he enjoyed the experience of using tools that real investigators use and poring through tax returns.
“I had not contemplated a career incorporating law enforcement and accounting backgrounds before,” he said. “After going through the exercise, I see law enforcement as a strong career option for accounting majors. I even bring the idea up occasionally with other accounting majors.”
Normally, the IRS will hold only one such conference every two years at the same college, Cannon said. He gave the IRS an incentive to come back to GVSU again by inviting students from the three other colleges to participate. He hopes to stage at least one fraud conference at GVSU next year.
The student fraud program is now available nationwide to all IRS criminal investigation offices.