We all do them throughout our career. Whether it’s a SAS99 interview during risk assessment of an audit or specific interview procedures surrounding suspected fraudulent activity, we have performed one-on-one interviews to gather information regarding the suspicion of, or possibility of fraud. The following are five key steps in making your one-on-one interviews significantly more successful.
1. Timing Of The Interviews
Interviews are often the most useful tool in uncovering fraud. When conducted correctly, interviewers can obtain a significant amount of useful information about the company and its processes in a short period of time. Oftentimes when comfortable, interviewees are very forthcoming about what they think the risks are within the company, as well as where within the company they think something suspicious or dishonest may be occurring.
Whether you are performing a fraud investigation or an audit, interviews of this nature are extremely useful in the planning stages of any engagement. They assist the auditor in identifying levels of risk during risk assessment, they can assist in designing appropriate tests during audit fraud procedures, and they can help a fraud investigator plan out the procedures needed to investigate an actual fraud.
Because of their importance, fraud interviews should be completed as early as possible in any type of engagement. As part of an audit, they should be performed during preliminary procedures, and a high level of importance should be placed on completing them before audit procedures begin. During investigations, interviews should be one of the first procedures completed, as they have a direct effect on the focus and scope of the investigation. The scope of an investigation can be altered dramatically by what one discovers in an interview. Unnecessary procedures can be avoided and precious time saved through simple conversations up front.
2. Select the Right Individuals
Fraud interviews shouldn’t just be concentrated on individuals in charge. Many times, individuals in charge have the easiest avenue in which to perpetrate fraud, so a nice mix of all employee levels creates a well-balanced round of fraud interviews.
Interviews also shouldn’t just be concentrated on employees in the finance department. Although these individuals are typically the most knowledgeable regarding the financial activities and processes of the company, they certainly aren’t the only department that experiences the risk of fraud. Using a manufacturing plant as an example, you may wish to interview a cross section of employees such as:
- Machine operator
- Design engineer
- Inventory technician
- Accounts receivable clerk
- Chief Financial Officer
The order of the interviews is also important. You should start with interviewees that have the smallest concentration of responsibility within the company. As you work your way down the list of interviewees, and up the chain of command, you can corroborate stories or claims with individuals who may have oversight over those areas. As an example, if your interview with the machine operator on the floor of the manufacturing plant leads you to believe that supplies and parts are being stolen by workers in the plant, your questions during the inventory technician and CFO interview can be much more focused on the use, disposal and recording of parts inventory.
3. Set a Relaxed Tone
Sit across from the interviewee if possible, and assume a relaxed physical position. Use a smile and direct eye contact to begin the interview with a light and relaxed mood. Use some summarized notes to keep you organized for the interview, but employ them as little as possible to keep from appearing disinterested or unengaged. Writing notes throughout the interview is typically necessary, but they should be written down quickly and in a summarized fashion, so as not to cause alarm or appear concealing to the interviewee.
Explain who you are and the purpose of the interview. Don’t lie about the reason you are talking, but keep it light. Examples might include:
- This is just a standard part of our internal control procedures for the audit”
- We just need to understand further details about a specific financial area, and you are one of the people we were told to speak to”
- These interviews are all just part of an improvement study for certain systems/processes"
Start the interview by asking the interviewee how long they’ve been with the company. Ask what their specific job responsibilities are, who they report to, what a typical day is like for them. Earn their trust by listening and asking open-ended questions to allow them to keep speaking. Interviewees inherently become more comfortable when asked to speak about themselves, as well as when someone takes an interest in what they do each day. Ask for more detail when they speak of certain forms, lists, software or interactions that they have throughout the day
The first 5 minutes of any one-on-one interview is the most crucial phase. You can create trust or distrust within the interviewee within seconds, based on your demeanor, attitude, and physical appearance.
4. Ask The Right Questions
Many interviewers tend to follow a script when performing interviews. Typically this list of questions is universal to all interviews for the day and asks common questions about seeing or reporting fraud, seeing or reporting strange or unusual behavior, etc. Although straightforward in nature, these questions will rarely get an interviewee to divulge information that the interviewer may find useful or informative. An interviewer can ask more appropriate questions throughout an interview that fulfill the requirements of these questions, without asking them verbatim.
Using specific questions about unusual behavior in each of the interviewee’s job responsibility areas may be much more effective than a general question of abnormal activity within the organization. Instead of asking a payroll clerk whether she knows of or has seen any fraud within the organization, it makes much more sense to ask whether she has seen any odd entries or deletions in the payroll system, whether she’s ever been asked to override the system in some manner, what weaknesses exist within the hiring/termination process and whether past errors in timekeeping and paychecks were handled appropriately.
Use the following tips and lines of questioning to strengthen your interviews:
- Converse about an interviewee’s daily responsibilities using open-ended questions regarding atypical situations that might occur, and brainstorm with the interviewee about weaknesses in the process and how a fraud or scheme could occur.
- Identify specific interviewee responsibilities that are prone to fraud and ask about instances in which they struggled to complete their tasks or had issues related to abnormalities within the process.
- Ask about areas that the interviewee used to be responsible for in the past that have since been taken away from them, and understand the reasoning behind the change.
- Ask what changes the interviewee would make to the process if they were in charge, and why.
- Ask the interviewee the main thing about their job that “keeps them up at night.” Typically, areas that concern or worry an employee the most may have levels of uncertainty that are indicative of risk, misstatement or fraud.
- Finally, begin asking whether they have seen fraud or unusual behavior within any of the areas they work in, or in other departments.
By empowering the interviewee throughout the interview, you not only develop a trusted rapport with them, but you initiate a thought process within them that is more likely to remember and report anomalies from the past.
5. Don’t Give In / Be Persistent
Humans by nature like to avoid conflict or uncomfortable situations. Because of this, inexperienced interviewers tend to “miss the mark” when it comes to encouraging an interviewee to open up and divulge something they may know. Many interviewers may become doubtful that the interviewee is being completely truthful or forthcoming, but they tend to back down after the first round of questioning because they are afraid of upsetting the individual or pushing too hard.
If you begin to identify an area that your interviewee prefers to avoid speaking about, professional persistence will be the key in uncovering the reason why. Many potential tips go uninvestigated because the interviewer was uncomfortable with addressing the discrepancy in the dialogue. The following suggestions can help keep the interview heading in the right direction:
- Continually go back through the details of a certain procedure or process that the interviewee has already explained to you, but ask for more detail and examples related to it each time. This act of “gaining a full understanding” gives the interviewee a perception that you are getting closer and closer to asking the EXACT question that they are uncomfortable with. Many times they will divulge more than they originally intended because of the fear that you might uncover it first.
- Cross reference their responsibilities with the information they told you at the beginning of the interview, such as how they stay organized, who they report to, etc. Typically at the beginning of the interview, the interviewee may exaggerate their responsibilities as if to tell the auditor more of what they think they want to hear. But as you question and get more into the details of their responsibilities, you may see shortcuts, tasks they complete that aren’t reviewed, checks and balances that aren’t being completed, etc. A good interviewer won’t let these items pass by. As you begin to identify these discrepancies and ask for clarity on how its actually being completed, you have begun to gain full control of the interview.
- Ask direct questions, and call them out on their hesitance. An example may be by saying “I see that you are hesitant to answer that question, or that something is right on the tip of your lips. What exactly is holding you back from answering my question?” By rerouting them away from the actual question but into the reason of why they don’t want to respond, you have developed an alternative avenue for them to respond. In fraud investigations, this is always the point in the interview where the response is “I don’t want to get Sally in trouble” or “I don’t want to go to jail.” Although the inappropriate, dishonest or fraudulent activity hasn’t exactly been uncovered, the interviewer is well on their way and has much more to work with.
A persistent interviewer must always remain professional and calm throughout the interview. Often times, interviewees are nervous and unsure of what they are able or supposed to say. More times than not, interviewees hesitancy or uncertainty is because they just don’t know the answer, rather than that they are hiding something. Be careful to not push too hard and make the interviewee feel attacked.
Tim Ball is a principal based out of our Rochester, NY office.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.