From left: UT Dallas President David E. Daniel, accounting graduate student Sarah Carraher, James Ratley BS'85 and Mark Salamasick, director of the Center for Internal Auditing Excellence at the Naveen Jindal School of Management. Carraher was named the first recipient of the James Ratley Internal Audit Scholarship, which was announced at the 10th annual Fraud Summit.
Most fraudsters don’t see themselves as wrongdoers and are typically surprised they get caught, UT Dallas alumnus James Ratley BS’85 told the audience at the 10th annual Fraud Summit hosted by the Naveen Jindal School of Management in March.
“You cannot steer them into confessing,” he said. “You have to convince them it’s in their best interest.”
The conference, which attracted its largest audience ever with about 700 participants and a lineup of 35 speakers, featured tips on uncovering corruption, sessions on cybersecurity and insights into a fraudster’s mind, and the unveiling of a new Jindal School scholarship.
The scholarship, named in honor of Ratley, a three-time keynote speaker at the event, was announced along with its first recipient, accounting graduate student Sarah Carraher, by UT Dallas President David E. Daniel.
Stephen Minder, whose role in the price-fixing scandal at Archer Daniels Midland in the 1990s was the basis for the film The Informant, said fraud is most likely when there are seven signs of ethical collapse in the organization.
Proceeds from the conference benefit the Jindal School’s Internal Auditing Excellence program, whose students helped ensure that the event ran smoothly. The program is one of only three in the U.S. to receive the prestigious Center for Internal Auditing Excellence designation.
Ratley, president and CEO of the Association of Certified Fraud Examiners and a former police officer, said that people committing fraud are typically very engaging and likeable.
“They want to bond with you,” he said. “That’s because they have no credibility. They want to use your credibility.”
Ratley said it is imperative for employers and organizations to make it tough to steal from them.
“We owe our young employees internal controls,” he said. “Too much trust is very unfair to the person trusted. There are no small frauds. Only frauds that haven’t had time to reach maturity.”
The conference also featured Stephen Minder, the chief audit executive at Archer Daniels Midland during its international price-fixing scandal in the 1990s, a story that was the basis for the movie The Informant starring Matt Damon.
Minder said fraud is most likely when there are seven signs of ethical collapse in the organization. They are:
- Pressure to make numbers
- Fear of silence
- Bigger-than-life CEO
- A weak board
- Conflicts within the organization
- Innovation “like no other”
- Goodness in some areas atones for evil in others
“Every chief audit executive needs to be ready every day to resign their job,” said Minder, who founded YCN Group in 2007 after retiring from Archer Daniels Midland.
He said auditors need to have access to all files — whether on paper or on a computer — whenever they like. He said it is imperative that the board and its audit committee be willing to discuss fraud, errors and illegal acts uncovered by internal audits. And the audit team must be equipped to do its work.
“We live in the world of big data,” Minder said. “We have to have the right tools.”
This story was reported and written by freelance contributor Jeanne Spreier.