The insightful and hilarious accounting rockstar Dawn Brolin, CFE, CPA, joins Blake and David at Accountex in Boston to talk about everyone's favorite topic, FRAUD! From the fraud triangle, to stupid fraudster tricks, to how you, too, with a few qualifications, can become a certified fraud examiner, Dawn shows us the fun, and colorful side of fraud detection!
- 00:48 – How can being a Bills fan ever be a bad choice?
- 01:40 – Fraudster Tip: If you're gonna steal the cash, stash it in your backyard!
- 02:36 – Dawn explains the geometry of fraud | ACFE
- 03:01 – The three steps leading to fraud - pressures, opportunity, and rationalization
- 04:55 – In the age of payroll automation, why do small-biz owners still insist on paying with paper checks?
- 05:26 – Time really is money, especially if your employees steal it
- 06:38 – Hook, line, and sinker, as a small-biz owner, you're fully liable for all tax obligations, regardless of whether you've been defrauded.
- 07:37 – Dawn says advisors are missing the mark when it comes to using the cloud and accounting apps
- 09:24 – Accountants and bookkeepers, assessing your clients' financial risk and providing suggestions for better internal controls should be a priority when it comes to adding value
- 12:48 – Table for two? Especially in smaller businesses, two or more employees make teamwork out of fraud
- 14:15 – The downside to all this super-efficient tech? It can make it super-easy to commit fraud
- 15:15 – Never take candy for your passwords!
- 21:29 – Why finding fraud is fun
- 23:05 – Forensic accounting - kicking ass and taking names is just part of the job description
- 25:46 – How to become a certified fraud examiner | ACFE
- 28:42 – Swearex 2019
Connect with Dawn
Get in Touch
Meet Blake and David in person!
Limited edition shirts, stickers, and other necessities.
Dawn Brolin: You know, I used to say, "I'm not trying to scare you, I'm trying to prepare you," but really, I'm just trying to scare the s#*$ outta you ...
Blake Oliver: Welcome to The Cloud Accounting podcast. I'm Blake Oliver.
David Leary: I'm David Leary.
Dawn Brolin: And I'm Dawn Brolin.
David Leary: Dawn Brolin. I'm so happy to be in your, basically, hometown here for Accountex USA. We're in Boston, home of all the sports teams I personally hate.
Dawn Brolin: Yeah.
David Leary: And usually I'm getting grief from you about how great these Boston teams are.
Dawn Brolin: Yep. I've been really lenient on you, thus far.
David Leary: This is why I would never invite you on the podcast until [00:00:30] today.
Dawn Brolin: Well, don't worry. The Patriots start their revenge on Sunday and just go in for another Super Bowl this year.
David Leary: I hate Tom Brady.
Dawn Brolin: I know you do, but the Buffalo Bills, they have a chance to participate this year. I mean, they're gonna get uniforms and cleats, so they'll probably be out there a little bit. Yeah-
David Leary: This is the world [cross talk]
Dawn Brolin: Yeah, this is it.
David Leary: This is why I do a podcast with Blake and not you-
Dawn Brolin: It's your fault. It's your fault that you are a Buffalo fan, not my fault. You made bad choices. It's not my fault [cross talk]
David Leary: Speaking of bad choices, the reason we have Dawn [00:01:00] here today is Dawn is an expert in small business fraud. When I say expert, you testify at courts and things, and you're seriously all about the small business fraud. Let's go from there. I don't know if you've a question, Blake? When you had ... Actually, let's start with that, Blake. When you had small business clients, did you ever come across any fraudulent things?
Blake Oliver: Well, not my client, my dad. My dad was a consultant in real estate. He had a practice with three partners, and they [00:01:30] had an office manager who, over the course of a few years, stole a quarter-million dollars.
Dawn Brolin: Yeah, no problem. Easy breezy.
Blake Oliver: Yeah, and they never got it back. She went to jail, but they ... Yeah.
Dawn Brolin: They don't typically save the money when they steal it and then return it upon discovery. Typically, you know, they got a new car; they're going on quite a few trips. Their kid's in private school ... They're not stashing it. They're not putting it in cans in the backyard ... Which, if you're gonna steal, do that. If you're gonna save it, put in the backyard.
Blake Oliver: I feel like a lot of these fraud cases, it's one of those things that just spirals [00:02:00] out of control. They weren't planning it. They didn't have an exit strategy, because how did you think you were ever not going to get caught?
Dawn Brolin: Yeah. Well, it's interesting. We all know the fraud triangle, which is the three pieces-
David Leary: No, we don't. What is the fraud triangle?
Dawn Brolin: Oh, you don't? Okay, well, it's a fraud-
Blake Oliver: Educate us. We are woefully ignorant.
Dawn Brolin: Oh, good. That's just like my clients-
David Leary: We always have good ideas for committing frauds.
Dawn Brolin: I know so many people who are ignorant, including an attorney that I'm gonna go battle next- a week from Wednesday in court on a fraud case, which I love. I love doing that. I love humiliating those who think they're smarter than every other person in the universe, when they're not-
Blake Oliver: Well, especially [00:02:30] lawyers-
Dawn Brolin: Especially lawyers.
Blake Oliver: We're on board with that.
David Leary: And accountants.
Dawn Brolin: I call them lawyer-liars, and accountants. Well, actually, the fraud triangle. What happens ... If you read The Report to the Nations, which is a great resource ... If you've never heard of that, it's called The Report to the Nations. It's published by the Association of Certified Fraud Examiners. It comes out every year, and it's like a book. I love it. It's my favorite book ever. It really tells you the statistics around what's happening.
In the fraud triangle, what happens is people have, without internal controls - of course, small businesses think that's impossible to have. "We're not a corp big corporation. We don't need internal [00:03:00] controls." They don't even know what that means-
Blake Oliver: Yeah, they have no idea.
Dawn Brolin: It's such an easy, easy way for those who are involved, where they have pressure ... What kind of pressure do they have? It's a bunch of different things. Either they have pressure to get their work done, and they're always at work - 80 hours a week - and the boss is outta town; always traveling to Italy. But they've got all this pressure, and then they have opportunity, because the small business doesn't have internal controls implemented or in place.
Then, the last thing, they can rationalize it. They rationalize it and say, "You know what? That guy's always in Italy, and I'm always here working for that guy. I'm in charge [00:03:30] of everything, and I only get paid $60,000 a year, and they're living the life of luxury." Typically, the people who are actually committing the fraud are first-time offenders. These are not criminals that are out to defraud small business-
David Leary: So, they weren't planning this-
Dawn Brolin: Right.
David Leary: The situation created itself-
Dawn Brolin: -in their life. Correct.
Blake Oliver: Okay, so we've got three of them. You said opportunity, rationale - well, that's the last one ... What was the ...?
Dawn Brolin: Yeah, opportunity, pressure-
Blake Oliver: Pressure.
Dawn Brolin: -and rationalization-
Blake Oliver: Those three things, okay.
Dawn Brolin: When that combination comes, that's like a hurricane, which we've [00:04:00] just seen, hurricanes are coming back, because it's the time of year. That's what happens; it's like the perfect storm, where they've got this pressure at home. Maybe a spouse lost a job; maybe a spouse passed away, and now they're the only source of income, and they've got six kids. There's reasons ... Anyone could give a reason why they would defraud somebody.
Blake Oliver: Your high school chemistry teacher who gets cancer and needs to pay for his treatment ...
Dawn Brolin: You know, literally ...
David Leary: That's because there was no money in the high school system, so he couldn't commit fraud there ... He had to move on to selling meth.
Dawn Brolin: Selling meth is not [00:04:30] a bad idea, I guess-
Blake Oliver: It's probably a better idea than-
Dawn Brolin: That's more tax fraud than anything, but ....
Blake Oliver: Right. Okay.
Dawn Brolin: No, so that's what happens, and these small businesses are going out of business. Interestingly enough, there are statistics, which I'll be giving in my presentation, where payroll fraud takes three years to detect, and an average of $150,000 per occurrence.
Blake Oliver: Wait, say that again, those numbers?
Dawn Brolin: Yeah. It takes three years - 36 months - on average-
Blake Oliver: To detect it.
Dawn Brolin: -to detect a payroll fraud. Now, to me, that's disgusting, and the reason is there's so many easy, affordable ways to have your [00:05:00] payroll processed that there should never be a bookkeeper stealing payroll taxes. That should not even be a thing, but it is.
Blake Oliver: Right, but a lot of businesses ... We tend to forget this, I think, living in The Cloud Accounting Podcast world, with these automated payroll providers ... A lot of businesses are still cutting paper payroll checks.
Dawn Brolin: Right. Those, in and of themselves, is a whole 'nother situation.
Blake Oliver: Just checks.
Dawn Brolin: What's really great is - well, it's great for me, I guess - there are so many ways that these people are stealing ... They're time-stealing. Matt Rissell's the king of that. He solved that [00:05:30] problem for his small business. Time doesn't matter? Well, guess what? If people are stealing time, which people do, and you multiply that out, that's costing a small business owner a fortune. I can tell you, as a small business owner, myself, having someone steal from me, after the sacrifices ... Listen, everyone thinks you're in business. You've got all this flexibility; you have all this money ... They have this big vision of what we all look like, quote/unquote, right? Ultimately, at the end of the day, we've sacrificed everything. We've invested in our education and all these things.
You hire an employee, and they're in a situation, [00:06:00] where maybe the baby is sick ... Whose heart doesn't stretch for that? But instead of talking about it or bringing it to attention, they feel like they've just ... "I'm under so much pressure. I've gotta take care, my baby," because, trust me, your baby comes way before me, as your boss. I get that. What ends up happening is they do that rationalization and say, "Well, you know what? They have plenty of money. I don't have any money, and I need it for my baby." Guess what? They're gonna rationalize that, and they're going to steal; it'll be the first time ever ... With the payroll tax, it's a compounding issue, right?
Blake Oliver: Sorry, did you bring up payroll, because that's the most common, or [00:06:30] is it-
David Leary: Or is just the most preventable? It's easy to [cross talk] preventable.
Dawn Brolin: Yeah, I think it's the most preventable out of all of them.
Blake Oliver: You said 36 months to detect and how, on average ...?
Dawn Brolin: Average, over $150,000. If you think about it, if it takes three years, they're not saving the payroll tax money. What ends up happening is the IRS does not care, neither does estate, neither does unemployment. They don't care that the bookkeeper stole your money. You are a fiduciary to your employees, and you are the boss of your company. If the bookkeeper steals the money, you're still on the hook.
Blake Oliver: The business owners are personally [00:07:00] on the hook-
Dawn Brolin: You bet.
Blake Oliver: -for the payroll, or whoever was also responsible for the payroll, right?
Dawn Brolin: Yeah, there's different ... Obviously, if you can prove control of the bookkeeper, 100 percent, then the bookkeeper's the ... There's a lot of cases.
Blake Oliver: I've heard about outside accountants, actually, who run payroll, getting held accountable- getting on the hook for those payroll taxes-
Dawn Brolin: Absolutely.
Blake Oliver: -that didn't get paid.
Dawn Brolin: I think that's part of this awareness that I'm trying to bring to people about fraud, that it's not ... This is something that I talk about all the time. All the applications that we see at all of our shows, those [00:07:30] applications are great. Yes, they're efficient. Yes, they're all of those things. But that's not the primary reason why we should be implementing them with clients.
I think that's where we as the trusted advisors are missing it. I think we're so wrapped up in efficiency, and, oh, bank feeds ... You don't even really have to do anything. Well, that's not what it was ... That's not what it's meant for. It's not meant to not hand-key transactions. It's meant to be an internal control for someone to look at financial records and say, "Why do I have so much in marketing?" They're cutting themselves a $5,000 check, and if you're a company that spends a lot of money in advertising, you're [00:08:00] not gonna think $30,000 a year is a big deal. That's one of my biggest things is the awareness that we, as the trusted advisors ... It has to start with us. If we, ourselves, aren't cloud accounting for ourselves, how can we possibly, with an ethical attitude and appearance, promote that to our clients?
Blake Oliver: David, I'm sure you have lots of questions. I have lots of questions about ... I've never looked for fraud, as an outsourced accountant/bookkeeper. Sometimes, I've spotted it, or found iffy situations. How [00:08:30] can I make that part of what I do for my clients?
Dawn Brolin: Yeah, so great! That's such a great question because I'm actually gonna cover that in my presentation today, which is fun. What we can do is we can start with one client at a time. I think people ... Sometimes, we all, as we find this maybe new service value-add that we can give to our clients, which is really one of the most important ones is to protect them ...
We can take one client that we know, that we work with often, maybe they're even on a value billing. You take that one client and say what do they do? Do they have a cash register? [00:09:00] Do they have payroll? Do they have files in their office that are in an unlocked desk, or whatever? Even just taking a simple evaluation of one client, and say let me look and see where are the areas that they could be at risk of even just basic ... Go through five- pick five things and say, payroll, that seems to be pretty nailed down. Okay, that's good, but they've got the payroll documents in a drawer that anyone can grab and have identity theft.
You could do a simple evaluation of one client and say, "Hey, I went to a conference, [00:09:30] and I'm starting to really pay attention to how the technology changes can be a threat for you. It may not be an improvement. So, how can we implement some internal controls? Because I'm concerned about these five areas of your business. What do you think about that?" Hand them The Report to the Nations; actually, print it and hand it to them ... Well, I'm not really ... I'm all about the cloud, too, but whatever you've gotta do-
David Leary: Yeah, kill some trees.
Dawn Brolin: Shake them. I used to say, "I'm not trying to scare you, I'm trying to prepare you," but really, I'm just trying to scare the shit outta you, because you don't listen when I'm just trying to prepare you. "Oh, okay, great. Thanks. That's [00:10:00] nice ..." No! Guess what? I'm going to court a week from Wednesday, and I'm going to testify in a divorce case, which, who would think there's fraud in a divorce case? Guess where this fraud? An affidavit of financial means. Do you know what that is? That's one spouse has to provide their financial- how do they make money.
Blake Oliver: Oh, yeah. Mm-hmm.
Dawn Brolin: The other spouse has to do the same thing. When it gets down to it, if you have a small business owner who runs a salon, for instance ... If there's a person running a salon, is their Schedule C accurate? Why do they [00:10:30] say they don't make any money? Okay. Why do they show $30,000 profit on their Schedule C when there's no accounting system? Now, you go, and you start digging into bank statements, and you look at the copies of the deposit slips, which are awesome, because, at this particular bank, you have to sign them when you do the deposit. So, we know exactly who made cash deposits. Who made check deposits and did less cash received - which, you're not supposed to even do with a business bank account?
You just start to look, and you say, "Oh, my goodness ... There's fraud [00:11:00] everywhere." It's happening. That's a simple example, but this other- the husband, or whatever, he's making a 150Gs a year, and she's saying, "He's making 150, and I'm making 30." Well, he's like, "No, you make more than that, because you may show you make 30 ..." Now, guess what? We've got structuring, when it comes to the cash deposits, potentially; we have tax fraud - under-reporting of gross income; tax loss to the government; we have sales tax issues, sales tax fraud-
David Leary: It's a domino.
Dawn Brolin: -all in one case. It just falls ... I tried to scare the crap out of this chick in my deposition, [00:11:30] and she was stone cold. I was like, "Wow, I don't know if I've ever met anyone as dumb as you, because I'm gonna tear you apart in court. You and your attorney, I'm gonna annihilate you in front of the judge." It's so simple, because guess what? One plus one is one. We're not economists; we're not weather people. We get paid for the facts, not for a guess.
Blake Oliver: Wait, did you say one plus one is one?
Dawn Brolin: No, one plus one is two. I might've said one plus one is one, but that's an economist [cross talk] I apologize, if that's what I said.
Blake Oliver: I was trying to work it out in my head.
Dawn Brolin: My bad [cross talk]
Blake Oliver: I was like, wait ... Gotcha-
David Leary: So, every day, there's a news article that comes up- [00:12:00]
Dawn Brolin: Absolutely.
David Leary: -constantly, some bookkeeper did something fraudulent. It always seems like it gets discovered on accident. Like, oh, that person finally took a vacation ... Is there ways you can actually create a scenario in your small business to possibly surface fraud by [cross talk] like little hacks, making some- changing rules. Can you speak to that?
Dawn Brolin: Yeah, and that's one thing ... When you get to a company that's like 10, 15, 20 employees, that's a small business that's growing. They're still considered, in the world of our world, they call them small business, [00:12:30] which is relative, in my opinion. You've got 10 employees, and you have one bookkeeper and maybe one AR person, for example. There could be coercion there, where the two of them are working together, and they're figuring out how the AR person is gonna send invoices. Then, when the check comes in, the bookkeeper will delete the invoice from the system. They'll take the check and deposit it in their bank account.
Especially when there's multiple roles, where there's five people in the accounting department and two people team up ... I don't know, maybe they go out and drink together at night or something, and they've got the scheme where, "You know what? I really wanna go on a trip. Let's just ... We'll [00:13:00] do one invoice," and it leads to two, three, four, and then it becomes a pattern. Your question is a great question - do you want to create that culture of ... "I'm trying to frame my employees" would be something I think a business owner would think about-
David Leary: Yeah.
Dawn Brolin: When, in fact, for me, it's more of let's examine this one internal control and see where there may be risks. Do you ever open your mail? Do you ever go online and check your bank statement? "Well, no, I got ... They do all that stuff ..." Have you ever signed a payroll check? "Well, no, I just sign checks and hand them to the bookkeeper, and she pays the bills." I've seen [00:13:30] that, and they and they just hand them over.
I have a fraud case right now in South Chicago, which is really safe. A business owner has been kinda pushed out- a partner has been kinda pushed out, and they're using his signature stamp. Back in, I think it was February 18 or something of 2017, there was an email that went out from not him, but his partner, who said, "Don't use this guy's signature stamp without his approval." We went in there. I took everything off of computers that I could find. I took the whole Outlook file from forever, and we restored it. We found the email that gave that direction. [00:14:00]
Well, everybody's ... Yeah, they deleted, or no one remembers that it really happened. We went in, and we searched for it, and we found it. That's one of the complaints ... That's what you do, you look at the complaint - what are the issues that we're bringing up? Then you get the facts to back it up. That was just one example, but it's just crazy what people are doing, and the technology is allowing them to do it easier, to be honest with you. That's why you need internal controls, approval processes, and things like that.
Blake Oliver: Yeah, yeah, because people think, "Oh, I'm gonna get rid of the paper checks ..." Yes, it solves one problem, but then it creates a whole host of others, [00:14:30] which is now you've got people accessing online banking, perhaps.
Dawn Brolin: Exactly.
Blake Oliver: I saw business owners in my practice who'd give the employee full access into their online banking, so they could do bill pay-
Dawn Brolin: Yeah, their own their log-in.
Blake Oliver: Yeah.
Dawn Brolin: I have clients, all I have to do is say to them ... I love it when you go out ... They have those videos, where you go out and you say, "Hey, what's your password to your email?" and they tell it to them, like on the Facebook Live, or whatever it is.
David Leary: We should actually do that here, for accountants [cross talk] we should test them once-
Dawn Brolin: Yeah, just test some people.
David Leary: We'll go walk around with our microphones, and be like, "What's your password?" and see if somebody just spits it out to us. [00:15:00]
Dawn Brolin: Really cool ... Yeah, you just say, "Oh, hey, do you listen ..."
Blake Oliver: We're security researchers-
Dawn Brolin: "... do you listen to us on Google podcasts? What's your Google password?" And just see if they give it to you ... You'll probably get a ... I don't know.
Blake Oliver: We talked about a study. Some researchers did this-
David Leary: Oh, the chocolate; the chocolate study.
Blake Oliver: Yeah. It was like a German university, and the researchers there just stood outside wearing the logo of the university and asked people for their university log-ins in exchange for chocolate, and 40 percent of the students gave their passwords away.
Dawn Brolin: It's [00:15:30] like, no ... But here's what you're gonna find. You're gonna find one of a few things, right?
"Hey, what's your Google password?"
"You know what? I have no idea, but I have a notebook with all my passwords in it. Let me get that outta my backpack.".
Blake Oliver: Right.
Dawn Brolin: That's gonna be one answer.
Blake Oliver: Oh, man ...
Dawn Brolin: Then, you're gonna have another answer, where, "Okay, my password's ... Oh, yeah ... I always use my last name and birthday ..." or whatever. They're gonna say, "I use this password for everything ..." You'll see people here, and if you do it, ask these people, "Where do you hold your passwords? Where do [00:16:00] you hold your passwords?"
Blake Oliver: Most of them, it's gonna be like an Excel file-
Dawn Brolin: In a notebook, or it's in an Excel file, or, "It's on my desk ... A Sticky Note on my monitor." What? All of my passwords are in Password Keeper or LastPass. I have them, because I never remember my passwords, and I'm not gonna have them on paper; like, "Oh, I have them in my notes on my phone." Are you kidding me? Well, that's nice and secure.
Blake Oliver: Yeah, very secure, very secure ...
Dawn Brolin: They're entering them into information systems, like-
David Leary: Well, you could just put them in your email, and email them to yourself ...
Dawn Brolin: Well, yeah, and then you have a sent item ... You could pin it to the top - "Here are all [00:16:30] my passwords ..."
This episode of the Cloud Accounting Podcast is sponsored by Right Networks. In a perfect world, everyone would have 100 percent of their clients on a cloud-based accounting system using cloud-based apps, but the world isn't perfect, and clients have a wide range of needs. And for some, this means using desktop-based software. That's where Right Networks comes in.
Right Networks is your 100-percent accounting-focused desktop in the cloud that also includes an ecosystem of over 250 connected apps. As you and your clients take the journey to the cloud, Right Networks will be at your side innovating the best ways to leverage the true cloud future by investing heavily in cloud apps, like Transaction Pro and Autofy. They've created an always-on environment that supports 24/7 data transfer. Right Networks also offers no scheduled downtime for maintenance or application updates and meets the industry's highest security standards.
To join the more than 50,000 firms that use Right Networks daily with their clients, head over to CloudAccountingPodcast.promo/rncloud. That is Cloud Accounting Podcast dot promo forward slash R-N-C-L-O-U-D. And be sure to visit the Right Networks booth in San Jose at QuickBooks Connect 2019.
Blake Oliver: Before we go, I really wanna hear some good horror stories or some good case studies. What's your favorite? I mean, it's not a good thing-
Dawn Brolin: There are so many ...
Blake Oliver: -give us a really juicy one, like top of mind.
David Leary: The creative ... You know when these people do something and it's so genius ... Those are the ones [00:18:00] I love. I'm like, "This is the smartest person in the world!"
Blake Oliver: Yeah. We were talking about the guy who was using the IRS to launder money. He was paying the payroll taxes, but on the check, he would write his own social.
Dawn Brolin: Right, and he was paying his estimated payments, essentially-
Blake Oliver: And then getting refunds.
Dawn Brolin: Refunds. Oh, yeah. That's a good one.
Blake Oliver: It's annoying to me when people aren't even somewhat clever. They're just taking money; writing checks to themselves. I'm like, "This is stupid ..." Anyway ...
Dawn Brolin: The problem is they don't realize that when they actually document- when [00:18:30] they sign something, or write something, or do something, it's documented. If it was a negotiation, like Bitcoin, that's a whole 'nother thing ... I'll tell you; this is a good one. This is a good case I did, a year ago, about a year ago. It was a husband and wife who became ex-husband and wife, because he threw her down the stairs. That happens. He went to jail for seven years. While he's in jail, the ex-wife runs his landscaping business. She's running her own landscaping business and running his landscaping business, okay?
Blake Oliver: They previously had [00:19:00] one together, or ...?
Dawn Brolin: Yeah, they previously had one together, but then they got ... You know, he threw her down the stairs, and she was like, "Well, I'm going to have my own landscaping business because you threw me down the stairs ..." or whatever. So, she actually does the accounting. She's sending the crew out. She's cutting the checks. She's doing all this stuff. Now it comes to me. She wants more child support, but he's been in jail, so he makes probably one cent an hour or whatever. But she's running his business ... Lucrative; cash all over the place. You mow a lawn; you get 50 bucks; you put it in your pocket; you walk away. That's not being reported, but that's a whole separate issue.
She wants child support. [00:19:30] So, they hired me to go in and do a forensic analysis of his business account and her business account. We were able to very easily show where she would pay herself, because she wrote a check out to herself and wrote whatever on it. You could see she would pay for the subcontractors that were doing work for her out of his business, and all of these things that I could tell what was going on. Then, when you go in and look at that, and it's so easy to pick it up ... If you make a check out to yourself, you gave yourself money, what was it for? Well, guess what? If she [00:20:00] put on there subcontract labor for herself, like doing accounting work, and bookkeeping, and she paid herself, did you claim it on your tax return?
We pull the tax return. We say, "Okay, well, did you report this?" "Well, no, I was paying myself for my husband's business." Yeah, that's called income. The best part about the story is that she represented herself in court.
Blake Oliver: Oh, no.
Dawn Brolin: I went to court, and I'm on the stand. She's asking me just questions that I'm just like, are you serious? The judge's got his hand on his head. I mean his head on his hand or whatever, and he's like, "You [00:20:30] can't object to that answer, miss," and all this other stuff. He's just like rolling his eyes at me. I'm like, no kidding. How do you think I feel? I have to answer dumb questions [cross talk] That was kind of a good one-
David Leary: -could Blake and I show up and sit in the back as press and watch one of these hearings?
Dawn Brolin: Oh, definitely. Those are public cases. Cases are public, man. I'll let you know where I'm going on the 18th. You can come visit. You can come and watch how I will rock and roll, because I'm gonna tear that one apart. It's fun. I do depositions, and I have to- I create an expert report with what I'm relying on - the facts and figures. [00:21:00]
This one case that I'm gonna be at, I'll pull the sentencing guidelines from the IRS pubs. I'll pull their- they have Internal Revenue manuals that they follow when they do audit. So, I specifically go to those businesses that are primarily cash-type businesses, which, hair salons are famous for that, if you will. Not that they don't accept other things. Everybody really accepts credit cards, but what about the cash? You know, you're still doing ... You see, you go in to get your nails done, and you see "Cash Tips and Cash Only." Well, why do you think they're doing that? I mean, come on ...
David Leary: Or, "Hey, 20 percent off if you pay cash." [00:21:30]
Dawn Brolin: Yeah. I mean, come on. So, anyway, it's kinda fun stuff. I don't remember the last time I couldn't find something wrong. Partners stealing from partners is so easy [cross talk] Oh, you didn't have a company trip to the Bahamas? Oh, no ... Oh, there's four tickets? Oh, I see. Are these your kids? Because on the front of your tax return, it shows they're your dependents. Are they working in your business? Oh, they're four and five? Oh, this is not really working out well for you.
Blake Oliver: You mean I can't employ my four-year-old son?
Dawn Brolin: Oh, boy, don't even get me started on a particular [00:22:00] speaker at a particular conference, who was promoting strategic tax deductions that was extremely inappropriate. We can talk about that offline. But people are telling people to do that, and those people are gonna get caught, because, if I hear it, I'm reporting them. I'm not- I will have none of someone, a professional, telling other professionals that this is okay. You cannot write off your swimming pool. Okay, people? I don't care if you bring your clients over, or your customers, or your employees, or whatever, that's not a write off. You can't [00:22:30] call that part of your home office, people. It's just not a thing. Sorry, David. You're gonna have amend your returns.
David Leary: I record the podcast in my closet, and all my wife's clothes are in there, and they act as a sound barrier. Can't I just buy her new clothes, and it's a business expense?
Dawn Brolin: Of course. Yeah, it's a business expense. It's part of your noise-buffering system? Yeah, of course. Absolutely. Listen, I use my dogs. I use my dogs for their bark for some of my things- recordings that I do. So, I pay the dogs. They can't go to the bank. They've got little legs, so, of course, I'm gonna pay them and deduct it as [00:23:00] part of my voice-over career.
Blake Oliver: I like that, yeah ...
Dawn Brolin: It's stupid. So funny.
Blake Oliver: That's a good one.
David Leary: Dawn, you're super-excited about this. Feels like it's the dream for you. You've found your niche. In all the accounting directions you could go, this is the one for you. You're like the detective. You're like a cop. You get to kick people's ass, you know?
Dawn Brolin: Absolutely. For me, the hairs on my arms - which, I have hair on my arms. That'd be the first observant thing for you, David ... I do have hair on my arms ... Whenever I [00:23:30] get a call for a new case, my hair stands straight up, and I get giggly, and I grab the nearest eye-black that I can find, and I wipe it on my eyes. I put my bullet-proof vest on, and put my belt on and off I go, because I'm like, "Okay, someone stole from someone else. I'm not okay with that!" I love it so much that I'll put everything I can ... You have to be creative as a forensic accountant, right?
Blake Oliver: Yeah.
Dawn Brolin: You have to think outside the box and think of how can I back into these facts? I come up with crazy things, like I need your schedule, for a hair salon. I want [00:24:00] to see your schedule, because I wanna see how many appointments you had that day and what deposits went in. You only had three credit card transactions, but you had eight clients, and you're only showing that you had five. Where the other three? People just don't get that connection.
David Leary: You're just reconciling it. That's all you're doing.
Dawn Brolin: It's simple. Yeah, and it's not about really doing accounting in some ways. It's just there's something that doesn't make sense here.
David Leary: One and one equals one ...
Dawn Brolin: One and one equals one, to them, but one and one equals two, to me.
David Leary: I have some questions on the whole ... You're a certified fraud examiner, and obviously, [00:24:30] you're telling us you're going to different states to testify in court. Is there some sort of licensure that carries from state to state? How does the logistics of being in your profession work?
Dawn Brolin: As far as going across state lines and whatever, being a certified fraud examiner, you're just a certified fraud examiner. Obviously, a CPA, those kinda rules run a little different, if there's reciprocation between the states and things like that. But going in as a certified fraud examiner and saying, "Okay, I'm testifying in court," there's no parameters around that.
Blake Oliver: What does it take to become one?
Dawn Brolin: Well, so, you go ... Again, [00:25:00] Association of Certified Fraud Examiners. They're based in Texas. They're wonderful. You can either take their course in self-study, or you can go do it in person. Then you take four tests, four exams. What I found ... I went to D.C., and I went for four days, and I sat in class all day. They brought FBI agents ... I was like this, "Can we do this again?"
David Leary: You lost your mind, I'm sure.
Dawn Brolin: I lost my mind. I was like, "Oh, my goodness ... I'm such a nerd. I can't ..."
Blake Oliver: The accountants who carry guns, right?
Dawn Brolin: Yeah. Hey, listen, if I can't be a cop; like a real police officer ... I wish somebody had told me. I would've went into the FBI, or CIA, or something like that. I had no [00:25:30] guidance for that.
Blake Oliver: She's deep undercover.
Dawn Brolin: I'm hardcore, yeah [cross talk]
David Leary: Yeah, somebody's like, "Hey, you should be an accountant. It's great!"
Dawn Brolin: Yeah, really! Let's do it. That's why I have a Jeep Wrangler. I just gotta shade the windows a little bit more. They need to be a little darker. I'll put on my glasses, and sometimes, I just put a suit coat on, and I have shorts on, to make it look like I'm in the Secret Service-
David Leary: Do you have big binoculars? The big old ones-
Dawn Brolin: I do, and I have the earpiece thing and everything. I got all that stuff. Rollin' ... Rollin with Brolin. But no, you can go take the test and then you become a certified ... There are requirements; if you go to the ACFE.[com], there is a point system. So, you [00:26:00] have to have a certain number of points between education, between experience; you have to get letters of recommendation that you've done casework. It's similar to the CPA, where you have to have the two years' experience and all that stuff; a little less heavy than, obviously, the CPA - which is insane, that whole thing.
Being a certified fraud examiner is, for me, really changed things, because I learned a lot of strategies through that class, and things that I already knew as an accountant, but looking at it in a totally different angle. As, there's obviously ... As [00:26:30] a tax preparer, you're preparing taxes based on things your client has given you, and that's the best we can do. They don't let us audit their books before we prepare tax returns.
But, at the same time, because I deal with IRS, criminal, and civil investigation, all these other things, as a preparer, it's made me change the way I approach a tax return, and the fraud that's out there, and that kinda stuff. I look at the comparatives for the small businesses and say why is this so high this year? Like, I don't just prepare the returns and say, "Oh, you owe this much money, or you're getting this refund." I look at the Schedule Cs and I'm like, "Wait a minute, this is really [00:27:00] off. Why was your revenue so much lower? Like, what happened?"
I've become a little more inquisitive. Not that I have to, but I do, because I want to be more diligent. You know, the last thing I want is one of my tax returns to get audited, and I screwed it up, or I at least didn't do- add up the deposits, which even that is ... You wanna do a due diligence. Add the deposits and see if it matches gross revenue. That doesn't even matter, because in this case I'm working on now, she took checks to the bank and then took cash out of the deposit and deposited what she wanted. If you just added deposits, you'd think she made X, when really, [00:27:30] if you look at the deposit slips, it's way more than X. It's just a whole different mindset, and it's a new level of paranoia. I think that's probably the biggest thing.
Blake Oliver: Well, I love it. And it's been so great talking to you, but you've gotta go do your session.
Dawn Brolin: I gotta go teach to you guys, because I don't think- I think you're the only ones left. So, I'll be talking to myself, and I'll just let you listen.
Blake Oliver: We're gonna come listen. So, Dawn, if people wanna get in touch with you online, where's the best place for them to do that?
Dawn Brolin: I'm very active on Twitter; @DawnBrolin is a really good way to just catch up on [00:28:00] what I'm posting. LinkedIn, I try to get relevant fraud content out there as much as possible. I think Twitter is probably the best. That's where I live mostly, and I enjoy that. I'm building this fight against fraud, and I've got the FightAgainstFraud.com, and the Fraudcast that Cloud Accounting and I are gonna talk about, coming up here in the future, because-
Blake Oliver: Oh, awesome. Yeah.
Dawn Brolin: -we need to get the word out. Our small business owners are in danger. They really are. If people don't start taking that seriously, we're gonna lose those small business owners and we're gonna have a bigger problem in the United States than we have ever had before, because [00:28:30] we do carry the country.
Blake Oliver: I love that mission. As always, you can find me on Twitter. I'm @BlakeTOliver.
David Leary: And I'm @DavidLeary.
Blake Oliver: Dawn, thanks so much.
Dawn Brolin: I love you guys. Thank you. I'm so proud of you-
David Leary: If you want ... I know you held in all these cuss words, to be very professional ... If you wanna just rattle them off now, we'll just beep them-
Dawn Brolin: I just F*$%&#@ love you guys. This is unf*#$ingbelievable! Oh, $&%^, sorry, that's absolutely unprofessional, but they said, "You know what? Got a whole bunch of $*#&@ards around here, so we've gotta be real careful about what we're saying. And they're accountants, dumb as #$%* ... My [00:29:00] favorite one is douche canoe, If you don't-
Blake Oliver: I've never heard that. That's a new one for me.
Dawn Brolin: That's a good one. I saw it on Bachelorette. Such a good word. So, anyway, bleepity, bleep, bleep, bleep.
David Leary: Podcast out ...
Dawn Brolin: Was that loud? Did I say the words loud?