Accounting Education
The main pillar behind the strength of our capitalistic economic system is the integrity of financial information. Such information is disseminated by companies and relied upon by investors, lenders, creditors, governments, and other third parties to make crucial economic decisions.
However, fraudsters are committing ever larger frauds year after year, while the government and professional regulatory bodies pass laws, rules, and regulations that frankly are not solving the problem.
The accounting profession is not properly educated, trained, and experienced to deal with criminals of my former caliber. While criminals do sometimes get caught (and most of the time it is not as a result of independent audits conducted by CPA firms), it is often too late to undo the economic damage and carnage already done: lost integrity in the financial markets, billion dollar investor and creditor losses, and unemployment.
While I do not advocate anything less than strict and harsh sentencing for white collar crime, major prosecutions and sentencing of criminals (while making good headlines) do not significantly solve the problem of preventing white collar crime.
Strong sentencing and punishment should be considered as a means of exacting responsibility on these criminals and not used as a primary means of prevention. The best use of harsh sentencing comes is to induce otherwise non-cooperating criminals into government witnesses.
The solution is very fundamental. It is about education. Congress cannot legislate competence, but it can learned. Legislation such as Sarbanes Oxley should not be legislation without teeth. Accounting students and auditors simply do not have enough education on white collar crime, prevention, and detection.
Most colleges and universities do not offer a single fraud or forensic accounting course for accounting students. They learn it as a subset within an auditing course. The few colleges that have such courses only offer them as an elective subject.
Most accounting students never learn about securities law and other basic subjects covered on the CPA exam in college. They must "learn" these subject areas in a CPA exam (cram) review course after they graduate.
Criminology courses are almost nonexistent to accounting students. They are not even taught how to ask proper questions or conduct field interviews. Criminology and interview skills are not covered on the CPA exam.
Today most accounting students graduate and obtain CPA licenses with ever taking a specific full semester course on white collar crime, forensic accounting, criminology, internal controls, securities law and many other important areas required for the profession and the investing public that relies on the integrity of their work product.
The American Institute of Certified Public Accountants (AICPA) which has over 300,000 CPAs as members, only “recommends” that CPAs take 10% of their continuing education credits in fraud with no specific criteria for accountants who spend most of their time on audits.
We must make a complete reevaluation and overhaul of accounting education in America today to take into account the biggest enemy to American capitalism – white collar crime. It must no longer be considered a side issue to the profession.
The educational community, regulatory agencies, and licensing authorities must move now to require strict education standards for any persons entering the profession as well as those practicing in it now. It is an issue for us all as we would demand any critical profession to rise up to the challenges facing our society as we have in the sciences and elsewhere.
I was a CPA and a fraudster who committed one of the largest securities frauds of the 1980’s involving the electronics retailer Crazy Eddie Inc. The American Institute of Certified Public Accountants sold educational materials (for which I receive no compensation by choice since I deserve none) featuring interviews of me about this fraud in an effort to educate its members about accounting fraud.
The AICPA web site and the CPA Letter issued by the AICPA in February/March 2003 said:
“Sam Antar, a former CPA with the now-defunct Crazy Eddie's electronic chain, would be the first to agree that CPAs need to learn more about fraud. That's because Antar, now a convicted felon, helped engineer a half-billion dollar financial statement fraud that was made possible by taking advantage of the company's independent auditors.”
Therefore, I ask why isn’t any one listening to the confessions of a criminal mind? Is it not logical that the first step toward defeating us is to learn more about us? Remember the saying, “Know thy enemy.” As a criminal I knew my auditors much better than they knew me. They never caught me. It was family infighting that brought me down. Unfortunately, most of the time the auditors are the last to know about frauds committed under their noses.
To the accounting profession and the public at large: listen my warnings and wake up. Not every former fraudster is willing to come forward and give you this advice. The profession needs to do more work to address white collar crime.
If you do not listen to me you will continue to experience ever growing massive frauds that our current laws cannot prevent because the auditors of America’s corporations have no skill to match wits with people like me (or rather like I used to be). The risks to the future of the accounting profession, capitalism, and our economy are enormous.
Respectfully,
Sam E. Antar
