March 22, 2024

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Programming note

Hey, newsletter readers. In case you missed the last edition, On the Margins is going on an indefinite hiatus starting in April. I’m going to be working on other projects over the spring and summer, so the newsletter is going on a break. 

You can still catch me on The Gustonomics Podcast asking Liz Wilke all the econ questions, or yukking it up with Greg Kyte on Oh My Fraud. Thanks again for reading On the Margins. See you out there. Or maybe I won’t! Don’t worry, you’ll be fine.

And now, the newsletter.

Creative accounting

Over the last several years, the hype around new technology—I’m thinking things like blockchain, cryptocurrency, and now artificial intelligence—has resulted in countless stories of innovation and vaporware, fortunes won and lost, frauds exposed, titans rising and falling in spectacular fashion. I feel very fortunate to have had the chance to read and write and talk about these things for a living. It’s made my job easy.

But sometimes I yearn for a more throwback tale. One with less technobabble. Just good, ol’ fashioned, paper pushing and massaging of numbers to get a desired result that is totally against the spirit and letter of the rules. And pure, unadulterated greed. I think in this day and age where there’s so much DAZZLE, we definitely take for granted that the vast majority of us want more money than less money, and that will drive us to make questionable decisions. 

Like this story featuring Chemours’s top brass. The chemical company put its CEO, CFO, and Chief Accounting Officer all on administrative leave after an investigation found that they had “shifted cash flows at year-end to hit targets that determined their annual stock and bonus awards.”


Now the company said the investigation found that the executives took steps to delay payments to some vendors during the fourth quarter of 2023 into the first quarter of 2024. In addition, Chemours said the executives sped up the collection of receivables, so the cash would come into Chemours during the fourth quarter instead of the first quarter.

Chemours said its audit committee found that the executives “engaged in these efforts in part to meet free cash flow targets that the company had communicated publicly, and which also would be part of a key metric for determining incentive compensation.”

Nothing fancy here—just pairing some tried and true strategies of stalling on some vendors and hassling creditors. 

There’s something comforting—or maybe discomfiting?—about such seemingly basic business chicanery. On the one hand, it’s more nostalgic, familiar. You see it and think, “Ohhhhh, look. Someone is still trying to do that.”

But on the other hand, with all the technology available to use, you can’t help but feel a little embarrassed for them and think, “Ohhhh, look. Someone is still trying to do that.”

Fraud, fraud everywhere

This newsletter started in October 2019. Maybe that seems like a long time ago, and maybe it doesn’t. But it was also only a handful of months before the pandemic lockdowns began in March 2020, and then I first wrote about a pandemic aid fraud in May 2020. In some ways, I’m surprised it took even two months for that first pandemic fraud to come to light. I suppose I could look up how many times I’ve written about pandemic era fraud since then, but safe to say, it’s a lot. 

Anyway, the Association of Certified Fraud Examiners just put out its Occupational Fraud 2024: A Report to the Nations, and pandemic era fraud is the star of the show:

Many of the cases investigated during the survey period are believed to have occurred during the height of the COVID-19 pandemic. In the 2024 report, 53% of the cases had at least one pandemic-related factor that contributed to the fraud’s occurrence, and the median losses from frauds increased for the first time since the 2016 report. Fraud cases involving more than one perpetrator decreased, reversing the trend of increasing collusion from previous years.

“Pandemic lockdowns prevented fraudsters being able to work together to commit frauds,” ACFE President John Gill, J.D., CFE, said. “However, the economic pressures of the pandemic, combined with the opportunity of remote work and emptier offices, kept the frauds going.”

Look, I’m glad that fraudsters felt responsible enough to isolate and/or social distance which probably helped prevent collusion. But I’m also a little confused why fraudsters weren’t using Zoom or Teams? Perhaps they were generally paranoid about surveillance or monitoring by that technology when everyone was still getting used to it?

In any event, like editions of this report, some of the results are hilarious and/or a little hard to take. Such as:

  • Most perpetrators (87%) had never been charged or convicted for fraud-related offenses in the past. Basically this suggests that any one of us, if the circumstances are right, can become a fraudster. The employers of the 13% of perps who had been previously charged with fraud are obviously not doing background checks.
  • 84% of fraudsters displayed at least one behavioral red flag. In other words, in 16% of frauds we’re going to be totally blindsided. Fantastic. 
  • The most common red flag being the perpetrator was living beyond their means (39%). This is a global survey, but for American frauds, I don’t know how “living beyond their means” is a red flag. If a huge chunk of the population is living beyond their means, then I guess that means, once again, anyone’s a potential future fraudster.
  • 68% of perpetrators were terminated by their employers. I guess this means that nearly one-third of people who committed fraud got to keep their jobs? Maybe American businesses are more magnanimous than I give them credit for.

I think one of my hopes for the accounting profession is that it becomes more attuned to fraud and takes a bigger role in looking for it, reporting it, and stopping it. So much of fraud is knowing when things don’t look right and following money around. Accountants are well suited for that kind of work, and tools like artificial intelligence seem to have the potential to help us make judgment calls rather than just replace us. 

Plus, there’s always more than enough work to go around. No need to wait for the next pandemic to come along.

Fresh from Gusto


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Caleb Newquist Caleb is Editor-at-Large at Gusto. In 2009, he became the founding editor of Going Concern, the one-of-a-kind voice on the accounting profession, serving in the role for 9 years. Prior to Going Concern, Caleb worked as a CPA for nearly 6 years in New York and Denver. He lives in Denver with his wife, two daughters, and two cats.
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