Accountants and Finance Executives: Reporting What the Numbers Show
Finance professionals make strong relators because fraud has to be recorded somewhere. Depending on the conduct, the route may be a False Claims Act qui tam case, an SEC whistleblower submission which allows full anonymity through counsel, or both.
Choosing the right program matters
Finance professionals often see conduct that fits more than one framework, and the choice affects anonymity, award range, and timing.
- False Claims Act, for fraud against federal healthcare, contracting, or grant programs. 15 to 30 percent. Sealed but not permanently anonymous.
- SEC whistleblower program, for securities and accounting fraud at public companies. 10 to 30 percent above a 1 million dollar sanction threshold. Fully anonymous if filed through an attorney.
- IRS whistleblower program, for tax underpayment. 15 to 30 percent above a 2 million dollar threshold. Anonymous through counsel.
- CFTC program, for commodities and derivatives. 10 to 30 percent.
What finance staff report
The accounting record is where fraud becomes visible even when the underlying conduct is hidden.
- Cost transfers between federal awards near period end
- Unallowable costs charged directly to government contracts or grants
- Revenue recognized on contracts that were obtained by misrepresentation
- Reserves adjusted to manage earnings
- Related party transactions priced outside fair market value
- Overpayments identified and not returned within the 60 day window
- Effort reporting that does not reconcile to payroll
Sarbanes-Oxley obligations and internal reporting
Finance executives at public companies operate under certification obligations that can create personal exposure if they sign statements they know to be wrong.
That cuts both ways. It creates pressure to go along, and it creates a strong reason not to. A controller who documented objections and then reported is in a far better position than one who signed and stayed quiet.
Internal audit is a special case
Internal auditors find these issues as their job, which raises the question of whether the information is original enough to support an award.
It usually is. Performing the audit that found the fraud is exactly the kind of direct and independent knowledge the statute contemplates. What matters more is whether the findings were reported and ignored, which is common and which strengthens the case.
Frequently asked questions
Can I stay anonymous?
Through the SEC, CFTC, and IRS programs, yes, if you file through an attorney. Under the False Claims Act the case is sealed during the investigation but your name becomes known if it proceeds.
I signed the certification. Am I exposed?
Possibly, which is a reason to get advice rather than to wait. Documented objections before signing materially change the analysis.
Does my professional obligation require me to report internally first?
Professional standards generally require escalation within the organization. That does not prevent a later external report, and a documented ignored escalation strengthens the case. Speak with counsel about the order.
The attorneys who handle these cases
Related reading
Talk to a whistleblower attorney before you report
A conversation costs nothing and is confidential. We will tell you honestly whether what you have describes a case, and what the first-to-file rule means for your timing.