Whistleblowing and How CPAs Can Help Shine a Light on Financial Crimes

Jennifer Lynch, MBA, CPA, CMA, CFE, CFI, CBV, ABV is a qualified expert witness in the field of forensic and investigative accounting and is the principal forensic accountant of Lynch & Associates. Along with being a CPA, CMA, she is also a Certified Fraud Examiner, Certified Forensic Investigator and a Chartered Business Valuator and holds an MBA from the Schulich School of Business. Jennifer is a professor at York University’s MFAc program.

We asked Jennifer about whistleblowing financial crimes and how CPAs can support these efforts.

Jennifer standing up holding a mic and talking

How did you start your career and get to where you are today?

I started my forensic accounting career by chance. I came to Canada in 2003 as an international exchange student. Upon graduation from my BA in Economics in 2005, I obtained a job at a boutique forensic accounting firm. I was referred to this job by my friend whose father, the owner, was looking for a junior assistant.

What originally interested you in forensic accounting and whistleblowing?

Growing up, I always had a strong desire for justice and to help those who are vulnerable. I want to uncover the truth and make positive changes in the world. After witnessing firsthand and hearing about unethical and illegal activities, I felt motivated by a sense of responsibility to report them. I think this career is meaningful and creates value to our society.

What do you think the biggest risk is for whistleblowers?

Becoming a whistleblower is not an easy decision to make. Whistleblowers often face retaliation or legal action from their employer or other implicated parties. They may even face physical harm or threats. They can be isolated from their colleagues, feel financial strain from losing their job and potential legal fees and find it difficult finding new employment because other companies may know what they’ve done.

But whistleblowers speak up because they want to make a positive change in the world and protect the public. So, they’re often considered heroes and gain respect and recognition from the public for their bravery and integrity.

Despite the risks, whistleblowers can try to protect themselves. They can find information by reviewing their employment contract and policies and contacting government agencies. For example, the Ontario Securities Commission (OSC) and Financial Services Regulatory Authority of Ontario (FSRA) have whistleblower guidance. The OSC also rewards up to $5 million for tips that lead to enforcement action. Whistleblowers may also have protection under the Public Servants Disclosure Protection Act. Unfortunately, sometimes these laws may not provide sufficient protections, so they should turn to legal organizations and lawyers who specialize in whistleblowing law and non-profit organizations.

How can CPAs support whistleblowers?

Any CPA can support whistleblowers’ actions. First, they can help whistleblowers understand the proper channels for reporting their concerns, such as reporting to management, a compliance officer or a regulatory agency, and help them maintain their anonymity and confidentiality. All CPAs in Canada should be familiar with CPA Canada’s fraud policy, which provides protection of whistleblowers.

CPAs can also help whistleblowers understand their legal rights and protections under whistleblower laws. In Canada, the key federal statue is the Public Servants Disclosure Protection Act, along with the Competition Act and the Criminal Code.

CPAs, including forensic accountants, fraud examiners and general accountants, can investigate allegations of illegal or unethical activities within an organization and provide objective assessments of the evidence and the financial impact of any wrongdoing. Forensic accountants can also serve as expert witnesses in legal proceedings related to whistleblower claims, providing insight and analysis on financial and accounting issues.

CPAs should also work with regulators and policymakers to advocate for stronger whistleblower protections and greater transparency and accountability in organizations.

Can auditors be protected when whistleblowing on their own companies?

Yes. Auditors are protected by whistleblowing laws in Canada, including Public Servants Disclosure Protection Act, Criminal Code, the Competition Act, Ontario Securities Commission Whistleblowing program, CPA fraud policy including whistleblower protection program, and/or their employer’s fraud policy.

Auditors should strictly follow the Canadian auditing standards (CAS 600). Auditors who suspect fraud during an audit engagement are required to report it to the appropriate level of management, such as board of director, the audit committee, or senior management.

How has financial crime changed in the last decade?

One of the most significant changes in financial crime has been the increased use of technology. Criminals are now using digital means to perpetrate fraud, such as hacking into financial systems or using phishing emails to obtain sensitive financial information. And the emergence of cryptocurrencies has created new opportunities for financial criminals because they provide anonymity and can be used to launder money or facilitate other illegal activities.

In recent years, there has been a greater emphasis on preventing financial crime and greater global cooperation and information-sharing to fight against financial crime. This has led to increased regulations, stronger compliance measures and more robust anti-money laundering and know-your-customer policies.

What advice can you share with aspiring forensic accountants?

Forensic accountants need a strong foundation in auditing and analytical and critical thinking skills. Computer forensics and data analysis courses are also useful. And you should try to gain experience through internships or entry-level positions in fraud investigation.

I also advise to network with other professionals in the field and stay up to date on industry trends and best practices.

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