Robert Gralla is a CPA, Certified Fraud Examiner and Certified Forensic Accountant who has experience as a private investigator and an expert witness. CPA Magazine sat down with Gralla to discuss his vast repertoire.
CPA Magazine: What attracted you to becoming a CPA in the first place?
Robert Gralla, CPA, CFE: First of all, I wanted to make a difference in this world. As a young man growing up, I wanted to be able to help people and become a productive member of society. My father came from Europe as an immigrant so he and his future family could have a better life. This was part of what my motivation was. When I was growing up I always had an interest in business; it just fascinated me. I used to have various part-time jobs and businesses when I was growing up. I was a little bit of a young entrepreneur. I made that into a career as a certified public accountant.
CPA Magazine: Why did you become a Certified fraud Examiner?
Gralla: I would work for clients and prepare financial statements, tax returns and do their books and I came across situations where employees were stealing from them. I wanted to do a little bit more for them than just prepare financial statements and tax returns. A combination of a little bit of an investigative instinct that I had and the fact that I wanted to do more for my clients led me to look into other aspects of the accounting world where I found this thing called a certified fraud examiner [CFE]. I looked into it, studied and I took the exam and became a CFE. It gave me more education and insight into how fraud is committed in the business world.
CPA Magazine: What is the difference between a Certified fraud Examiner and a Certified forensic Accountant?
Gralla: There is a little bit of overlap between the two. As a forensic accountant [FA] you basically deal strictly with fraud investigation and the deterrents of fraud. You deal with litigation support, reconstruction of books and records, business valuations, and calculate damages. You also work with the authorities. They piece together everything after something has been done and figure out the who, what, where, why, things like that. As a certified CFE you look into business frauds and you consult with businesses about how to prevent them.
CPA Magazine: What are the most common difficulties you encounter as a CFE and how do you overcome them?/strong>
Gralla: If you go in to prepare a client’s financial statements, you have their books, records, tax returns, you have standards you need to follow; you have a roadmap and know where to go. As a CFE, there is no roadmap. No two cases are the same. You have to figure out the roadmap as you go along. You have to review the client’s books, records and you have to interview. You have to do so much more work to figure out what’s going on, who did what, why did they do it? There is no standard way of operating.
[You overcome something like that] with a lot of hard work, intuitiveness and determination. You have to sit down and be a detective and figure out why someone did something. What was the motivation? As a CFE, it always comes down to a thing called the Fraud Triangle. There was a sociologist named Donald Cressey that came up with this theory that fraud happens because of three different things. You have the pressure; you have a lot of financial challenges so you really need the money. Next is the rationalization, such as ‘I worked for this company for so many years and they owe me.’ [Additionally, there is] The opportunity, you have your hands on the checkbook.
CPA Magazine: What recommendations would you make to professionals who are interested in becoming a Certified Forensic Accountant?
Gralla: You have to have it in you. It’s almost like an instinct to be a detective. Imagine walking up to an apartment building that was just torn down and you have to go put it back together. What pieces go where? Putting a puzzle together is what it is. You have to be able to think outside the box to be a forensic accountant. My best advice is to be a jack-of-all-trades and understand all the different aspects of a business and understand the psychology of people.
CPA Magazine: What are some good tips regarding expert witness testimony?
Gralla: To become an expert witness you need to be able to withstand a lot of scrutiny and you have to be able to think on your feet because when you’re under cross-examination the other attorney just wants to discredit you. They can’t discredit what you say or what the facts are but if they discredit you, they discredit your opinion.
What I do before I get up on the witness stand is to make sure I understand every single aspect of the case I’m involved in. I go through all the books, records and testimony so I know what’s going on. I also make sure that I’m up on any changes in any laws.
CPA Magazine: Given recent developments with the IRS such as Circular 230 and the Jumpstart Our Business Startups Act (JOBS Act) creating a greater need for audits, what do you predict the next 15 years of the CPA profession will be like?
Gralla: Basically, in the next 15 years I see more and more government regulations. I think we’re going to work more as regulators than independent professionals. I don’t particularly like that and I think it’s a bit of paranoia on the side of the government but on the other hand you’re seeing a lot of bad preparers starting to fall out of the business.
CPA Magazine: What do you like to do in your free time?
Gralla: Well motorcycle ride, of course. I love riding my motorcycle. I was looking for a dining room table when I came across a motorcycle in a store. When I saw this motorcycle, the lights got dim, the angles were playing their little harps and skyrockets were going off. I had to own this motorcycle. Now it’s my peace of mind. Since then I’ve traveled about 150,000 miles by motorcycle. I’ve been to Sturgis, the Grand Canyon, Tail of the Dragon, it’s unbelievable. I also like going to concerts. I enjoy art. I go to the comedy clubs. In my spare time I do volunteer work for nonprofit organizations as well.