Cressey Award recipient and securities regulation expert Prof. John C. Coffee encourages fraud examiners to persevere in the wake of the global economic crisis, but also take advantage of the new Dodd-Frank Act.
"For fraud examiners, courage is part of the job description," said John C. Coffee Jr., Adolf A. Berle Professor Law at Columbia Law School, recipient of the ACFE's 2011 Cressey Award, during a recent Fraud Magazine interview. "Remember that at WorldCom it was the internal auditors who caught the fraud and brought it to the board's attention when the outside auditors missed it."
Coffee, a U.S. securities regulation and white-collar crime expert, helped draft parts of the new U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act and the Sarbanes-Oxley Act, and he has testified before Congress numerous times. The National Law Journal has listed him as one "The 100 Most Influential Lawyers in the United States." He is the director of the Center on Corporate Governance at Columbia University Law School and is frequently quoted and interviewed by major media outlets. He teaches course on white-collar crime, securities regulation, corporations and complex corporate litigation.
Coffee, 66, and his wife of more than 40 years, Jane, a professor of mathematics, live in New Jersey, and have one daughter, a physician.
"Under most compliance programs, internal auditing staff should have immunity and protection for information that they bring to the board. If there is ambiguity on this score, reform must begin with protection from internal retaliation."
The Dodd-Frank Act, passed in the wake of the economic meltdown, does strengthen protections for internal auditors. "Also under Dodd-Frank's whistleblowing provisions, internal compliance staff can become whistleblowers — and profit — if the corporation covers up — or ignores — misconduct that they have found or reviewed. Anonymous hotlines to the audit committee are common and should be universal," Coffee said.
"Corporate bonuses should be paid for uncovering fraud or abuse, and formulas should be crafted and communicated to employees that offer corporate-paid bounties to fraud examiners for their success. If executives are paid for performance, so should fraud examiners," he said.
The Cressey Award is the ACFE's highest honor, given for a lifetime of achievement in the detection and deterrence of fraud. The award memorializes the late Dr. Donald R. Cressey, a renowned fraud researcher and an ACFE founding father.
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