I'm a CFE

Dave Cotton, CFE

Chairman at Cotton & Company, LLP

The ACFE presented Dave Cotton, CFE, the Certified Fraud Examiner of the Year award at the 29th Annual ACFE Global Fraud Conference in June. Cotton, who’s the chairman at Cotton & Company, LLP, has played a significant role in developing best practices in anti-fraud controls. He recently created, chaired and managed a working group of professionals from leading accounting and anti-fraud organizations in the U.S. to close the gap on comprehensive, universal guidance on fraud risk management. Under his leadership, the ACFE and COSO co-published the Fraud Risk Management Guide, which is official guidance for organizations to use in managing their fraud risk.

I was born in Pittsburgh, Pennsylvania. My father was an executive with General Motors, so we moved often. I attended elementary and junior high in the Washington D.C. area, and I attended high school in northern New Jersey. I enjoyed all sports — I ran cross-country, played football, wrestled and ran track in high school.

I always wanted to be a mechanical engineer. I enjoyed doing mechanical things like working on cars and building things. My parents gave me an Erector Set for Christmas when I was six years old.

I received my mechanical engineering degree and an MBA in management science and labor relations at Lehigh University. Following school, I took a position as a program manager and quality assurance specialist in the U.S. Air Force, stationed at Wright-Patterson Air Force Base in Fairborn, Ohio. After active duty in the Air Force, I joined a management consulting firm in the D.C. area and did a variety of consulting engagements, including work measurement studies for federal agencies.

After two years at that firm, I joined a small CPA firm, opened an office in Chicago, and managed several consulting and auditing engagements. I decided that if I was working at a CPA firm, being a CPA was probably a good idea. So, I enrolled as an at-large student at the University of Chicago Graduate School of Business and took accounting and auditing classes.

I moved back to Virginia, passed the CPA exam and started my own CPA firm in Alexandria in 1981. That firm grew slowly in the early years, maintaining a focus on auditing and consulting for federal agencies, particularly offices of inspectors general. Following passage of the Chief Financial Officers Act in 1990, we began auditing federal agency financial statements and helping federal agencies prepare financial statements and improve internal controls. The firm grew steadily after that. We now have approximately 200 professionals. We specialize in contract and grant audits, federal agency financial statement audits and consulting, information assurance, and forensic accounting and litigation support. I stepped down as managing partner in 2007 and have remained chairman.

In 1988, the Auditing Standards Board issued the so-called “expectation gap” auditing standards, including Statement on Auditing Standards No. 53, “The Auditor’s Responsibility to Detect and Report Errors and Irregularities.” That new standard expanded what auditors were required to do regarding fraud detection. I began searching for appropriate training for our staff and me. I found a five-day course conducted by the newly established National Association of Certified Fraud Examiners. It was outstanding. We applied this new knowledge in our contract and grant audits and began finding fraud. I sat for and passed the CFE Exam and have been a dedicated supporter of the ACFE ever since.

If CFEs simply remain alert and maintain a high degree of professional skepticism, many potential frauds are easy to find.

It was serendipitous that my search for guidance on the newly enacted requirements for fraud detection placed on auditors coincided closely with the formation of the ACFE. Meeting Joe Wells and Jim Ratley at that long-ago training event was transformational. I decided that the CFE credential, though brand new, was going to be big, and that I wanted to move my career in that direction. Joe asked me to teach for the ACFE, so I taught contract and procurement fraud courses for the ACFE for several years.

I’m most proud that I was able to work with so many smart and dedicated people to build Cotton & Company that has employed hundreds of people over the years and empowered so many people to further their careers with challenging and fascinating work. Our recent selection as a “best place to work” in the D.C. area is something about which I’m particularly proud.

Many fraud perpetrators aren’t as clever at concealing fraud as most people probably think. If CFEs simply remain alert and maintain a high degree of professional skepticism, many potential frauds are easy to find. Proving the elements of fraud is more difficult and requires a great deal of tenacity and an ability to withstand the inevitable attacks by the perpetrators.

I enjoy golfing, boating, running and snowboarding. My son is now 29 and an officer in the U.S. Navy.  When he was seven, he asked me to teach him to snowboard. We spent a grueling day (for him) on the beginner hill at Brighton, Utah. He never quit. Three days later, he told me that I make too many turns coming down the mountain. I can still keep up with him ... sort of.

Emily Primeaux, CFE, is associate editor of Fraud Magazine. Her email address is: eprimeaux@ACFE.com.