Campus Connection

Obviously, auditors need to crunch numbers. But when it comes to cracking fraud cases — what counts most is creativity, says Eddward Herron, UW-La Crosse assistant professor of Accountancy. Herron used creativity and subtle cues to crack numerous fraud cases while working for The Federal Reserve and the International Monetary Fund before coming to UWL to teach. In his 22-year auditing career, he recalls only three cases he solved by “crunching numbers.” The rest took a more creative approach. He shares these Sherlock-Holmes-style cases in his auditing courses. Good stories “stick” in students’ minds and knowing the kinds of scenarios to expect gives them an edge in the real world, he says. In classes, Herron recounts a particular bank audit he did in a small town while working for The Federal Reserve. As he and his trainee were leaving town, they stopped at a small café where Herron asked his partner if she noticed anything anomalous about the village. “Just a lot of old people,” she said. “Exactly,” replied Herron. The bank they had just audited was experiencing three percent loan growth in a town where the vast majority of its citizenry were living on Social Security and weren’t at a stage in life to borrow. Their detection took the auditors back to the bank where they uncovered extensive fictitious loan documentation and cracked a 50-year old fraud case. Herron published the case last year and plans to publish more, eventually compiling them into a book to provide real-life auditing scenarios for students in the field. Another publication he’s working on measures the role of creativity in an auditors’ ability to solve cases. Understanding the importance of creativity will play a major role in training future auditors, he says. Herron transitioned from his auditing career to academia for just this sort of research and communication on auditing. He attributes his own creativity to his undergraduate liberal arts education, and one of his two master’s degrees in education, as well as a doctoral degree in accounting. “I’ve always appreciated a liberal arts education because it taught me how to have a broader perspective, how to analyze and how to write,” he says. Being an effective auditor also takes an appreciation for the importance of the career, since auditing is the last line of defense against many kinds of crime, says Herron. “We [auditors] have a really vital role — to hold the line to make sure financial and other data is reliable so people will take money and invest it,” he says.