I love using film to teach accounting. It may seem like an odd combination, but actually it’s not. As I tell my students often, numbers tells the best stories. I stay on the lookout for the best business films in order to keep my courses engaging and relevant. As I began working on this year’s syllabus and thinking about which films I would be using for class, it dawned on me that these shows would also be good for entrepreneurs. Organizations lose an estimated 5% of annual revenues to fraud which so we need to educate ourselves routinely about what to look for. Common fraud schemes that often plaque entrepreneurs are:
- Having ghost employees (payroll fraud)
- Employees stealing cash or cash equivalents (cash theft)
- Employees issuing false invoices (expense fraud)
By no means is this an exhaustive list or in any particular order, but entrepreneurs are so vulnerable to fraud because very little time (or resources) is devoted to internal controls. Your employees are great and they would never steal from you, right? Be very careful with that line of reasoning.
I recently read an article by Deep Patel entitled 10 Entertaining Business Documentaries Entrepreneurs Can Learn From. While I think Patel includes a good collection of films, I believe he’s missed a few very important titles. Given that I teach and research fraud and forensic accounting, it is no surprise that I believe it’s critical that every entrepreneur must protect their business from fraud. Film is an excellent way to education yourself about common fraud schemes. Here are my recommendations about what every business owner should be watching along with the schemes the films cover.
Synopsis: This documentary follows the journey of Abacus Federal Savings after its indictment by the Manhattan District Attorney’s office on fraud charges connected to the 2008 financial crisis.
Fraud Scheme: falsified documents, bribery
Why entrepreneurs should care: Most employees have the ability to falsify documents and without a routine training program, specifically an employee fraud awareness program, employees can create fictitious documents. When I’ve used the documentary in my class, we spent time reviewing the actual indictment prior to watching the film. The documentary follows the events of the trial, and includes interviews with lawyers from prosecutors, defense attorneys, jurors, journalists and the Sung family. Abacus was nominated for best documentary in 2018
Synopsis: Financial adviser Marty Byrde has secretly been working for years as a money launderer for the second largest drug cartel in Mexico.
Fraud schemes: money laundering
Why entrepreneurs should care: This Netflix series highlights how a cash-based business can be susceptible to money laundering by illegitimate businesses. Money laundering is a complex topic that I don’t always cover in my forensic accounting class, but should. When I show clips from Ozarks, I open my class discussion by showing Delena Spann’s TED Ed lesson How does money laundering work which highlights the three stages (placement, layering and integration) of money laundering. Byrde’s character (played by Jason Bateman) often centers around the conflict of integrating his money within a legitimate business.
Synopsis: This documentary chronicles the $53.7 million theft by ex-city comptroller Rita Crundwell from the small town of Dixon, IL.
Fraud scheme: embezzlement, falsified documents
Why entrepreneurs should care: Every business owner can name at least one employee that is their “right hand”. That’s the go-to person for everything. They know your passwords, they reply to emails for you, they know your calendars…they know everything. And you trust them because you need to. This valued employee is exactly who Rita Crundwell was to the City of Dixon. This documentary simply shows the importance of segregating job duties and maintaining internal controls. Being completely transparent, I am the director and producer of All the Queen’s Horses, so I am completely biased and think this is required viewing for any entrepreneur.
Synopsis: This movie tells the story of a banker who is sentenced to life in prison for the murder of his wife and her lover.
Fraud scheme: embezzlement
Why entrepreneurs should care: As we love to say in the fraud community, trust is never an internal control. The relationship between the warden and Tim Robbins is the perfect example of what can happen when an person gives absolute financial control to another person. Many entrepreneurs are often passionate about their businesses but not as enthusiastic about their financial statements. Small businesses that have reported fraud suffered a median loss of $150,000. Without spoiling this classic film, an entrepreneur can learn the dangers of not paying full attention to their own financials.
Fraud scheme: money laundering
Synopsis: the series tells the story of a struggling high school chemistry teacher who is diagnosed with stage-3 lung cancer who finds himself faced with a serious ethical dilemma. Together with his former student, White turns to a life of crime by producing and selling crystallized methamphetamine to secure his family’s financial future before he dies.
Why entrepreneurs should care: What I love about this series is how relatable the main character Walter White is to most people. If you only had a few months remaining to live, would you sells drugs to provide for your family? This series forces the viewer to witness the trails of a once ethical citizen transform into a criminal to secure a future for his family. Although the majority of the show is not appropriate to show in class, there are some valuable life lessons that any entrepreneur can benefit from.
If you are a business owner be sure to check out these important films.