At a glance
- Deception brings financial, reputational, and legal risks for accountants.
- Clients may lie for financial gain, fear of loss, or to hide mistakes.
- Spot deception by looking for evasive answers and asking probing questions.
- If you suspect deception, probe respectfully and seek legal advice if confirmed.
Accounts face a deception problem. To provide sound advice, perform audits, ensure compliance, and protect both their reputation and that of their clients, accountants rely on data supplied by other people. When that data is misleading, contrast, serious repercussions can flow – financial losses, reputational damage, exposure to legal penalties, and more.
But we know that as humans, we cannot always easily detect deception. Reading the lines of a financial report is second nature to expert accountants. Deciphering the reality between the lines of a financial report is an entirely different skill.
From picking up on subtle behavioural cues to mastering the art of the interview, here are some tools that help accountants discern truth from trickery – and some steps you might take when you encounter deception.
The high cost of lies
Robert Cockerell, Partner at Australia-based PKF Integrity Services, says it’s an accountant’s duty to verify the accuracy of the information they manage.
“It’s expected that you’ve employed all your skills to gather reliable information. Failing to do so could hold you accountable,” he says.
“Imagine, for example, a client presents an investment proposal, and you introduce other clients to it. The associated reputational risk could portray you as negligent.”
Paul Crean, Partner and Head of Economic Crime at BDO UK, says deception can pose serious commercial, legal and reputational issues.
“Deception can absorb a large amount of senior management time and cause significant reputational damage. The loss of trust can result in the loss of potential and existing clients, and make it much more difficult to recruit and retain good people.”
With upcoming changes to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), set for July 1 2026, accountants and other professionals will face stricter regulations, raising the stakes even higher.
Non-compliance could result in severe penalties, including fines, enforceable undertakings, infringement notices and potentially criminal charges.
Cockerell says the key takeaway for accountants is the importance of knowing your client.
“Is your client truly who they claim to be? Verify their documents and take the time to understand their business and your potential role within it.”
Why your clients may seek to deceive
But of course, clients who may try to deceive you are not necessarily criminals.
They may have various motivations, says Crean. And the dominant one is financial gain – or the fear of substantial financial loss.
“People generally seek to deceive because of personal or corporate financial greed. This can be driven by financial difficulties, coercion and fear.”
For example, clients might seek legitimate services but fear the accountant will reject them if they know all the facts. They may be trying to cover up mistakes that risk their job or their business. Or, faced with a significant tax liability from past decisions, they may try to mislead or become evasive with their accountants.
“This gradual ‘deception by degrees’ is often driven by commercial pressures, leading to ‘ethical fading’ that evolves into full-blown deception,” says Crean.
He adds that deception can manifest in various areas, such as the source of wealth and funds, true ownership of structures, and the activities conducted by a client.
How to spot deception
Over time, accountants develop detective-like skills, analysing non-verbal cues, identifying behavioral warnings, and using interviewing techniques to uncover inconsistencies or falsehoods.
“Professional skepticism is a key skill for accountants,” says Cockerell.
Another key indicator of deception is your client’s response to simple questions, he adds.
“A client with something to hide may offer a response, but they don’t really answer the question you asked. They might feign forgetfulness, say they can’t remember, pretend to be ignorant about certain details, or omit crucial facts.
“If a client falls into any of these categories, you’re wise to be suspicious that they may not be telling you the truth.”
To assess your potential client and their character, Crean suggests meeting them face-to-face at their premises.
“It’s expected that you’ve employed all your skills to gather reliable information. Failing to do so could hold you accountable.”
Robert Cockerell, Partner, PKF Integrity Services
He proposes a series of questions for accountants to assess whether their story holds up:
- Why have they chosen our firm and why did they leave their previous advisers?
- Why do they want advice?
- How did they make their money?
- What has been their business trajectory, and how can I verify this information?
- Could I comfortably explain the client’s answers to an independent third party?
“When you ask these questions, notice how the client responds,” he says. “Is their body language open and honest, or are they defensive and evasive, providing explanations that don’t quite add up?
“A problematic and unclear client during the initial stages will likely remain so throughout the relationship.”
How to handle deceptive clients
If you suspect something isn’t quite right, keep probing, says Cockerell.
But keep the conversation respectful at all times.
“Don’t accuse anyone of lying. Simply ask more questions until you’re satisfied with their answers. Focus on understanding rather than just responding, and keep probing until you’re confident you’ve gathered all the necessary information.”
If your suspicions are confirmed, you may require legal advice.
And in more serious cases, you may need to report the individual or business to regulators and law enforcement.
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