That occupational fraud occurs is a fact. Research (Holinger
& Clark) indicates that 30% of a workforce will at some time, or over time,
misappropriate cash or tangible goods from their employer. The ACFE, in their 2010 Report to the
Nations, estimates that 5% of potential revenue is lost to incidence of
occupational fraud annually. ACFE
also cites that asset misappropriation schemes account for over 90% of cases
investigated by its 32,000 members, with a median loss value of $135,000.
We are not talking
about that employee who steals the occasional box of binder clips, or a
ream of paper for their home office. Occupational fraudsters operate at a
“higher” level, with a person (or persons) creating a scheme to siphon cash or assets
out of the company in a planned manner (often with the intent to repeat action
as desired). This method will typically
include efforts to hide the fraudulent actions to exposure from known levels of
reviews and monitoring.
We are talking
about examples such as the buyer who sets up a shell company to sell
products to the employer at an inflated price, the department or business unit management who
records invalid revenue to make this year’s numbers and receive their bonus or
support analyst projections only to erode subsequent performance, the health care employee who sells prescription
inventory at street value, and the construction site manager who orders more
inventory than the project needs to supply his side business.
The impact of fraud touches everyone in the company,
either in direct terms such as the ability to provide benefits and raises, or less
directly, like the ability to maintain favorable financial margins and required ratios. It is to everybody’s benefit to
heighten the awareness of frauds’ impact throughout the workforce, and to
develop a strong culture of honesty and accountability throughout the
management team and employees.
There are three approaches that a company can adopt to better defend against such actions:
The Proactive – Working toward Prevention
- New Hire screening considerations
- Employee Training on Fraud
- Policy and Procedures Changes
- Risk Assessment
- Developing Active Detection Methods and Testing Analytics
- Hot-Line
Output analysis (predictive and risk assessment)
The Reactive – Working toward consistent response upon
detection.
Responding to:
- Active
Detection and Prevention (Proactive) Efforts
- Active
Hot-line monitoring and analysis
- Accidental
discovery
- Audit
Related discovery
- Other
Inputs
- Establish Internal Response Team
- Select
Lead Manager for Investigation (will vary by situation)
- Internal
and external communications considerations
- Determine necessary
skill sets (technical, financial, legal)
- Establish Threshold of predication – decision
tree analysis for further investigation or alternative action.
The Passive
- The assumption of risk by company (cost of
prevention, detection and follow though does not offset risk of loss). OF NOTE: not all loss will be tangible!
- The transfer of risk by various insurance
instruments
We Are Your Resource!!
The Goals:
- Reduce Your risk of financial loss due to fraud.
- Improve Your profit, Mitigate Your loss.
- Increase Your overall financial and reporting integrity.
The Work:
- Increase management and workforce awareness of fraud and its impact on every stakeholder.
- Review and improve the controls environment, creating a culture of heightened integrity and accountability.
- Increase ability to detect “Red Flags” indicating suspect activity.
- When required, complete investigations and support potential litigation.
Forensic Accounting Specialists is focused on serving Attorneys, Growing Businesses, Venture Capital and Lending Interests, Auditors, Private Investigators, and Law Enforcement with effective results in:
Fraud Examination:
- Specializing in Payables/Billing Schemes
Fraud Risk Assessments/ Improving Prevention & Detection Abilities:
- Develop inventory of high-risk
areas within business model, and operational control environment.
- Work with internal/external
auditors, Audit Committee, and others to develop monitoring plans to mitigate
the opportunity for fraud actions, increase potential for timely detection, and
limit loss related to potential fraud schemes.
- Provide education programs tailored to management and workforce tiers.
Financial Statement Analytics:
- Analysis of
financial statements to discern anomilous behavior.
- From above, provide deeper
analysis of underlying transactions, and related documentation to
identify potential manipulation, non-compliance, or
errors.
Litigation Support/Consulting Expert Witness:
- Coordinate with counsel to fully understand determinative issues and applicable law.
- Provide counsel with objective findings and report citing all methodology, error considerations, citations to other documentation, conclusions. Provide support for development of exhibits.
It is our goal to provide the highest quality service and the presentation of findings in objective, clear and concise manner.
