Is Your Business Primed for Fraud?

Jean Pavlin 

According to the Association of Certified Fraud Examiners 2010 Report to the Nations on Occupational Fraud and Abuse:

• A typical organization can lose 5% of its annual revenue to fraud.
• Most frauds last a median of 18 months before being detected.
• Nearly 90% of occupation frauds (the use of one’s occupation for personal enrichment) involve some form of asset misappropriation.

Does your business have fraud risk factors?

A fraud risk factor is an event or condition that indicates an incentive or pressure to perpetrate fraud, an opportunity to carry out the fraud, or attitudes or rationalizations to justify a fraudulent action.

How can we help?

• Fraud Prevention Check-Up – Including: Employee assessment; Key management assessment; Check tampering schemes; Cash register schemes; Purchasing and billing schemes; Payroll schemes; Expense schemes; Inventory schemes, etc.
• Investigation of potential wrongdoings – If you believe you have a suspicion of fraud we can discuss the situation and perform an Agreed Procedure Engagement to list the areas of concern and create a plan to test the specified areas and record the results of the testing.
• Education – We are here to help our clients and future clients understand basic accounting controls and proper oversight.

As an example:

During an Employee Assessment Engagement some of the questions we ask are:

• Are employees provided formal written job descriptions? Not only should the job descriptions clarify what employees are responsible for, but also what employees are not responsible for.
• Do employees have a close association with vendors and competitors?  Employees with a close relationship to a vendor or competitor should be monitored for potential conflict of interest.
• Are employees required to take annual vacations?  Requiring employees to take annual vacations can aid an employer in detecting an ongoing fraud scheme.
• Does the company have unrealistic productivity measurements and expectations?  Unrealistic productivity measurements and expectations can place undue pressure on employees and result in employees committing fraudulent acts in order to meet them.

Every organization should have an inspection of their in-house policies and controls. Also, consider implementing a fraud hotline!  Frauds are much more likely to be detected by tips than by any other method, and a fraud hotline will increase your number of tips.

The forensic field is continually changing, just like technology. New scams are invented daily by perpetrators with the intention of harming others.

Above All!

Remember, fraud is easier to prevent than detect.

Contact Jean Pavlin, our Certified Fraud Examiner to discuss how we can help.  J.Pavlin@walthall.com or Fraud Group