AUGUST 2016
In This Issue

 

 
We are grateful to have the opportunity to provide you this valuable information via our monthly e-newsletter and our unparalleled forensic accounting and investigative services.

The goal of this e-newsletter is to provide you critical, inside information that will help you prevail when defending an IRS criminal case. We will do this by sharing the knowledge we have from our 25+ years of experience as an IRS Special Agent.

We take special care to ensure the information we provide you in "The Beacon" is the latest and most current information available. 
In this edition, we explain fraud investigations using the audit report and how the audit trail report is hidden in most accounting software.

We want to write about topics that will assist you in prevailing with criminal IRS cases. Please e-mail us your topics of interest to Thebeacon@sageinvestigations.com 
 
We encourage you to share our e-newsletter with others in your sphere of influence.
 
Sincerely,
 
Edmond J. Martin
 
Principal, Chief Investigator
Certified Fraud Examiner (CFE)
Texas Certified Investigator (TCI)
The Audit Trail Report Hidden in Most Accounting Software



When it comes to fraud investigations, the Audit Report, found in most accounting software, is a very important tool. In years past, the Audit Report for software like Peachtree or QuickBooks could be turned off. Today the Audit Log or Report operates automatically in most accounting software. In my opinion, it is imperative to operate and maintain the Report by all companies using accounting software. The following will explain how the Report is used by fraud investigators to determine cases of fraud.
 
In an investigation of a Non-Profit Organization (NPO) that was experiencing a decrease in cash flow; we found that the Chief Financial Officer (CFO) had created a "ghost vendor" to funnel money from the NPO to himself over a three-year period. A review of the Audit Report for Peachtree delivered in Excel format revealed each person who had access to the system, and further identified that they each had their own sign-in. A sort of the report by the sign-in list revealed that the CFO accessed the software periodically but only after the Accounts Payable Clerk signed off for the day. At that time he entered an invoice in the accounts payable and went to the stored checks; the CFO removed one check, printed it, as well as the check register. He then signed out of the software.

The CFO circumvented established controls by taking...
 
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Fraud Investigation Using the Audit Report

In civil cases involving partnership agreements that are not fulfilled and money is not equitably divided per their agreement, legal actions generally ensue. Attorneys often require the assistance of a forensic accountant and someone experienced in developing the fraudulent aspects of a financial investigation.

As attorney's battle over disclosures under discovery, the defense will resist giving up information that may be detrimental to their client. They will resist giving up tax returns, bank statements, cancelled checks, accounting system records, and any other documents that could potentially have a negative impact on their client.

If the defendant provides only inadequate financial reports that are not the customary Balance Sheet, Income Statements, and general ledger, then consider requesting the Audit Report for the accounting system in an Excel format for the period in question. From that report, the fraud investigator will be able to reconstruct the receipts and disbursements for the company. The investigator will also gain knowledge of the categorization of transactions and identify deleted revenue and expenditure transactions.

If discovery is finally delivered in the form of third-party released bank statements for the period in question, but the cancelled checks are not provided, the investigator is not left totally in the dark. Convert the bank statements using the Sage DIO proprietary software and generate a Bank Account Report. Take the information from the Audit Report and...   read more
About Us

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At Sage Investigations we are dedicated to serving our clients nationally, to help them navigate the difficulties of dealing with the IRS, and other complex (forensic) financial fraud investigations both civil and criminal. By narrowing our focus to our primary strength of following the money, we steer our knowledge, efforts, and experience to financial issues. We help our clients propel their cases forward by assisting in the review, acquisition, and organization of financial records, evaluating the elements of their cases, and helping create winning strategies. Through the use of our proprietary advanced financial investigative technology we analyze complex financial data quickly, easily and efficiently, saving our client's time and money.

 

Sage handles all cases with altruism, professionalism, honesty, integrity, passion and respect. When you hire Sage, you hire a team of professionals with skill and knowledge that helps you have more effective solutions. We are innovative with our DIO cutting edge technology, and perform every investigation in an orderly and organized manner to develop a clear investigative roadmap and deliver a quality work product. The compass that guides us is strong leadership and accountability. Learn more...

 

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Austin, TX 78716

Phone: 512-659-3179

Fax: 512-328-6878

Email: info@SageInvestigations.com 

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