 | |
Greetings!
We are grateful to have the opportunity to provide you with this valuable information via our monthly e-newsletter and our unparalleled forensic accounting, expert witness, and fraud investigative services.
The goal of this e-newsletter is to provide you with critical, inside information that will help you "follow the money" in business disputes, fraud cases, corporate embezzlement, and prevail when defending an IRS criminal case. We do this by sharing our knowledge from our 25+ years of experience as an IRS Special Agent and 25 years as a private investigator / forensic accountant.
We take special care to ensure the information we provide you in "The Beacon" is the latest and most current information available. This edition discusses how to help your client prevent expense fraud in their business.
We want to write about topics that will help you prevail with business disputes, fraud, and IRS criminal 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 Board Certified Investigator (TBCI)
| | Help Your Client Prevent Expense Fraud in Their Business |
Business attorneys like yourself are always trying to help clients prevent fraud in their businesses. To prevent fraud, it is critical first to encourage your clients to develop a policy to deter fraud and make employees aware of the impact of fraud on the organization. This includes the loss of profits, adverse publicity, potential job loss, and decreased morale and productivity. Management also should set up a strong internal control structure to mitigate the risk of this type of fraud occurring in the organization. In addition, management must communicate that they are open to employees speaking freely and are receptive to information from employees when faced with unethical decisions, along with an employee hotline to report tips anonymously of suspicious behavior. Management must convey a zero-tolerance policy to the employees through words and actions.
Occupational fraud: [1] Asset misappropriation involving employee stealing and misuse of resources is the most common, with 86% of the cases reported with a median loss of USD 100,000. Corruption was reported at 50% with a median loss of USD 150,000, and financial statement fraud was at 9% with a median loss of USD 593,000.
Reconciliation of transactions and verification of supporting documentation is also crucial to preventing expense reimbursement schemes. It is essential to require expense reports to include the receipts matched to those expenditures. Cloud-based expense and travel management software packages will track expenditures, but regardless of the software used, someone in the accounting department must review it. Credit cards should be treated as cash and reconciled by someone in the accounting department who is not responsible for credit purchases or payments on the card. Periodically the organization’s internal auditors should review the reports from the software system and compare the transactions with the receipts before month-end close. This would enable the accounting department to be alerted to any possible fraud early before it gets out of control. Discrepancies should be addressed at once directly with the responsible party in the accounting department and discussed with the CEO and CFO.
The lack of proper monitoring of employee spending can result in fraudulent activities. In the following scenario, the company allowed an officer to keep the company credit card. The officer was a long-time employee responsible for buying assets and materials, recording the receipts into an expense tracking system, and authorizing payment. After receiving a tip from an outside contractor, it was found that the officer was using the credit card for personal expenditures. In the last six months, the expense supporting documentation revealed photoshopped receipts, actual receipts with deliveries to his home, and other questionable expenditures. The matter is still under examination. To date, the loss is more than $500,000, and the employee has been fired.
[1] 2020 ACFE Report to the Nations
| |
Contact Us
P.O. Box 160161
Austin, TX 78716
Phone: 512-659-3179
Fax: 512-328-6878
Texas License #A10803
| | Serving your needs is our priority. |
At Sage Investigations, we are dedicated to serving our clients nationally to help them navigate the difficulties of dealing with fraud, divorce, estate and probate, the IRS Criminal Investigation, and other complex (forensic) financial fraud investigations. 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 reviewing, acquiring, and organizing financial records, evaluating the elements of their cases, and helping create winning strategies. Through the use of our proprietary advanced financial investigative technology, we trace and 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 skills and knowledge that will help you have more effective solutions. We are innovative with our DIO cutting-edge technology. We 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 ...
| | © 2022 Sage Investigations. All rights reserved. | | | | |
