|
|
||
       |
||
|
This Month's Featured Service: Forensic Accounting
Learn how
our Fraud Experts at Grimaldi & Nelkin can assist you with fraud detection
and prevention!
|
Forensic
Accounting Services
Statistics on White Collar
Crime
There are many surprising
and alarming fraud statistics.
It’s a little known fact
that it’s the trusted employee that may be the most likely to commit
fraud. Small businesses, those with 100 or fewer employees, are the most
vulnerable.
Fraud costs U.S. businesses
and government agencies more than $660 billion per year. Organizations
lose 6% of annual revenue to fraud and abuse.
The median loss per case is
$100,000. The position a perpetrator holds within an organization has the
most significant effect on the size of the loss. Median losses for
employees is $62,000, managers $140,000 and owner/executives $900,000.
In many investigations, the
breach of trust is the hardest part of fraud to overcome. Many employers
can’t believe that a well-trusted and fairly paid employee would steal
from the company. The financial loss can also be devastating.
What can you do to protect
yourself from becoming the next victim?
Here are a few suggestions from the Certified Fraud Examiners at
Grimaldi & Nelkin CPAs, PLLC:
Adequate Background
Checks
Perform adequate background
checks prior to hiring employees. Statistics show that 15% of employees
would be rejected if background checks were performed. Gather information
regarding education, previous employment, certifications and licenses, and
check references.
Insurance
A good insurance policy will
come in handy to limit your losses. Review your insurance coverage. Most
general business policies have fraud provisions, and specific crime
coverage can also be purchased. Be sure that your policy limit and the
covered employees are appropriate. If your policies haven’t been examined
in years, and your revenue and number of employees have increased, you may
need adjustments.
Red Flags
Internal Controls
Assess effectiveness of your
internal controls. Internal controls are prescribed procedures having to
do with the processing of accounting transactions to ensure proper
recording and safeguarding of assets and recording of liabilities. The
system must be properly designed, enforced and monitored. When problems
exist, it is usually the result of a breach in the enforcement of existing
internal controls. Segregation of duties should exist among
authorization, custody and recordkeeping activities. If there are fewer
employees in your workforce than when your system was designed, employees
may be performing incompatible duties. Also, use internal documents
appropriately. This may include accounting for numerical sequences on
checks and invoices, dual signatures on checks with review of appropriate
documentation, and proper mail opening procedures.
Remember, good old-fashioned
checks and balances can go a long way to preventing, detecting and
minimizing financial losses from white-collar crime. Be alert to employee
behavior. Implement an effective hotline or system to encourage reporting
of fraudulent activities to keep tips and complaints coming your way.
Insurance policies can minimize your losses. Don’t think fraud can’t
happen to you. Healthy skepticism and effective controls are a must.
Lead by example, and show your employees that honesty and integrity are
required by your organization. Prosecute every known instance of fraud.
Perpetrators don’t expect to get caught and punished. Lastly if you can’t
segregate duties, give the appearance that you are. The success of your
company may depend on it. For more information on the prevention or detection of fraud, please feel free to contact any of Grimaldi & Nelkin CPAs, PLLC Certified Fraud Examiners. John Dubiel and Karen Hovey offer our clients the knowledge and expertise necessary to assist business owners and management with fraud deterrence policies or in investigative services.
|
Services
Tax Services
Accounting
Services
Management
Consulting Services
General
Business |
|
Careers at G&N |
||
| Call us today at 315.472.1040
Home •
Meet our Partners •
Services •
Tax & Accounting Tips •
Careers • |
||
