Fraud, It’s Not Going Away Anytime Soon!

| Business Miscellaneous

By Sarah Seacat     I have been a member of the Indiana CPA Society Fraud Conference Project Team for the past three years and have had the privilege to work with and meet several individuals in the world of Forensic Accounting.  The 2013 conference had a diverse group of presenters and topics ranging from fraud protection and early prevention to an ex-felon revealing how fraud detection set her free and hot topics surrounding identity theft.  Some highlights include:

John Hall, CPA with Hall Consulting, Inc., started the day speaking about three types of fraud:  misappropriation of assets; manipulation of financial results; and corruption.  Many of our clients have heard us discuss these types of fraud during annual fraud interviews and other audit testing.  However, Hall took an interesting perspective by breaking down the types of fraud into three different levels of fraudulent activity:

  • Macro – actions by leaders/abuse, misuse of restricted funds, actions that damage reputation
  • Micro – embezzlement, misuse of data, vendor schemes
  • Systemic – expense reimbursement, gift cards

One of the most effective ways to deter and prevent fraud may be fraud skills training.  In a survey presented at the conference, 62% of participants stated that providing awareness, prevention and early detection skills training for managers and staff would make the most significant impact on helping organization’s be more effective in fighting fraud, misconduct and wrongdoing.  Skills training should include a general understanding of fraud risks, why soft controls are as important as hard controls, specific fraud examples for the industry the company operates, and suggestions for employees on how to prevent fraud in their area of expertise.  Among the most vital elements to educate employees is how leadership will respond in the event fraud is detected.

An ex-felon spoke specifically on her successful embezzlement of funds from her employer.  The keys to her success included a lack of segregation of duties and a lack of management oversight as it pertains to financial reporting.  Her employers trusted her and simply did not perform detailed review and approval of bank statements, credit card activity and overall financial statements.

Lecturer Marcus K. Rogers, ACE, CCI, CISSP, DFCP, PhD from Purdue University provided several hot topics related to the fastest growing crime in the United States: identity theft.   There is a victim to identity theft every three seconds.  There are several simple steps that individuals can take to help avoid it including: not responding to suspicious emails or phone calls, shredding personal documents in lieu of recycling and monitoring credit ratings on a monthly basis.

The term “fraud” and everything it stands for has become significant in the business world.  Unfortunately, it doesn’t seem to be going anywhere soon.  If you would like more information on how to better prepare your organization as it relates to fraud detection and prevention, please contact Sarah Seacat, Audit Manager and Certified Fraud Examiner for Alerding CPA Group at 317-569-4181 ext. 235 or sseacat@alerdingcpagroup.com.  Alerding CPA Group is an Indianapolis-based public accounting firm. Visit our website: www.alerdingcpagroup.com.

This post was written by:

Sarah Seacat, CPA, CFE
Audit Manager

Sarah is responsible for reviewing, planning and participating in fieldwork as well as client management regarding annual financial reporting and general consulting services. She is also a Certified Fraud Examiner and specializes in employee benefit plans, litigation support services and works with many not-for-profits throughout Indiana.
See Sarah Seacat’s Full Bio ►

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