Fraud Investigations and Fire Drills

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Fire drill training in grade school always included the mantra, “Stop, drop and roll.” This was the prescribed course of action if a child was on fire. Professionals sometimes refer to tragedies in companies as fire drills. When a major internal theft occurs, it is akin to a fire, and needs to be met with swift action.

Where there is smoke, there might be fire. Numerous red flags can point to internal theft: missing or altered documentation, unexplained accounting entries, excessive customer complaints about account balances, and disregard for policies and procedures.

While one red flag alone does not necessarily mean a fraud has occurred, numerous questions increase the suspicion of internal fraud. It is important to quickly identify the red flags, determine who might be responsible, and take quick action to extinguish the problem. Continue reading

The Face of Forensic Accounting

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Tracy Coenen recently appeared in Milwaukee Magazine’s Faces of Milwaukee feature.

When you need to find lost or hidden money, forensic accountant Tracy Coenen is the detective you want on your side. She doesn’t just add up the numbers, she digs into the details to find out what really happened with the money and who has it.

Consider her a financial crime fighter: part accountant, part fraud investigator. Tracy utilizes background checks, spreadsheets, and financial paper trails to trace money through a complex web of entities and accounts. She uses these tools and more to investigate cases of corporate fraud and embezzlement, calculate damages in business deals gone bad, and help divorcing spouses figure out how to divide the money equitably.

It’s a task Tracy isn’t afraid to take on as she uncovers deals made in the dark and brings them to light. Companies find out who within their own trusted network took their money and how the crime was committed.

Divorcing spouses find money that was hidden and receive a fair share of the assets. Along with being a Certified Public Accountant, Tracy is certified in financial forensics, has a degree in criminology, and holds a Master of Business Administration. She has written four books on forensic accounting and fraud investigation, and has taught numerous forensic accounting courses to accountants and attorneys. More importantly, Tracy has gotten her hands dirty making sense of complicated financial situations for everyone from jilted spouses to ripped-off investors.

It’s a thankless job sometimes, being the one to reveal betrayal and deceit and outright fraud, but for Tracy, it’s a life dedicated to living in the truth, and finding it by any means necessary.

Recreating Books and Records For a Tax Audit

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You are being audited. These are some of the most dreaded words an individual or business will ever hear from a state or federal tax auditor. They invoke fear, panic, and sometimes anger.

Most of all, they create a need for documentation. Every number could be scrutinized. That means documentation must be produced to support the amount of each expense and the business purpose of the item.

Some of us are meticulous in our documentation, but if you are like most taxpayers, you have pockets of misplaced or destroyed data. Even worse, you may be in a situation where documentation was completely destroyed by a fire or flood. If you don’t have documentation, does that mean your deductions are automatically disallowed? Not necessarily. Continue reading

Fraud in Churches

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There may be nothing more disheartening in the world of fraud investigation than a church employee caught embezzling. Unfortunately, there are fairly regular news reports of financial fraud at churches. Fraud hits churches hard. Many churches operate on shoestring budgets to begin with. A sizable fraud can put a church on the brink of financial collapse.

And it’s appalling to think this is happening in a place that many view as the most sacred and the most likely to attract honest people. Unfortunately, churches and other non-profits aren’t immune to fraud. In fact, they often set themselves up to be even more vulnerable to fraud than your average business.

Diverting Donations

Historically, churches were often run largely by pastors who had little to no business training. But the time has come for churches to get serious about operating like real businesses. Continue reading

Net Worth Method of Proof: Calculating Income in Divorce Cases

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In divorce cases, forensic accountants can use the “net worth method of proof” to calculate income. This is used to search for hidden or unreported income. Rather than simply taking a spouse’s word for it that his or her income is X, we can do an analysis like this to try to verify the claimed income.

This method of proof is one part of a lifestyle analysis, in which we are analyzing the party’s lifestyle and determining if that lifestyle matches the income that is being reported. This video explains the process of completing the net worth analysis.

How to Commit Fraud and Get Away With It

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If a fraud is worth committing, it’s worth committing right. A little extra effort in the commission of a fraud can go a long way toward profiting from it as long as possible. Follow these recommended steps to increase your chances of successfully pulling off a fraud at work.

Don’t Act Suspicious

Don’t be a complainer. Don’t blatantly fight the rules. Appear to go along with policies and procedures, and don’t cause trouble for your co-workers or supervisors. You don’t want to appear to be disgruntled or seem like a problem employee. Those types of employees cause suspicion.

Do not discuss or display any dishonest behavior. Don’t talk about how you screwed your neighbor out of some money. Do not brag that you got one over on the auto repair shop. Don’t tell people that you filed a false insurance claim. Never daydream out loud about stealing money from someone. Dishonest behavior in your personal life can make managers suspicious about your propensity to commit fraud at work. You don’t want to give them any clues.

Never make your money problems public. Don’t say that you’re underpaid, or complain about your raise, or brag that you do much more work than you’re paid for. You don’t want to make it seem like you’re unhappy or might steal money to get back at a company that treats you unfairly. Continue reading