Private and public records offer a wealth of information to fraud investigators
On Balance – The Magazine for Wisconsin CPAs
Without information, a fraud investigation goes nowhere. There are abundant sources of information on people and companies, and as the Internet continues to expand, so does the accessibility of the information.
Doing a thorough fraud investigation often goes beyond just analyzing documents produced by the client. The best forensic accountants and fraud investigators are able to find additional sources of information to help crack the case. There is plenty of art to finding clues in an investigation, and it all starts with knowing what to look for and where to find it.
Private records Fraud investigations rely heavily on the availability of private records. In the typical business fraud case, helpful internal records could include financial statements, tax returns, sales and receivable records, expense documentation, proof of payments to vendors, or other information from a company’s accounting system.Continue reading
One of the biggest mistakes small business owners make in relation to fraud prevention at their companies is doing nothing. They often think that fraud prevention is too extensive and too expensive, so they opt to do nothing proactive to reduce fraud. The idea that fraud prevention is too difficult or too costly is simply not true.
While it is true that a full-blown fraud prevention plan at a company can be expensive to develop and implement, there are many inexpensive things small business owners can do to reduce their risks of fraud. So even if they can’t afford the best or most expensive fraud prevention solutions, there are still steps they can take to improve.Continue reading
Why should a taxpayer use the services of a forensic accountant when being audited or under criminal investigation? Tracy Coenen talks about the expertise a forensic accountant can bring to the case, specifically in evaluating the methods used by the IRS for determining income.
Ask a random group of attorneys what they think of social media, and you’ll get some funny looks. Several of them will turn up their noses, while an equal number will have only a vague idea of what you’re talking about. Although more attorneys are participating in social media, there is still a good bit of reluctance to get involved.
The phenomenon called social media is simply a category of online resources used by people to communicate with one another, research topics of interest, stay on top of current events, and market their businesses. It includes blogs, which may be used by professionals to write about news affecting their industries, promote their businesses and expertise, and engage in dialogue with others in far away places.
Sites like Facebook, LinkedIn, and Twitter are considered to be more pure social media than blogs. A blog can be created and maintained without interaction with other people, if that’s what the writer chooses. Facebook, Twitter, and other social media sites require interaction with others to make them worthwhile. On these sites, you will “connect” with people you know or are interested in, and you’ll be able to see updates they post about themselves and their companies, articles they’ve written, and articles they find interesting. You will be able to “like” or comment on their updates, and often engaging discussions follow.Continue reading
In November 2014, Marquette University professor of political science Dr. John McAdams criticized the instructor of a philosophy class (graduate student Cheryl Abbate) for allegedly shutting down discussion of a student’s negative opinion of gay marriage. Dr. McAdams wrote:
Abbate explained that “some opinions are not appropriate, such as racist opinions, sexist opinions” and then went on to ask “do you know if anyone in your class is homosexual?” And further “don’t you think it would be offensive to them” if some student raised his hand and challenged gay marriage? The point being, apparently that any gay classmates should not be subjected to hearing any disagreement with their presumed policy views.
Dr. McAdams opined:
Abbate, of course, was just using a tactic typical among liberals now. Opinions with which they disagree are not merely wrong, and are not to be argued against on their merits, but are deemed “offensive” and need to be shut up.
According to the Association of Certified Fraud Examiners, the overwhelming majority of frauds against organizations are committed by insiders.Yet, it would be a mistake to assume that most employees who steal are experienced criminals.
In fact, many, if not most, employees who defraud their employers are fundamentally honest.They just get themselves into difficult predicaments or have personalities that are more prone to breaking the law if given the opportunity.
There are hundreds of kinds of personal problems and personality traits that can cause a normally honest employee to “cross the line.” While the existence of one or two or even just a few such indicators doesn’t necessarily mean that a person is stealing, understanding the common behavioral red flags of internal fraud can be extremely helpful in protecting the organization from a variety of frauds.
IN A JAM Among the most common personal problems that can present red flags of fraud are substance abuse, gambling habits or other addictions.Continue reading
A few months ago, I was asked to beta test PerfectAudit software by Ocrolus.The software has used other names such as AuditGenius (auditgenius.com now forwards to perfectaudit.com) and Medicaid Genius. Promotional emails are being sent from the domain perfectauditpreview.com, which forwards to perfectaudit.com. The company is currently marketing to service providers in the divorce arena, and they say that firms such as Met Life, RGL, and Duff & Phelps are using the site for divorce cases.
The website bills Perfect Audit as a “game changer” for those who depend on data from bank statements and credit card statements. It’s a great concept! PerfectAudit will use OCR technology to pull the data off the statements, put the data into a searchable database, and you have access to data that is guaranteed to be 100% accurate.
But the product is terrible and doesn’t even come close to doing what they say it does. Here is what they say it does: Continue reading
I am a proud graduate of Marquette University (both undergraduate and graduate), and currently serve as an adjunct instructor in the accounting program. I love my alma mater deeply, but I cannot stand by and watch the treatment of Dr. John McAdams over the last year without saying something.
One of the last places you’d expect to find fraud is in a law practice. Like accounting, the practice of law is a profession in which ethics are of utmost importance. Accountants and lawyers are often too trusting of their fellow professionals, and therefore leave themselves open to the risks of fraud.
The issue of fraud isn’t limited to a law practice of a particular size. Larger firms experience fraud because there are so many people generating so many documents, that it’s easy for a fraud to get lost in the shuffle. Small firms become victims of fraud primarily because management puts too much trust in one or two employees and fails to properly supervise them.
According to the Association of Certified Fraud Examiners, the average workplace fraud costs $175,000. What would a theft of that size mean for your practice? Could your law office sustain such a fraud? The average workplace fraud goes on for two years before it is discovered. Could that be happening in your law firm?Continue reading
What is at the heart of almost every securities case, whether the case is pursued by the government or a private party? It is a trail of money. The difficulty in prosecuting or defending a securities case is the fact that there is voluminous financial data that must be culled, analyzed, and presented in a way that proves the case.
For the last three decades, securities and financial fraud cases have been evaluated by forensic accountants using manual processes. The financial investigators compared accounting data with source documents, ultimately trying to prove the source and use of funds.
This is complicated, especially in large cases (which are the ones the government most often cares about), because there can be a multitude of involved people, entities, bank accounts, and brokerage accounts. The process of understanding and organizing the flow of funds is complex, and it can take months or even years before plaintiffs or defendants know exactly what happened to the money.
Cutting-Edge Forensic Accounting
The world of forensic accounting is moving in a new direction, however. Fraud investigators are slowly beginning to use technology to analyze large volumes of financial data much faster, more efficiently, and more accurately than they have been able to do using traditional investigative techniques. The shift has been moving at a snail’s pace, however, but this provides significant opportunities for parties to litigation who are willing to embrace change and harness the power of cutting-edge technology.Continue reading