There’s a good chance fraud may be occurring under your nose. How to get better at preventing it from happening on your watch.

Tracy L. Coenen – CFO Magazine

Internal fraud is a huge risk to companies. Experts estimate that on average it costs companies 3% to 5% of revenue each year. Especially when profit margins are thin, internal fraud can literally put some companies out of business.

But executives are prone to underestimating the amount of fraud that exists within their company. They want to believe that their internal controls are better, their employees are more honest, and their ability to stop fraud is more effective than that of executives at other companies.

Written by Tracy L. Coenen, CPA, CFF

Executives have the means to commit and cover up the largest frauds.

They have access to the information and computer systems, they have power over all employees and they have access to the money. The finance function is riddled with fraud risks and the company’s executives are in the best position to take advantage of those risks.

Because of the risk of losing large sums of money to fraud by executives, companies must ensure owners and boards of directors are actively involved in creating and maintaining an environment that is not conducive to fraud. This involves active oversight of daily operations, continuous monitoring of potential red flags of fraud and swift action when fraud is discovered.

As regulators focus on corruption crackdowns, companies are turning to compliance committees to help them stay on the right track.

Tracy L. Coenen – CFO Magazine

Do a Web search for corporate compliance committees, and you’ll get hundreds of thousands of results. As compliance issues move front and center thanks to the new U.K. Bribery Act and a renewed focus on the Foreign Corrupt Practices Act (FCPA), compliance committees have become a hot new topic.

Compliance Week – Melissa Klein Aguilar
A large school of thought has developed to support the argument that non-accelerated filers should be exempt from compliance with Section 404(b) of Sarbanes-Oxley, which requires external auditors to review and attest to the strength of a company’s internal controls.

But as much as non-accelerated filers denounce the burden of Section 404(b) compliance, they’re still confronted with one stubborn counter-argument: fraud happens.

Written by Tracy L. Coenen, CPA, CFF

Wisconsin Law Journal

Executives, consultants, and business analysts are currently asking themselves a critical question: Does a major economic downturn increase a company’s chance of being hit by employee fraud? The answer to that question isn’t immediately clear.

Fraud experts are often quick to theorize that difficult economic conditions naturally create a higher instance of workplace fraud. The problem with this theory, however, is that it can’t really be proven true or false.

Written by Tracy L. Coenen, CPA, CFF

Wisconsin Lawyer Magazine

There are two inexpensive and simple steps that can be taken to provide more oversight for the disbursement function at a law office. First, a partner needs to be actively involved in the process of issuing checks and payments. It’s not enough to simply glance at checks to vendors and immediately sign them. Before any check is signed or sent out, it should be compared to an invoice, credit card statement, or other documentation that will help verify the legitimacy of the payment. This reduces the risk that an employee pays a personal credit card with company funds or otherwise improperly issues a payment from the firm’s checking account.

Written by Tracy L. Coenen, CPA, CFF

Wisconsin Law Journal

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.

Written by Tracy L. Coenen, CPA, CFF

Resource Nation

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.

Written by Tracy L. Coenen, CPA, CFF

It might be hard to believe, but each and every day companies are losing money because they not only give employees opportunities to steal, they encourage it.

How? By not providing adequate oversight. A clerk, for example, sees that an error in an account wasn’t caught by anyone. A purchasing manager notices that no one is watching over his vendor relationships, and won’t know it if he establishes a fake account. Employees are not stupid. They know when they are being monitored and when their work is being checked. They know when they are working in an environment ripe for fraud.

The Business Journal of Milwaukee
By Barbara Bartlein

In the aftermath of Enron, WorldCom and Tyco, many companies have taken steps to protect their businesses from fraud. They have initiated new accounting procedures, complied with the Sarbanes-Oxley legislation and conducted better screening of new employees.