When an internal fraud (one committed by employees) occurs at a company, the natural reaction is to assume that an investigation must be started immediately. After all, it is important to determine who was involved, exactly how the fraud was committed and covered up, and what evidence exists to prove …
Schemes that involve the skimming of money are very difficult to detect, investigate, and ultimately prove. These types of schemes are carried out before money is recorded in a company’s accounting system. Because of this “off-books” nature of the crime, little to no trail is created for investigators to follow. …
The notes to financial statements are often lengthy and boring. But they can provide very important information about a company. On the most basic level, they provide details behind the company’s numbers. But they can also provide clues to fraud or other irregularities that may be occurring. Tracy gives a …
A while back we talked about behavioral red flags of fraud, which are the signs that someone might be involved in a fraud at work. Some of the most common red flags are living a lifestyle that exceeds a person’s earnings and unusual attitudes on the job (being combative, possessive …
After a company has experienced internal fraud and has investigated the situation, how do they address the issue of fraud prevention? Moving forward after an internal fraud requires that management actually make good on promises to prevent future frauds. It is sometimes difficult to get management to make changes, because …
When consumers think about investigating fraud, they do not usually think of the investigation as part of an overall plan to reduce fraud in a company. An investigation is typically seen as a reactive process that is only engaged in when a major problem is identified. Fraud investigations are representative …
Education is a highly effective fraud prevention technique for companies. Studies have shown that companies with anti-fraud educational programs in place can cut their fraud losses in half. By educating employees, management is giving them the tools to help look for and stop fraud. This information helps them know what …
By far the most common way that executives manipulate financial statements is through the overstatement of revenue. The reason is simple: It’s the easiest way to improve the appearance of the company’s financial condition. Revenue can be inflated by doing things such as: Booking fictitious sales Holding the books open …
Cost-saving measures are always attractive to businesses. If a company with annual revenue of $10 million could eliminate a $500,000 expense, would management be interested? Internal fraud prevention could be the key to saving money in precisely this way. Experts estimate that companies lose about 5% of their revenue each …
There are a number of common signs that we may see when someone is engaged in financial fraud within a company. Tracy talks about the behavioral red flags for fraud in this video, which are also summarized below:
