HOW TO PREVENT AND DETECT EXPENSE ACCOUNT FRAUD
It’s hard not to have noticed all the corporate executives and politicians who have been accused of expense account fraud. With executive salaries, do they do it because they have financial problems? Probably not, they could be living beyond their means, but a more reasonable explanation is greed. That they felt they were entitled to fudge their expenses and they could get away with it. They have justified it by thinking this is acceptable behaviour or rationalizing everybody is doing it so why not me.
Whether you are in manufacturing, retail or a service industry. Your employees steal from you for all the same reasons. Criminologists state that three elements must be present in order for employee theft to occur,
1.Motive:Employees may have financial, gambling, substance abuse problems, or may just feel they are unappreciated or under paid at work.
2.Opportunity:The lack of security control systems and clear cut policies and procedures. Make it easier to steal from you.
3.Justification:Is simply the employee justifying his actions by saying I will put it back, it's not really stealing or they want me to take it.
Shoplifters- The National Retail Federation reports that one out of every ten shoppers attempts to shoplift. There are three categories of shoplifters:
1. The average amateur shoplifter who accounts for 75% of the arrests.
2. The full-time amateur shoplifter who accounts for 20% of the arrests.
3. The professional shoplifter who accounts for 5% of the arrests.
Common Characteristics of a shoplifter:
- Often carries a bag or backpack into the store.
- Appears nervous or startled when approached.
- Constantly looks around.
East Coast Fraud & Risk
Management Group - www.eastcoastfraud.ca
Most organizations don’t give much thought to their business
reputation until something goes wrong. One of the reasons is that a business’s
reputation is difficult to identify, analyze and put a value on. It is an
intangible asset that does not show up on the balance sheet, except perhaps as
Goodwill when one company buys another company. Your reputation is what brings
customers to you, keeps your customers coming back, and why existing customers
will refer friends and family to your business.
How to Use Corporate Culture to Prevent
Corporate Culture can be
described as “The beliefs and values which are understood by employees.”
Culture is like an invisible energy field that surrounds your organization and determines
how people think, act and see the world around them.
Some facts about corporate
1. Culture determines the “way of
life” for employees who often take its influence for granted.
2. Over time culture is fairly
stable and resistant to quick changes.
REDUCING THE RISK OF BUSINESS IDENTITY
Most of us are familiar with personal identity theft, where
an individual has their identity stolen, but business owners may not be as
familiar with Business Identity Theft. Business Identity Theft is not the theft
of customer’s personal information, but is someone assuming the identity of the
business, that has no right to, for illegal purposes.
The purpose is to gather information on the company and then
submit fraudulent business records and tax filings, causing significant
financial losses to the company and defrauding their creditors, suppliers and
No where in an organization is
the opportunity for fraud the greatest and the catastrophic losses the highest than
in the Accounting/Bookkeeping department. The accounting department handles large inflows
and outflows of cash and cheques, that a dishonest employee can find numerous
ways to commit fraudulent acts. Not only can they commit the fraud, but they
also have the means to conceal it, because they have too much control over the
accounting function and the secrecy that surrounds the financial information.
How Not to Lose Your Life Savings to Fraudulent
As a former stockbroker turned
fraud examiner, I am always dismayed when I hear about another investor getting
swindled out of their life savings. It hurts the reputation of not only the
firm involved but the industry as a whole. The securities industry is one of
the most highly regulated industries in Canada with Investment Advisers
being carefully screened, regulated and monitored. The firms are also highly
regulated, by Provincial Securities Regulators, National Securities Regulators
and their in house Compliance Departments.
We are pleased to have added a Blog to our site. We will be covering topics that affect Small & Medium Enterprises such as Investment Fraud, Corporate Culture and Fraud, Corporate Identity Theft and Enterprise Risk Management. We encourage our many clients and friends to offer suggestions and comments. More to come shortly.
We are excited about adding a blog to our site. It is our intentions to cover topics in Fraud and Risk Management that affect Small and Medium Enterprises. Planned topics will include Investment Fraud, Corporate Culture and Fraud, Retail and Hospitality Fraud, and Enterprise Risk Management.
We welcome comments from our many friends and clients. Check back later for our first blog.