Posts Tagged ‘business fraud’

National ID Theft Awareness Month: Get in the Know

Saturday, December 26th, 2015

Stop Criminals From Hijacking Your Identity With These Top 5 ID Theft Prevention Posts

ID Theft Awareness | Rea & Associates | Ohio CPA Firm

Identity theft is a scary thing and you don’t want to become a victim. Take some steps now to protect yourself in the future.

December is National ID Theft Awareness Month and the fraud prevention team at Rea is a wealth of information when it comes to sharing great tips to help taxpayers protect their identities from fraudsters. Instead of scrolling past posts in our expansive article library or award-winning blog, we’ve compiled this Top 5 list to make your search for information easier. Read on to discover how you can prevent cyber criminals from hijacking your identity all year long.

Read Also: Let’s Talk About The F-Word

  1. WARNING: Tis The Season To Practice Safe Online Shopping Habits: While it may be the most wonderful time of the year, cyber criminals are looking for ways to stuff their own stockings – at your expense. The holiday season is also a busy time of the year for scammers because, in general, more money is being spent and more people are clicking through cyberspace for the best deals and tracking their purchases. Find out what you can do to keep your identity safe this Holiday season.
  2. Cyber Crime: It Can Happen To You: Fraudsters don’t take holidays. In fact, they tend to be more active this time of year because they believe we are more likely to let our guards down. I don’t intend on falling for any of their traps, and I encourage you to do the same.
  3. Malware Threat Spreads To Smart Phones: Researchers and IT security experts from ESET, a global IT security company, recently announced that they had discovered a malware application that is designed to encrypt files and change PINs on Android devices in the United States. In return, victims are demanded to pay up to the tune of $500. Only then will hackers provide users with the recover key. Keep reading to learn how you can protect yourself.
  4. Should I Still Be Concerned About Identity Theft And Tax Fraud?: Identity theft and tax fraud are problems that show no signs of stopping. In 2015, in an attempt to provide an added layer of protection, taxpayers in Ohio had the opportunity to get up close and personal with the Ohio Department of Taxation’s (ODT) newest fraud safety measure – the Identification Confirmation Quiz. Read on to see how this quiz has helped reduce fraud in Ohio.
  5. How To Recover From Identity Theft & Refund Fraud: Suspecting, and then confirming, that you’ve had your identity stolen is a nightmarish scenario. It combines one of your worst fears, losing your wallet or purse, with all of the work of replacing the things that were lost. It can be so overwhelming you might be wondering: “Where do I even start?” We can help you answer that question.

Identity theft is a scary thing and you don’t want to become a victim. Take some steps now to protect yourself in the future.

Want to learn more about keeping your identity safe? Email the team at Rea & Associates, our fraud prevention specialists can be an important of keeping your information protected.

By Joe Welker, CISA (New Philadelphia office)

Looking for tips to secure your business from fraudsters? Check out these posts:

Fraudulent Credit Card Transactions Will Become Merchant’s Problem On Oct. 1

Who Is That Email Really From?

Businesses Beware: Sloppy Data Security Could Cost You

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Will An Audit Find Fraud In My Business?

Thursday, September 10th, 2015
Fraud in My Business - Ohio CPA Firm

Your annual audit isn’t designed to detect fraudulent activity, but if across suspicious transactions are discovered a fraud detection expert should be called in.

For the same reason you wouldn’t expect your eye doctor to repair your tooth, you shouldn’t depend on your annual audit to detect occupational fraud in your business. A financial statement audit validates your financial records and provides reasonable assurance that they are materially accurate. It does not look for fraudulent activity.

Of course, if your auditor comes across suspicious transactions or questionable information, they will certainly share their findings with you. In addition, a good auditor will be able to recommend a fraud detection expert to help you dig deeper into the questionable activity.

So, if your audit won’t detect fraud, how will you know if it’s happening in your organization? 

According to the Association of Certified Fraud ExaminersReport to the Nations on Occupational Fraud and Abuse, only 3 percent of the nearly 1,500 reported cases of occupational fraud were detected by an external audit. According to the study, employee tips continue to be the most common way in which fraudulent activity is reported – usually through a fraud reporting hotline.

Your employees are likely honest, hard-working individuals who would never do anything to jeopardize your business. But until you empower them with a secure, anonymous outlet to tip off this behavior, you will never truly know for sure.

Are you serious about protecting your business from fraud? Learn more at www.reacpa.com/red-flags or contact me directly.

This article was published in the September 2015 issue of Columbus Business First – Ask The Expert.

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Where There’s Smoke, There’s Fire: 5 Internal Control Tips That Can Save Your Business From Fraud

Monday, March 30th, 2015
Prevent Fraud With Internal Controls - Rea & Associates - Ohio CPA Firm

When you implement internal control components into your management strategy, you not only deter fraudulent behavior, you help improve the overall quality of your financial statements, which could result in improved transparency, fewer external audit findings and even additional growth and sustainability. Start establishing internal controls today by incorporating these five components into your daily business or organizational activities.

Will the lack of internal control procedures result in the untimely demise of your business or organization? Studies show that if you don’t take action against fraudulent behavior today, tomorrow could be too late. The term “fraud” covers a lot of ground and includes actions that ultimately affect the accuracy of your financial statements. In fact according to the Association of Certified Fraud Examiners (ACFE), entities without internal control procedures are more likely to make errors on their financial statements and more likely to be victims of fraud, which is why it is so important for you to protect your business or organization with procedures that ensure accuracy and reliability of these records.

“The presence of anti-fraud controls is associated with reduced fraud losses and shorter fraud duration. Fraud schemes that occurred at victim organizations that had implemented any of several common anti-fraud controls were significantly less costly and were detected much more quickly than frauds at organizations lacking these controls” (ACFE, 2014).

Read: Fraud Hotlines Deter Occupational Fraud

Improve Accuracy, Eliminate Fraud

When you implement internal control components into your management strategy, you not only deter fraudulent behavior, you help improve the overall quality of your financial statements, which could result in improved transparency, fewer external audit findings and even additional growth and sustainability. Start establishing internal controls today by incorporating these five components into your daily business or organizational activities.

  1. Control environment – There’s no doubt about it, when it comes to setting the tone of your business or organization, all eyes are on you. Employees, volunteers, management and even the general public are more likely to “walk the walk” AND “talk the talk” if they see that you hold them and yourself to the same expectations. When leaders demonstrate a good ethical and moral framework, appear to be approachable about all issues and a commitment to excellence, nearly everybody takes notice and adjusts their behavior accordingly. It also helps to develop a rapport with your management team to encourage engagement throughout all levels of leadership.
  1. Risk assessment – Whether formal or informal, a risk assessment is critical to the process of identifying areas in which errors, misstatements or potential fraud is most likely to occur. By conducting a thorough risk assessment, you can identify which control activities to implement.
  1. Control activities – The best way to safeguard your business or organization is to segregate duties. This means that you should have different employees managing different areas of the company’s accounting responsibilities. When you put one person in charge of your accounting process you are freely giving them the opportunity to alter documents or mismanage inventory – and it’s a clear indication that you have weak internal controls. Dividing the work among your other employees is critical to the checks and balances of your company or organization. It’s also a good idea to develop procedures for recording, posting and filing documentation. Here are a few activities to get you started:
    1. Reconcile bank statements.
    2. Require documentation with expense reports.
    3. Match invoices with the goods and services you received prior to paying off your accounts payable balances.
    4. Make sure the person who has access to your business assets is different from the person responsible for the accounting of those assets, which will establish a form of checks and balances.
  1. Information and communication – Providing your employees with information about the internal control process and the resources available to them is a critical component to your success and the overall success of the internal control activities. In fact, simply knowing there are certain controls in place to promote accuracy and prevent fraud is enough to stop problems before they even start.
  1. Monitoring activities – Your job doesn’t end at the implementation of your internal control procedures; in fact, it’s just beginning. For your internal controls to work (and work well) you must establish your monitoring activities – and monitor frequently. Establishing internal controls is great, but they will have no effect if you neglect to monitor them. Furthermore, your internal controls should grow with your business or organization to ensure their long-term effectiveness.

Risk management and internal controls are necessary for the long-term success of every business and organization and a financial statement audit is a great way to provide you with insight into the internal controls of your organization or business. This kind of review structure can potentially reveal problems you didn’t even know were there – including fraud. But what if you are not planning on conducting an audit on your financial statements this year? Another option could be to work with a CPA who can help you document an understanding of the design and effectiveness of your internal control policies as a way to reassess your current strategies and identify areas for improvement. Email Rea & Associates to find out what options are available and how internal controls can put a stop to fraud in the workplace.

By Christopher A. Roush, CPA (Millersburg office)

 

Related Articles

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Fraud Prevention Through Risk Assessment

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Fraud Hotlines Deter Occupational Fraud

Monday, August 25th, 2014

When it comes to your business or organization, you are passionate about making sure your staff embodies your mission and objectives. You take care to select only the best candidates; and when you find them, you conduct thorough interviews, background checks and offer extensive training and timely performance reviews. Months later, now that you have invested significant resources into finding, training and polishing your new employee, you can finally rest easy knowing that you created a team dedicated to common goals and objectives – right?

Fraud Happens

In its most recent version of The Report to the Nations on Occupational Fraud and Abuse, the Association of Certified Fraud Examiners (ACFE) analyzed 1,483 cases of occupational fraud, which resulted in losses totaling more than $3 billion. Of those cases, the ACFE found that businesses with 100 employees or less are more susceptible to financial losses as a result of the three categories of occupational fraud – corruption, asset misappropriation and financial statement fraud.

Here’s A Tip

Maybe, like so many other business owners, you have already considered these facts and have taken steps to deter fraud in your own offices by establishing and implementing codes of conduct and external audits. While those measures provide a good foundation, you may be surprised to learn that of the nearly 1,500 cases of fraud that were reviewed, auditing only revealed a few instances of fraud. On the other hand, 42 percent of these cases were detected by tips. These tips were frequently reported on fraud hotlines and resulted in a 50 percent quicker response time when it came to detecting and stopping fraud.

The Value of a Fraud Hotline

Be proactive about fraud prevention, instead of reacting when you’re caught in the middle of it. A fraud reporting hotline service, such as Red Flag Reporting, has helped clients stay informed about what’s going on in their businesses. Services like Red Flag provide businesses with an opportunity to focus on building relationships, increasing revenue and improving community outreach instead of chasing down occupational fraud in the workplace.

Fraud hotlines are utilized by small and large businesses alike and can help identify and deter other types of unethical behavior before it grows out of control. Fraud hotlines can result in:

  • Fewer OSHA violations
  • Lower Workers’ Compensation costs
  • A decreased likelihood of employment practices lawsuits
  • Zero-tolerance of discrimination in the workplace

Not all employees are bad and not everybody is looking for an opportunity to financially ruin their employer. In fact, fraud hotlines are great because they prove that you are have a team made up of responsible, honest, hard-working men and women. These professionals are the eyes and ears of your business or organization and you not only depend on them to help identify instances of fraud, you need them to report issues to you before they explode into situations that severely damage your financial well-being, employee morale and reputations. By providing your team with a hotline, they will be even more inclined to provide you with a tip or two without feeling like they are rocking the boat.

Are you concerned about the potential for fraud in your organization? Email Rea & Associates to learn more about how a fraud hotline could work for you.

Author: Annie Yoder, CPA, CFE, CFF (New Philadelphia office)

 

Related Articles:

Fraud: Could It Happen To You?

How Can Analytics Help Reduce Fraud Risk At Your Business?

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How Can Analytics Help Reduce Fraud Risk At Your Business?

Friday, April 25th, 2014

Whether it’s due to limited resources or staffing, you may find it difficult to find time to closely review the financial activity of various departments within your business. But here’s the thing: not doing detailed reviews can leave your business exposed to increased risk of error or fraud. Incorporating analytics into your review process can be an efficient way to detect errors and fraud and will allow you to identify areas of risk within your business. Analytics are frequently part of audit procedures, and compare the correlation between key statistical data and actual financial activity.

How To Use Analytics In Your Reviews

  1. Identify the information. Identify the department, segment or line item you want to review and determine a time period that will allow the most effective review. Analytics can be used to compare financial activity on a monthly, quarterly or annual basis. Determine what information will allow for the most effective review. For example, if you’re reviewing the revenues related to food service operations you may want to breakout the revenues by type (i.e. lunches, breakfast, a la carte, adult).
  2. Identify the primary driving factors. The most important step in an analytic is identifying the primary factors that will cause significant changes in the activity you are reviewing. Use the changes in those factors to set expectations for the amount you expect the actual financial activity to change. Continuing with the example above, if you noticed the number of lunches served increased 10 percent in the current month compared to the previous month then you would expect the revenues to correlate with that change.
  3. Review the results. Compare your expectations to what actually happened. Based on the example I’ve been using, if your actual revenues decreased by 2 percent then you will want to investigate this change further. If actual revenues increased by 9 percent then you may determine the variance is acceptable and you don’t need to investigate any further.

The Discovery Of Potential Errors

If after you’ve compared the results of the analytics and identified a few areas that didn’t meet your expectations, what do you do next?

  1. Contact the person responsible for the area you reviewed. Determine if there are additional factors that would have caused the variance from your expectations.
  2. If you have determined there are no additional factors or what was communicated to you was not reasonable, you may want to consider a more detailed review. Theoretically, if you have considered all factors in your expectations, the only plausible explanation at this point for a variance is a misstatement probably due to error or fraud.
  3. If you have identified an error, review the controls and processes in place to determine what caused the error. This is where you can identify steps to improve the control strength to prevent future errors.
  4. Inform your auditors of the results of your analytics and the areas of risk you identified. This will allow your auditors to focus on these areas and provide more value to your audit. Your auditors will more than likely ask these questions and you’ll already know the answers.

Using analytics within your business will allow you to properly allocate more of your time and resources to the areas with the most risk. You will be able to efficiently identify the riskier areas and make the necessary improvements in processes and controls to address the risk.  This can prevent possible audit findings, adjustments and can even help prevent fraud.

Analytics and Financial Review Help

If you are looking to step up your game as it relates to financial reviews within your company, contact Rea & Associates. Our team of Ohio government auditors can help you incorporate analytics into your reviews so you can get a better picture of how funds are being used throughout your organization.

Authors: Chad Gorfido, CPA (Medina office), and Annie Yoder, CPA, CFE, CFF (New Philadelphia office)

 

Looking for more information on how to reduce fraud risk within your business? Check these articles out:

Have You Assessed Your Fraud Risk?

Do You Subscribe to a Fraud Hotline?

 

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