The Exuberant Accountant - Scott Heintzelman

Register today for McKonly & Asbury’s 2011 Risk Management and Fraud Seminar! With great feedback from last year’s seminar, we are once again hosting this seminar with new topics geared towards learning about threats to your business and how to minimize those risks.

We are proud to welcome back Scott Sutherland, Special Agent of the FBI, to return and share his knowledge again! 

Sponsored by Citizens Bank, this seminar will take place on Friday, September 16, 2011 at the Radisson Penn Harris at 1150 Camp Hill Bypass in Camp Hill, PA.

Registration and breakfast will begin at 8:00 am and the seminar will run from 8:30 am – 3:15 pm with lunch provided at noon. There is a $50 registration fee and CPE credits are available. 

Topics include: 

• Fraud Risk Assessment – Looking for Exposure
• Fraud Trends – What’s Hot, What’s Not
• The Many Faces of Risk
• Demystifying Bank Fraud Protection
• Insurance Fraud

Are you more at risk for fraud? The percentage of reported corporate frauds compared with all other reported incidents increased to 20.3% in the first quarter of 2011, according to data from 1,000 organizations worldwide.

Of the approximately 30,000 ethics and compliance related reports, 6,100 concerned accounting and auditing irregularities, embezzlement, kickbacks and other forms of fraud. 

The first quarter results are slightly below the all time record for fraud reporting which took place in 2009.  One thing to keep in mind with this kind of reporting is that the fraud is only reported during this period and most likely the actual fraud started months or years ago. 

Good news for entrepreneurs, our firm (McKonly & Asbury) is kicking off our summer webinar series. The initial webinar will focus around fraud in the workplace and how the economy is playing a part in the increase of fraud activity. 

A few of the topics include: 

Fraud in the workplace.

Process improvements within your accounting department.

Managing your sales tax liability. 

This webinar will last one hour and will be held on Thursday, June 23 at 2:00 PM EST. CPE credit is available and there is no cost to participate. 

Reserve your Webinar seat now at: 

https://www1.gotomeeting.com/register/740157392 

After registering you will receive a confirmation email containing information about joining the Webinar. If you have any questions, please feel free to contact me.

Someone once asked Willie Sutton (the infamous bank robber) why he robbed banks. His answer was simply “because that is where the money is.” This same rule applies today. The easiest and most common fraud involves cash.  

We all want to trust our employees and always think the best of people; however, statistics from the Association of Certified Fraud Examiners prove that employees do steal from employers. These losses can be very large and surprisingly easy to do. 

Poor business practices and a lack of supervision create an environment for dishonest employees to use a variety of methods to steal from their employers. The really amazing thing is that most of the time it can be prevented.

The majority of fraud cases we work with involve employees who handle cash for the organization. These employees may be cashiers, bookkeepers, supervisors, etc… They all have one thing in common: every day they handle cash that belongs to someone else. 

 Last week our firm hosted a Security and Fraud Prevention Seminar which was highlighted by FBI Special Agents Scott Sutherland and David Clark. During the training we learned about the many different threats to your business.  Things like: 

1. Phishing – the art of socially engineering an individual into giving up their personal information.
2. Pharming – a scamming practice in which malicious code is installed on a personal computer or server.
3. Keylogger – a keystroke logging action of tracking the keys struck on a keyboard, typically in a covert manner so that the person using the keyboard is unaware that their actions are being monitored.
4. Skimming and Pin Capture -  is a method used to capture data from the magnetic stripe on the back of ATM and Credit Cards.
5. Affinity Fraud – scams that prey upon members of an identifiable groups.
6. Mortgage Fraud - A knowing misrepresentation of the truth or concealment of a material fact in a mortgage application to induce another to approve the granting of a mortgage.

Special Agent Sutherland, Clark, and the other speakers spent a considerable amount of time not only warning about these many dangers, but how to minimize those risks. If you would like a copy of the material shared at the session, please contact me.

Thought you knew your accounting department? Did you place trust in them to handle corporate assets?  If the answer to these questions is yes, be aware that the accounting department is the most common location for fraud inside your organization, this according to the Association of Certified Fraud Examiners Report to the Nation.

Even though internal controls are in place, the report states, they often are not enforced or insufficient to keep occupational fraud from occurring.

Here are some helpful tips and best practices from the Fraud Association to help keep your organization protected from fraud:

Recently someone asked me why accountants use “two-sided” entries? It really is simple, but it requires some history. When Luca Pacioli, “The Father of Accounting,” wrote his foundational book on double-entry bookkeeping 5 centuries ago, his theory was that these “balanced” transactions would serve as a proof of accuracy.  We call this debits and credits within the accounting equation, assets = liabilities + equity. The accounting equation serves as a kind of error-detection system: if, at any point, the sum of debits does not equal the corresponding sum of credits, then an error has occurred.

This is important when it comes to occupational fraud and misappropriation of assets.  According to the Association of Certified Fraud Examiners, most frauds were committed by the accounting department or upper management and one of the most common is Accounts Payable schemes.

Fraud is a risk that most everyone is aware of in business, but it is addressed in different manners by different people at different times. This type of inconsistency can lead to holes in your company's protection against fraud. Taking a look at the risks is the first step in addressing the issue, and payroll fraud prevention is the focus today.

Who doesn't want a raise? That nice feeling when you receive a paycheck and it is a bit larger than the prior one. But when that paycheck or bonus was not approved or authorized, management will probably take issue when you cash that check. Within your business, you should be aware of the following schemes and how they might be perpetrated. Otherwise, how will you act to detect such frauds or prevent them from occurring in the future?

Here is a link to a story about a long standing employee looking to make a few more dollars.  If you click on the link you can read all the details of how the well respected office manager was able to steal $300,000 over a 5 year period. This organization had some control weakness (such as no segregation of duties) and the office manager was able to steal with little resistance.  Here is a list of controls that your organization can look for:

If you can’t answer “yes” to the question: “Are you using Positive Pay?” you may be unintentionally putting your company at risk.  Fraudsters can easily obtain blank check stock from an online vendor or your local office supply store and forge vendor checks.  Your bank doesn’t know all your vendors and these checks are often easily cashed without any questions being asked.

Depending on the size and complexity of your organization, this fraud may not be found until the bank reconciliations are done. This gives the fraudster plenty of time to cash several checks and disappear.

 
What if someone stole money from your bank account and the bank was not responsible for the loss?  It could happen.   By now, most computer users have heard of keyloggers which record all key strokes one does on their computer. These keyloggers come in various forms. Some need a wealth of IT knowledge to implement and others, your five year old child could implement.

Starting off with the less complex would be the ones that plug into the back of your computer between the actual computer and the keyboard. These are easily installed and removed without the user’s knowledge. After all, how many times do you look at the back of your computer?  A maintenance worker, co-worker, or janitor could easily install these and capture all your usernames and passwords that you keyed in during the time the small device was installed.