Detecting Fraud
- posted by KLR
How would you like another 7% to drop to the bottom line? Of course you would, right? Well, according to the Association of Certified Fraud Examiners 2008 Report to the Nation on Occupational Fraud & Abuse, that is the amount participants in the survey estimated was lost annually due to fraud. There are several other interesting statistics that came out of the survey, including the fact that the median loss was $175,000, and more than a quarter of the more than 959 cases studied suffered losses of over $1 million. With the economy continuing to decide on a direction, would you even want to suffer a loss of $10,000? I didn’t think so.
Now I know what you’re saying to yourself, my accountant is on the lookout for fraud so I have nothing to worry about. If you think that is the case, you may be in for a surprise. Bernie Madoff had an accountant too, who audited his company’s financial statements and issued a “clean” opinion on them. Remember Arthur Andersen? I know it’s been several years, but they were responsible for auditing Enron (and went out of business as a result of Enron’s collapse). I know these are two high profile examples, but the fact is, most frauds are uncovered by tips, and not by auditors.
So what does this all mean for you? What can you do to make sure your company is not the next to grace the front page with a story of financial malfeasance? There are a lot of different ways you can protect your assets, and it starts with taking a fresh look at your internal controls and evaluating where your exposure lies. In my next post I will start to explore the different types of internal fraud. Until then, remember, it’s always cheaper to prevent fraud than to try and recoup your loses after its been detected.
By. John Surrette, Jr., CPA, MBA
Senior Audit Manager
Now I know what you’re saying to yourself, my accountant is on the lookout for fraud so I have nothing to worry about. If you think that is the case, you may be in for a surprise. Bernie Madoff had an accountant too, who audited his company’s financial statements and issued a “clean” opinion on them. Remember Arthur Andersen? I know it’s been several years, but they were responsible for auditing Enron (and went out of business as a result of Enron’s collapse). I know these are two high profile examples, but the fact is, most frauds are uncovered by tips, and not by auditors.
So what does this all mean for you? What can you do to make sure your company is not the next to grace the front page with a story of financial malfeasance? There are a lot of different ways you can protect your assets, and it starts with taking a fresh look at your internal controls and evaluating where your exposure lies. In my next post I will start to explore the different types of internal fraud. Until then, remember, it’s always cheaper to prevent fraud than to try and recoup your loses after its been detected.
By. John Surrette, Jr., CPA, MBA
Senior Audit Manager
Labels: Accounting, Audit, Fraud, KLR, Surrette
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KLR is one of New England's premier accounting and business consulting firms. With 160 team members and offices in Providence, Boston, Waltham and Newport, KLR provides a wide range of services to both individuals and businesses.
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