Fraud Briefs Archives - Page 17 of 24

03 Aug 2020

Fraud in the Family Business

Family businesses make up the vast majority of companies in the United States and produce 62% of the country’s gross domestic product, according to the Conway Center for Family Business. Generally defined as companies that are majority owned by a single family with two or more members involved in their management, family businesses can be a significant source of wealth. But they also potentially face higher fraud risk. Recent research published in the Journal of Business Ethics found that auditors assess the risk of fraud in the family business as higher than for non-family businesses. Here’s why, and how you can reduce that risk. Major obstacles involved Why might family businesses be more vulnerable to fraud than other companies? For one thing, prevention efforts can be hampered...

16 Jul 2020

Smart Software Can Find Fraud

Roger Rossmeisl, CPA

Fraud Briefs

Machine learning increasingly is being used to discover fraud schemes. Smart software can find fraud. With this type of artificial intelligence (AI), the technology learns or improves in accuracy through experience, rather than through additional programming. If you already use AI in your business, you’re probably somewhat familiar with how machine learning works. But here’s a quick overview of its application in fraud detection. New approaches needed More and more, businesses rely on digitization to deliver the goods and services their customers want. Unfortunately, digitization also makes it easier both for cybercriminals and stakeholders, such as employees, vendors and customers, to steal. Preventing fraud in the digital age requires new approaches. Machine learning is one such approach. Traditional rules-based fraud detection software flags transactions — such as...

16 Jul 2020

Behavioral Issues Could Mean Fraud

Roger Rossmeisl, CPA

Fraud Briefs

The recently released 2020 Association of Certified Fraud Examiner’s (ACFE’s) occupational fraud study, Report to the Nations, reveals that the most common behavioral red flag exhibited by fraud perpetrators is living beyond their means. Also high on the list are financial difficulties and unusually close relationships with vendors and customers. The bottom line is behavioral issues could mean fraud. Some of these signs may be tough to spot if you don’t work closely with an occupational thief. That’s why the ACFE report also looks at correlations between fraud and non-fraud offenses and human resources issues. When these issues are present, supervisors and HR managers may need to increase their scrutiny of an employee. Recognize red flags The vast majority (96%) of occupational fraud perpetrators have no previous criminal...

06 Jul 2020

Foiling Parcel Delivery Thieves

Roger Rossmeisl, CPA

Fraud Briefs

Even before the novel coronavirus (COVID-19) pandemic struck, Americans received a lot of packages. About 18 billion parcels were shipped in the United States in 2018, according to Pitney Bowes, and the parcel delivery industry has been growing at an average 4.7% each year. But given the recent “shelter in place” orders, 2020 may break records for services such as UPS, FedEx and the U.S. Postal Service. Not surprisingly, thieves and fraud perpetrators are looking for any opportunity to profit from what has become an essential service. Here’s what you should watch out for to assist you in foiling parcel delivery thieves. Porch piracy You may already be aware of physical package thefts by “porch pirates” — a crime that usually flares up around the holidays. A...

27 Jun 2020

Efforts to Corral Coronavirus Fraud

Roger Rossmeisl, CPA

Fraud Briefs

The COVID-19 pandemic has opened the floodgates to scam artists attempting to profit from sick, anxious and financially vulnerable Americans. Frontline efforts to corral Coronavirus fraud are being headed up by the Federal Trade Commission (FTC), U.S. Justice Department (DOJ) and other government agencies. Here are some of the fraud schemes they’re actively investigating — and the perpetrators they’ve rounded up. Peddling false hope The FTC has sent warning letters to almost 100 businesses for making scientifically unsubstantiated claims about their products. Companies from California to Virginia, Indiana to Florida have touted (mostly online or by phone) “treatments” for COVID-19, even though the federal government hasn’t approved any vaccines or cures for the disease. Letter recipients must stop making deceptive claims immediately and notify the FTC within 48...

25 Jun 2020

Non-GAAP Measures Can Be Misleading

Roger Rossmeisl, CPA

Fraud Briefs

Not all companies follow U.S. generally accepted accounting principles (GAAP). Many smaller businesses, for example, have adopted the AICPA’s Financial Reporting Framework for Small and Medium-Sized Entities because it’s easier to follow. Other businesses may use non-GAAP measures because they don’t believe GAAP provides readers of financial reports with enough information to make informed decisions. Non-GAAP accounting is, in a nutshell, any measure a company uses that relies on a methodology not included in GAAP. But not all measures are necessarily created equal. Some non-GAAP measures can be misleading, and have the potential to mislead investors, lenders and the public. History lesson Historically, U.S. companies have used non-GAAP measures sparingly. Yet according to financial data provider Audit Analytics, in 2017, 97% of financial statements produced by S&P 500...

18 Jun 2020

Give Employees a Voice to Report Fraud

Roger Rossmeisl, CPA

Fraud Briefs

Before the novel coronavirus (COVID-19) pandemic struck, employees who suspected occupational fraud in their organizations had multiple options for notifying their employers. For example, they could use interoffice mail to send information anonymously or meet with HR personnel in person. In today's work from home environment, do you give employees a voice to report fraud? Reporting options for employees working from home are more limited — particularly if they wish to remain anonymous. The current working environment only highlights the necessity for a fraud hotline or online portal that workers can access anywhere, anytime. If your business doesn’t already offer a confidential reporting mechanism, start thinking about how you can establish one. Limiting damage One of the best ways to give employees a voice to report fraud and...

18 Jun 2020

Protecting Remote Workers From Cyberattacks

Roger Rossmeisl, CPA

Fraud Briefs

Protecting Remote Workers from Cyberattacks

Many businesses were unprepared when the novel coronavirus (COVID-19) pandemic required them to close their physical offices and shift to remote operations. Your company, for example, may have had to scramble to set up a virtual private network (VPN) or move files to the cloud. And while adapting to working from home, employees may have let your usual security procedures slide. From a cybercrime perspective, working from home generally isn’t as safe as working in the office. So you need to look for ways for protecting remote workers from cyberattacks, and prevent criminals from gaining access to your digital assets. Here are five ideas: Invest in education. Require remote employees to participate in security-related training that covers “old-school” phishing scams as well as new COVID-19 variations. As...

15 Jun 2020

Paying Workers Under the Table is a Lose-Lose

Roger Rossmeisl, CPA

Fraud Briefs

Paying Workers Under the Table is a Lose-Lose

Paying workers under the table or with cash can save businesses a bundle in taxes. But the potential consequences are grave. Not only is this practice illegal and could result in severe financial penalties, but it also shortchanges employees. The novel coronavirus (COVID-19) pandemic has made this abundantly clear. As many laid-off workers who were paid under the table have learned, they don’t qualify for unemployment benefits if their state has no record of their employer contributing to the insurance pool. They may have trouble getting other financial assistance as well. You should protect your business and its workers by following the rules. Paying the piper In general, compensation is subject to federal income and employment taxes, as well as taxes that may be assessed on state and...

03 Jun 2020

Business Opportunity or Scam?

Roger Rossmeisl, CPA

Fraud Briefs

The first question you should ask yourself about anything that's too good to be true is . . . is it a legitimate business opportunity or scam. The investment “opportunity” could be anything from a new nutritional supplement to a foolproof method for "flipping" houses. But if the investment or product is advertised as “easy money” or promises immediate high earnings, beware. Although there are plenty of legitimate business opportunities out there, there are also plenty of fraudulent schemes that exist for no other reason than to steal your money. Simple or complicated These schemes can be relatively straightforward. For example, one New York state man was convicted of enticing investors to sink $10,000 each into a vending machine distribution business he promised would be profitable —...

Fraud in the Family Business

Smart Software Can Find Fraud

Behavioral Issues Could Mean Fraud

Foiling Parcel Delivery Thieves

Efforts to Corral Coronavirus Fraud

Non-GAAP Measures Can Be Misleading

Give Employees a Voice to Report Fraud

Protecting Remote Workers From Cyberattacks

Paying Workers Under the Table is a Lose-Lose

Business Opportunity or Scam?

ROGER ROSSMEISL, CPA

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