05 May 2019
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401k Hackers: Prevent an Account Wipe-Out

Roger Rossmeisl, CPA
Fraud Briefs
401k Hackers

News of commercial database hackings may seem commonplace in 2019. But while many of these stories focus on hacked bank and credit card accounts, 401k plan sponsors and participants probably don’t realize that their plan assets also are at risk from 401k Hackers. Employers who offer 401k plans to their employees need to take precautions against identity theft. Part of this is educating participants. Role of sponsors If your organization sponsors a 401k plan, it’s essential that you assess plan service providers’ protection systems and policies. Most providers carry cyberfraud insurance that they extend to plan participants. But there may be limits to this protection if, for example, the provider determines that you (the sponsor) or employees (participants) opened the door to a security breach. Your plan’s documents may...

18 Apr 2019
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(#539) Fraud Fun Fact: Crooks Prefer Cash!

Roger Rossmeisl, CPA
Fraud Briefs

It should come as no surprise that cash is the most popular target of fraud perpetrators. After all, once stolen, cash itself is virtually untraceable. But that doesn’t mean forensic accounting professionals can’t unearth cash fraud schemes — and the crooks behind them. 3 Categories of Cash Fraud According to the Association of Certified Fraud Examiners, there are three main categories of cash fraud (which includes checks because they’re easily converted to cash): Theft of cash on hand, Theft of cash receipts, and Fraudulent disbursements. The last category comprises many of the most frequently executed schemes, such as overbilling and “ghost” vendor or employee schemes. For example, overbilling vendors usually submit inflated invoices by overstating the price per unit or the quantity delivered. A dishonest vendor also might...

18 Apr 2019
0

(#534) 5 Ways to Prevent Fraud in Your Law Firm

Roger Rossmeisl, CPA
Fraud Briefs

Because they foster a collegial, trusting environment, law firms can be more vulnerable to fraud than many other types of businesses. Enforcing internal controls may simply seem unnecessary in an office of professionals dedicated to the law. Unfortunately, occupational thieves can take advantage of such complacency. A law firm’s accounting department — payroll and accounts payable and receivable — may be particularly vulnerable. To protect against financial losses and possible public embarrassment, implement and enforce five basic controls: 1. Screen employees. Require all prospective employees, regardless of level, to complete an employment application with written authorization permitting your firm to verify information provided. Then, call references and conduct background checks (or hire a service to do it). These checks search criminal and court records, pull applicants’ credit...

17 Apr 2019
0

(#530) How Fraud Can Scuttle the Purchase of Your Dream Home

Roger Rossmeisl, CPA
Fraud Briefs

Buying a home is stressful enough without also having to worry about potential fraud. Unfortunately, real estate fraud is surging. According to Realtor magazine, scams targeting the industry rose 1,100% from 2015 to 2017, resulting in losses of more than $1.6 billion. Home closing wire fraud should be of particular concern for prospective homebuyers. When schemes are successful, criminals can make off with buyers’ hard-earned down payments — several hundred thousand dollars’ worth in some cases. Here’s how to avoid losing the home of your dreams and the money with which to buy it. The scoop Home closing wire fraud involves hackers who typically use real estate agents’ email accounts to trick homebuyers into wiring money. Perpetrators send phishing messages containing links that, if clicked on, install malware....

02 Apr 2019
0

(#524) Is Return Fraud Cutting Into Your Store’s Profits?

Roger Rossmeisl, CPA
Fraud Briefs

For brick-and-mortar retailers, return fraud can be a serious financial threat. There are several types of schemes. But when they’re successful, they all end the same way: Stores issue refunds that they shouldn’t have. Here’s what to look for and how to limit losses. Myriad schemes Return fraud perpetrators could be customers, employees or even a criminal gang working with employee accomplices. In perhaps the most common scheme, an individual steals merchandise, and then returns it and insists on a cash refund, despite the lack of a receipt. Or a criminal steals merchandise from one retailer and then returns it to another for a cash refund. Some thieves do supply receipts — but they’re fake. The “customer” hands over an altered or completely counterfeit receipt that the original...

27 Mar 2019
0

(#521) Prevent Fraud With The Help Of Your Audit Committee

Roger Rossmeisl, CPA
Fraud Briefs

Your board’s audit committee is a first line of defense against fraud. But to be effective, committee members need to do more than simply review financial statements and audit results. Members should also adopt the following best practices: Conduct risk assessments. Identify the types of risks faced by your company and their likelihood of occurrence. These assessments should include an evaluation of existing internal controls. Be knowledgeable. Become familiar with relevant accounting issues and recent developments. Also ask questions and challenge management on the accounting for complex transactions. If your company’s industry has specialized accounting rules, consider consulting outside specialists. Communicate with external auditors. Regularly touch base with outside auditors, because the external audit team performs many fraud prevention functions. Schedule formal meetings before the audit to elicit input...

18 Mar 2019
0

(#516) Preventing Phoenix Companies From Taking Flight With Your Money

Roger Rossmeisl, CPA
Fraud Briefs

Bankruptcy (or liquidation) can be a valid business tool when used properly. Unfortunately, it can also enable less-than-honest business owners to profit at the expense of their creditors. Such is often the case with “phoenix” companies. Rising from the ashes Phoenix companies earn their name because they rise from the ashes of failed companies, trading on the goodwill of the original businesses. Here’s how a phoenix company scheme might work: A company’s owner buys goods on credit, purposely drives the business into the ground and then buys its assets back from liquidators at knockdown prices. The owner then returns to the same line of business. Some operators repeat the process multiple times — as often as they can get away with it. These shady companies usually are undercapitalized...

13 Mar 2019
0

(#514) Ticket Scams: When the Price of Admission is Too High

Roger Rossmeisl, CPA
Fraud Briefs

Concert, sporting and other event tickets can go for astronomical prices — when they’re even available. Hoping to find reasonably priced tickets (or to find tickets at all), many consumers turn to the online resale market. But while most resale transactions are legitimate, some involve ticket scammers. Buy from one of these sellers and you may end up with stolen or counterfeit tickets. Playing defense Ticket scams generally succeed because they exploit a common desire to bag a bargain or gain access to something that isn’t easily obtainable. But you can avoid getting tricked. Here’s how: Buy direct. Whenever possible, buy first-release or secondary market tickets from the event’s official ticketing agent. The ticket may cost more, but buying from a reputable agent comes with peace of mind. Look...

06 Mar 2019
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(#511) Keep Fraud Off Your Restaurant’s Menu

Roger Rossmeisl, CPA
Fraud Briefs

In the restaurant industry, where long hours and thin profit margins are the norm, owners and managers often lack the time and resources to focus on fraud. Unfortunately, restaurants can provide crooked employees, customers and vendors with plenty of opportunities to steal. So you need to be able to recognize fraud threats — and nip them in the bud before they lead to heavy financial losses. Opportunity on the house Many restaurants have high transaction volumes but lack the technology linking point-of-sale, inventory and accounting systems. This leaves gaps for fraudsters to exploit. Employees could, for example, provide food and drinks to friends without entering the sales — or ring up only a portion of friends’ bills. They might issue voids or refunds when there was no...

27 Feb 2019
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(#502) How Fraud Experts Help Companies Head Off Bad Mergers

Roger Rossmeisl, CPA
Fraud Briefs

Mergers and acquisitions are filled with risks, some of them unavoidable. But buyers can avoid risks associated with cooked books and other forms of deceptive accounting used by a seller to distort the value of its company. Before closing an acquisition, engage a forensic accounting expert to look for fake performance figures and hidden liabilities that might turn your deal into a disaster. Something fishy When reviewing a seller’s financial statements, forensic experts look for subtle warning signs of fraud. These include: Excess inventory, Increased accounts payable and receivable combined with dropping or stagnant revenues and income, An unusually high number of voided discounts for returns, Lack of sufficient documentation in sales records, A large number of account write-offs, and Increased purchases from new vendors. Fishy revenue, cash...

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

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