Recent headlines from the Eastern District of Missouri, U. S. Attorney’s Office:
DeSoto Woman Sentenced for Embezzling $1.6 Million from Grandview School District
October 13, 2017
Kinloch Official Sentenced for Stealing Money from the Kinloch Fire Protection District
October 25, 2017
Former Chief Financial Officer Sentenced for Stealing $2.8 million from Company
November 6, 2017
The 2016 American Association of Certified Fraud Examiners (ACFE) Report to the Nations found that the median loss to businesses due to fraud was $150,000.00.
Most of these frauds could have been prevented with proper internal controls and due diligence on the part of the businesses. Looking at the court cases of the above three crimes cited, all involved individuals who were trusted by the organization and were given carte blanche to handle the organization finances with little or no oversight.
As a business owner, prevention of fraud, waste, and abuse can be achieved with proper internal controls and appropriate oversight. The loss from fraud and embezzlement is not only monetary. To quote a business owner from one of the above cited cases: we “thought we had a significant problem until we spent the next three months of our lives going through everything, including looking at the front and back of 44,000 checks…”
What can business owners do to protect themselves? Having strong internal controls are mandatory. Businesses can also watch for behavioral red flags for fraud and embezzlement as noted from the 2016 ACFE Report to the Nations:
- Living Beyond Means (45.8%)
- Financial Difficulties (30%)
- Unusually Close Association with Vendor/Customer (20.1%)
- Wheeler – Dealer Attitude (15.3%)
- Control Issues, Unwillingness to Share Duties (15.3%)
- Divorce / Family Problems (13.4%)
- Irritability, Suspiciousness or Defensiveness (12.4%)
- Addiction Problems (10%)
Businesses can be defrauded on many fronts: Internally by employees, managers, officers, or owners of the company, or externally by customers, vendors, and other parties.
Simpson Security and Investigative Advisory Group, LLC has trained fraud investigators, forensic accountants, and Certified Public Accountants (CPA’s) on staff to assist businesses in fraud prevention, fraud awareness, and fraud detection