As forensic accountants, there are two major types of fraud we are concerned with, financial reporting fraud and employee fraud.
Fraudulent financial reporting
Enron is the most popular example of fraudulent financial reporting. There are many ways that the financial statements can be “gimmicked” to show superior results when the company is teetering on insolvency. We are experts in detecting earning management. We work on behalf of boards of directors, financial institutions and interested parties in litigation and in merger and acquisition scenarios.
Employee fraud/Occupational fraud
The ACFE (Association of Certified Fraud Examiners) estimate that U.S. organizations lose 7% of their annual revenues to fraud. Extrapolating 2008 GDP, this figure translates to approximately $994 billion in fraud losses.
The ACFE has determined that small businesses are especially vulnerable to occupational fraud. The median loss suffered by organizations with fewer than 100 employees was $200,000. This is a higher median loss than suffered by any other size category. Therefore, small business is far more likely to suffer occupational frauds.
We have programs to detect:
- Cash and check schemes
- Cash larceny
- Swapping checks for cash
- Check tampering
- Credit card refund and cancellation schemes
- Accounts receivable fraud
- Fictitious receivables
- Borrowing against accounts receivable
- Inventory fraud
- Stealing inventory
- Short shipments with full prices
- Accounts payable fraud
- Fictitious disbursements
- Doctored sales figures
- Sham payments
- Price manipulations