Fraud Investigations – PROSPECTS

Business fraud and embezzlement involves deceiving an employer by misappropriation of funds.  It is usually a premeditated crime, sometimes performed through ingenious methods and other times concealed very sloppily.  Quite often someone in the accounting/finance department is the crook.

Why Commit the Crime?

The “fraud triangle” is a model explaining three factors that lead to an employee committing fraud: pressure, perceived opportunity, and rationalization.  Financial pressures (e.g., out of control expenses, expensive tastes, divorce, etc.) can be a tipping point in stealing cash or falsifying financial statements.  The “opportunity” arises when the employee realizes he/she uses a position of trust to commit fraud, usually with a low risk of getting caught.  The perpetrator then “rationalizes” the act by feeling underpaid or underappreciated, or the employer doesn’t really need the money, etc.

Recent Engagement

In this recent engagement, MyCFO was brought in because the business owner suspected something was wrong with cash flow.  He knew the company was making money but the bank account perpetually seemed to be empty.  Eventually, the office manager was suspected of having something to do with it.

In terms of responsibilties, the office manager was in charge of payroll and was fully entrusted with running it.  The owner never looked at anything besides the end result.  This allowed the office manager to exaggerate her hours and overtime, fabricate non-existent “ghost” employees, and steal hundreds of thousands of dollars.

MyCFO quickly identified the embezzlement, documented the crime, and provided information for criminal prosecution and civil action.

Broad Scope of Fraud Investigation

MyCFO’s fraud and embezzlement investigation engagements can involve a number of investigative techniques, including:

• Reconcile bank accounts
• Review payroll lists and personnel files for current/former employees (including start and termination dates)
• Review withholding and benefit deductions
• Trace schemes that move through third parties
• Detect vendor kickbacks
• Identify fictitious vendors
• Examine processed checks, payments, and direct deposits
• Identify inconsistencies in pricing on invoices
• Track electronic transfers and payments
• Scrutinize documentation supporting disbursements

Need help?

If you suspect fraud and embezzlement in your workplace, contact us today!