Fraud is an overlooked area in most organizations. A typical fraud scheme will last several years. Most fraud schemes are discovered accidentally. The tangible losses are often very high. However, there are intangible issues that surface when fraud is uncovered. For example, do you prosecute? Will the physical cost of prosecution or the potential publicity that may come from it, be more costly than the theft it itself?
A few facts about fraud:
- Long-time employees conduct most fraud. They are more likely to have access to records and do have your trust.
- Fraud can come in many forms. Skimming cash, inventory theft, diversion of checks and electronic fund transfers are common examples.
- Some of the reasons fraud occurs are addictions to gambling, shopping, and illegal drugs, but fraud is also driven by medical conditions and the need to pay for expensive treatments or medication.
- A financial audit does not ensure fraud is not occurring. A financial audit’s main purpose is to ensure the financial statements are fairly presented. There are some procedures to test for fraud in every audit, but they are not comprehensive.
RPB has a Certified Fraud Examiner (CFE) on staff. If you are concerned there may be exposure in your organization, or just wish to discuss your operating environment, please call.
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