Placing a sizable amount of trust in staff members is part of the cost of doing business. Trusting workers with access to information, products, vendors and funds is necessary to run an effective and efficient operation. But some employees—when faced with sufficient pressure, a perceived opportunity, and the ability to
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Forensic services
Computer Fraud Casebook: The Bytes that Bite
edited by Joseph T. Wells, CPA, CFE John Wiley and Sons Inc., 2009, 424 pp. Writing about accounting—or computers, for that matter—often can seem clinical to the point of disembodiment. The two together could be, well, a bit dry. Joe Wells can be counted on for a good tale or
AICPA Calls for CPA Exemption From Recently Delayed Red Flags Rule
The AICPA on Tuesday asked the Federal Trade Commission (FTC) to exempt CPAs from certain provisions of its Red Flags Ruleto prevent identity theft. The current action by the AICPA follows an FTC announcement last week that it would delay enforcement of the rule until Nov. 1. The Red Flags
TIGTA Announces Program to Detect, Deter IRS Employee Misconduct
The Treasury Inspector General for Tax Administration (TIGTA) announced on Tuesday that it has reached an agreement with the IRS to conduct a program to detect and deter waste, fraud and abuse in IRS programs and operations. The purpose of the program is to protect against attempts to interfere with
Securities Class Action Filings Decline
Federal securities class action activity declined in the first half of 2009, according to a report released Monday by the Stanford Law School’s Securities Class Action Clearinghouse and Cornerstone Research. Eighty-seven federal securities class actions were filed in the first half of 2009, a 22.3% decline from the 112 filings
FinCEN Proposes Applying SAR Regs to Nonbank Lenders
The Financial Crimes Enforcement Network (FinCEN) issued an advanced notice of proposed rulemaking for public comment regarding the possible application of anti-money laundering (AML) program and suspicious activity report (SAR) regulations to nonbank residential mortgage lenders and originators. FinCEN is considering expanding the regulations to nonbanks to thwart potential criminals.
FinCEN Reports Rapid Increases in Suspected Fraud
Suspicious activity reports (SARs) climbed at double-digit rates in the seven categories relating specifically to fraud in 2008, according to The SAR Activity Review—By the Numbers, Issue 12. The semiannual report by the Financial Crimes Enforcement Network (FinCEN) includes SAR filings through Dec. 31, 2008. Check fraud (17% year-to-year increase),
Money Laundering
The Financial Crimes Enforcement Network (FinCEN) published guidance designed to enable depository institutions to more easily determine and document certain business customers’ eligibility for exemption from currency transaction reporting. The guidance is expected to ease compliance with regulatory requirements and enhance supervisory consistency. It seeks to clarify for depository
Deducting Losses for Defrauded Investors
The financial collapse of high-profile investment institutions has generated billions of dollars of losses. A recent report notes that federal and state prosecutors “are preparing for a surge of prosecutions of financial fraud.”1 A question may arise as to whether these losses for tax purposes are to be treated as
Fraud
The U.S. Government Accountability Office (GAO) is encouraging people to use its FraudNet system to report waste, fraud, abuse or mismanagement related to funds distributed under the American Recovery and Reinvestment Act of 2009. The $787 billion stimulus act was signed by President Obama on Feb. 17. FraudNet is
The State of Schemes
The Deloitte Forensic Center analyzed and reported on hundreds of SEC Accounting and Auditing Enforcement Releases (AAERs) issued from January 2000 through December 2007. The results of the analysis were compiled in the report Ten Things About Financial Statement Fraud—Second Edition, released in December of 2008. Among the findings: From
Fraud
Suspicious activity reports (SARs) for suspected mortgage fraud increased 44% in the 12-month period ending June 30, 2008, according to Filing Trends in Mortgage Loan Fraud, a report compiled by the Financial Crimes Enforcement Network (FinCEN). In the most recent reporting period, financial institutions filed 62,084 SARs relating to mortgage
What’s Your Fraud IQ?
As the economy struggles, businesses and individuals are hanging on to their money more tightly than ever. With fewer resources available and reserves dwindling, becoming a victim of fraud during a recession could prove financially disastrous. However, a little awareness can go a long way in protecting hard-earned assets from
Madoff Auditor Charged with Securities Fraud
Federal officials filed criminal and civil charges against Bernard Madoff’s auditor on Wednesday, and the AICPA expelled him from the Institute after concluding its own ethics investigation. In a civil complaint filed in federal court in Manhattan, the SEC alleges that from 1991 through 2008, David G. Friehling and
Government
The Office of the Inspector General of the Department of Defense (DOD) launched a Web site that gives guidance on using internal controls to prevent or eliminate fraud, waste and abuse. “Fraud Indicators in Procurement and Other Defense Activities” provides common fraud indicators in contracting and other areas susceptible to
The Fraud Beat: It Pays to Be the Boss’s Wife
The British government’s tax fraud department didn’t have to look too far afield to find an ethical lapse. David Partridge, the COO of the Revenue and Customs Prosecutions Office, was fired for gross misconduct after awarding his wife what a government report termed a “lucrative” consultancy contract that paid her
SEC Nominee Pledges to Revitalize Enforcement, Has Concerns About IFRS
Mary Schapiro, President-elect Barack Obama’s nominee for SEC chair, testified Thursday before the Senate Banking, Housing, and Urban Affairs Committee that she would aggressively revitalize the SEC’s enforcement efforts. When asked by committee Chairman Sen. Chris Dodd, D-Conn., about whether she would support certain actions that would help detect
PCAOB Proposes Seven Auditing Standards Related to Risk Assessment
The PCAOB voted to propose a slate of seven auditing standards related to risk assessment and response. The standards would supersede the board’s interim auditing standards related to audit risk and materiality, audit planning and supervision, consideration of internal control in an audit of financial statements, audit evidence, and performing
Building an Effective Whistleblower Program
One of the most effective and inexpensive methods of monitoring the pulse of a business is to create a confidential whistleblower hotline. According to the 2008 Association of Certified Fraud Examiners Report to the Nation on Occupational Fraud & Abuse, tips have historically been the most common means of fraud
Fraud
The Financial Crimes Enforcement Network issued guidance to casinos and card clubs with “red flags” that may indicate the presence of money laundering, terrorist financing and related financial crimes. FinCEN’s guidance FIN-2008-G007, Recognizing Suspicious Activity—Red Flags for Casinos and Card Clubs, gives examples of activities that may be attempts to
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