Fraud detection class is now in session. It’s time to put your smarts to the test and see how you score on these questions from the Association of Certified Fraud Examiners. 1. According to ACFE’s 2006 Report to the Nation on Occupational Fraud and Abuse , the typical organization
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Forensic services
Stolen Without a Gun
by Walter Pavlo Jr. and Neil Weinberg Etika Books, 2007, 312 pp. For nearly four decades, I have been investigating, researching and writing about occupational fraudsters. From the mailroom to the boardroom, what these criminals have in common is the inability to commit fraud once and quit. So it was
Limit Your Loss
With the holiday shopping season around the corner, Americans will not only stack up gifts, but rack up credit card purchases. As spending increases, so does the likelihood of falling victim to identity theft or fraud schemes. Each payment method—including credit or debit cards, cash, checks or electronic payments—carries varying
Prepare for Cross-Border Investigations
Among 103 senior executives responsible for cross-border investigations, 56% cited proper planning and 40% cited the effective use of internal resources as the primary drivers of successful investigations. Richard H. Girgenti, the Forensic National Practice leader for KPMG LLP, suggests the following tips to improve international fraud investigations: Assess investigation
Fashioning a Fraud
EXECUTIVE SUMMARY Businesses must clearly define the roles and responsibilities of employees who sign expense reports and those who process the reports. That should eliminate confusion about whether a manager’s signature means that the individual is authorizing the expenses as reasonable business expenses or signifies that the
Assessing Fraud Risk
Every organization faces some risk of fraud from within. Fraud exposure can be classified into three broad categories: asset misappropriation, corruption and fraudulent financial statements. Answering the following 15 questions is a good starting point for sizing up a company’s vulnerability to fraud and creating an action plan for lessening
It’s Not Brain Surgery
Sharp-eyed auditors for a health insurance provider noticed something that had them scratching their noggins. According to reimbursement records, Stanley Cannella, his wife and their two sons had undergone nine brain surgeries in three years at a cost in excess of $142,000, with Cannella receiving reimbursement three separate times for
Banking
For news from the AICPA and state societies, visit www.cpa2biz.com, which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. The statement describes prudent safety, soundness and consumer protection standards that lending institutions should follow to ensure borrowers obtain loans they can
Compliance
A study by Lord & Benoit, a firm specializing in SOX compliance, identified what it described as the 10 leading material weaknesses among 148 companies with revenue of less than $100 million. Companies with effective internal controls were excluded from the study. Nearly two-thirds of the companies with material weaknesses
Crackdown on Fraudulent Tax Return Preparers
Recent criminal and civil enforcement against fraudulent tax preparers has been highlighted in stepped-up activity by the Treasury and Justice departments. Total investigations initiated by the IRS’s Criminal Investigations division rose in fiscal year 2006 from the previous year, as did the division’s time spent on tax-related
Data Point: 12,748
The number of companies using the five-story Ugland House in George Town, Cayman Islands, as their address. The office building was mentioned in several Senate committee hearings regarding U.S. tax compliance implications and tax havens. Source: Senate Finance Committee, http://finance.senate.gov .
All That Glitters Is Not Gold
According to police, Jadyn Sessing, of Farmington, Minn., had a bad, bad gambling problem. Authorities say that Sessing, an assistant day manager at Cooperative Plating, fed his addiction by stealing small amounts of silver from his employer over the past three years. Although the plant noticed the shortages right away,
Stakes Raised on Oversized Refund Claims
Taxpayers who receive “excessive” refunds can now be tagged with a 20% penalty on the overpayment. The provision is one of several revenue enhancers included in the recently passed Small Business and Work Opportunity Tax Act of 2007. The change to IRC § 6676(a) assesses the penalty on any claim
Wading Into Litigation Support
EXECUTIVE SUMMARY CPAs can provide valuable services as litigation support consultants in lawsuits involving business damages. This analytical role allows CPAs to enter the litigation support business before taking on the greater challenge of being an expert witness. Before accepting an engagement, the CPA should ask
Fraud
The federal Identity Theft Task Force launched a new Web site at www.idtheft.gov that outlines the Task Force’s Strategic Plan for preventing identity theft, assisting victims of identity theft crimes and prosecuting identity thieves. The Strategic Plan was developed with input from 17 federal agencies. The Task Force, which was
Tip Your Hat to Tipsters
The Association of Certified Fraud Examiners found occupational frauds are more likely to be detected by tips (34% of cases) than by internal audits (20%), external audits (12%), internal controls (19%) or police alerts (4%); accidental detection uncovered fraud 25% of the time. In some of the 1,134 cases studied,
A Risk-Based Approach to Journal Entry Testing
EXECUTIVE SUMMARY The top-side journal entry is most susceptible to fraud by management override. It’s possible to make adjustments in subledgers, but this requires collusion with other organizational departments, which is much harder to accomplish. The most frequent types of management fraud involve fictitious or premature
Whose Fraud?
The statute of limitations does not protect a taxpayer from a deficiency assessment for fraudulent returns when the fraud was committed by a preparer, the Tax Court ruled. In 2005, Vincent Allen was assessed a deficiency of $12,212 for income taxes in 1999 and 2000, based on false itemized deductions
IRS Targets Foreign Tax Credit Generators
The Joint International Tax Shelter Information Centre—an organization of tax administrators from Australia, Canada, the United Kingdom and the United States—recently focused on transactions by U.S. taxpayers with foreign counterparts to generate foreign tax credits. The IRS in response proposed amendments to regulations section 1.901-2, which targets transactions involving U.S.
Fraud
Colorado has taken what may be a first-in-the-nation approach to combat fraud and ID theft with the creation of the Colorado Fraud Investigators Unit, a division of the Colorado Bureau of Investigation (CBI). While other states have regional fraud units, CBI officials say the new unit is the first of
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