Something just doesn’t seem quite right. The financial statements are
showing a profit but there isn’t enough cash to pay all of the bills.
You begin to wonder where your bookkeeper got the money to buy the new
house. Now may be the time to have a special review of your accounting
records. Fraud reviews and forensic accounting services are tailored
engagements to look for anomalies in accounting records. It involves
an analysis of what is recorded, as well as what is not recorded.
Definitions:
Fraud
Simple definition: Fraud
is most simply defined as a deception made for personal gain. While
there are more specific legal meanings, they may be different from
one area of the country to another.
Legal definition: Fraud is
any crime or civil wrong for gain that uses deception to commit the
crime. Fraud occurs when a perpetrator deliberately deceives a
victim for personal gain (i.e. to get property or services from him
or her unjustly). Fraud can be accomplished through forgery, larceny
or other methods. Fraudsters often utilize the mail, phone, or
internet to commit fraud.
Acts which may constitute criminal fraud include identity theft,
embezzlement, forgery, false billings, false advertising, bait and
switch, fause claims, Ponzi schemes, and confidence tricks
Forensic Accounting
Forensic Accounting is the utilization of accounting, auditing and
investigative skills to provide an analysis designed to be suitable
for use in a court of law. The resulting report may be used as the
basis for discussion, debate, and dispute resolution as well. It also
is designed to communicate financial information clearly and
concisely. Forensic accountants are trained to look past the numbers.
Certified Fraud Examiners
(CFE’s) are professionals that have obtained a certification and are
considered to be experts in detecting and deterring fraud. Certified
Fraud Examiners are not required to also be CPA’s, however many are.
Common Types of Fraud
Employee Fraud
Check Kiting
Contract or Procurement Fraud
Asset Misappropriation
Embezzlement
Insurance Fraud
Tax Fraud
Health care Fraud
Securities Fraud
Types of Services
Fraud and forensic
engagements are unique. No two are the same because no two instances
of fraud are the same. Clients may want to prosecute the perpetrator
or they may want to fix the problem and just move on. Engagement
procedures are designed for each engagement to take into account the
resolution expected by the client and the unique aspects of each
situation.
Stories
Sue Bunevich, a Shareholder
at Moore Stephens Lovelace PA, has her Certified Fraud examiners
license and CPA certification. Sue was recently engaged for Fraud
Examination services and uncovered the theft of $700,000 from a
company. Once the theft was determined Sue assisted in the recovery of
the stolen funds.