How to Apply Survey Data to Your Company, using K-means Clustering We are in an age when fraud statistics and the individual profiles of those committing the fraud are at an all-time high. How does a firm identify factors that will enable the firm to understand the risk? The Association of Certified Fraud Examiners (ACFE) annual fraud survey—readily available for free—provides valuable insight to prevent fraud. In this article, Elliott Chester shares how K-means clustering is developed and used for profiling employees.
-
-
Full Disclosure to Equitably Settle Marital Disputes An important step in the divorce process is reviewing and disclosing financial matters. In this step, both parties are typically required to prepare and sign their respective financial affidavits. In matrimonial matters, a financial affidavit represents a sworn written statement of a spouse’s assets, liabilities, income, and expenses. The information disclosed in a financial affidavit typically represents a snapshot of an individual’s finances at a point in time, or, with respect to the income and expenses, represents the financial activities over a relatively short time period. In this article, the author describes the…
-
The Annual Audit Does not Identify Operational and Financial Risks According to the Association of Certified Fraud Examiners’ (ACFE) 2014 Report to the Nations on Occupational Fraud and Abuse, an estimated 5% of revenues each year are lost to fraud. What processes can management put in place to identify financial and operational risks? In this article, the author shares his experience and thoughts on that question.
-
The global nature of today’s economy makes the process of recovering the assets of fraud and other business crimes all the more difficult. The legal benefits provided by different jurisdictions are often used illegitimately by individuals to hide the proceeds of fraudulent activities, making it more difficult for the victims of fraud to recover their assets. In this article, Eric Rein discusses the strategies and procedural challenges to asset discovery and recovery.
-
Assessing Solvency, Fraudulent Transfers, and Liability When Distributions are Made to Minority Shareholders The recent U.S. Tax Court case of Kardash v Commissioner, T.C. Memo, 2015–51 provides guidance regarding transferee liability and underscores how valuations are used to determine when and if a subject company is insolvent. The case also summarizes a number of defenses used (and rejected) to counter a claim of transferee liability.
-
Simple Steps to Save Hundreds of Thousands of Dollars By implementing just a few simple steps and procedures, business owners can catch or prevent financial fraud that can have devastating financial and personal consequences. In this article, Chris Hamilton outlines six simple steps business owners can put into practice today.
-
Daily trading of foreign currencies is estimated to be about $5 trillion—a staggering figure, no doubt, but the sheer volume of the foreign currency market coupled with other factors such as weakened international regulation, the misapplication of translation standards, and the introduction of virtual currencies (bitcoin) has given rise to an environment where hedging, speculation, and fraud are prevalent, states Kurt Ramin, CPA, in “The Impact of Fraud in Fluctuating Currencies” in the September 3 edition of AICPA’s FVS News. For companies with overseas operations where currency exchange rates affect everything from the value of foreign assets to market…
-
Nathan J. Mueller embezzled $8.5 million in barely four years from financial giant, ING through a series of corporate incompetence, “happy” accidents and missteps inside the company. His case is unique in the amount of money he stole and the length of time it went undetected. The breach of controls at ING was astonishing, but not nearly as incredible as hearing Mueller describe how easy it was in his own words. The Journal of Accountancy provides an in-depth look into the Mueller/ING case and publishes much of Mueller’s own account of the operation. The authors round out the piece…
-
Eventually, everyone who works with or around money professionally comes across a particular transaction that just doesn’t look right. Lots of these eyebrow raisers turn out to be false alarms, and some even have odd, albeit legitimate and legal explanations. Still, there are those that defy explanation of any kind. If you’re not in the business of looking for fraud on a daily basis, will you be able to recognize it when it presents itself to you? Statistically speaking, it will…sooner or later. Visit the Journal of Accountancy to test how savvy your fraud sense is. [button color=”blue” link=”http://www.journalofaccountancy.com/Issues/2014/Aug/fraud-IQ-20149743.htm#”…
-
Three key elements of fraud risk assessment Organizations that have not performed a fraud risk assessment may be two-thirds more likely to suffer a fraud-related event, states KPMG-endowed fraud and forensic accounting professor Larry Crumbley. Learn the three key elements that a company’s fraud risk assessment should address.
-
A standard distinct from the fair market value standard The fair market value is distinct from the commercial reasonableness standard. The article highlights how these standards are applied in a healthcare transaction and why it is important to distinguish these standards.
-
Use of photography in forensic and valuation engagements The purpose of this article is to provide the CPA/expert a brief introduction to the use of photography in a valuation or forensic engagement. It is not intended to be an all-inclusive training manual in forensic photography. Criminal forensic photographic procedures may, due to the differences between civil and criminal law, be materially different.
-
Forensic accounting examinations of not-for-profit entities The keys to performing a successful expert forensic accounting fraud engagement is to gain an understanding of the present internal control system, including policies [or lack thereof] in place to prevent fraud and abuse, as well as other key steps and procedures, as John J. DeLuca outlines in this article.
-
The digital age represents both forensic challenge and opportunity Forensic financial analysts can increase their effectiveness and value by expanding their training and knowledge in IT forensics.
-
Misuse of university endowments and school funding tax dollars Money laundering is usually associated with criminal activity, but that is a narrow view. Money laundering takes many forms. In this article, Professor Larry Crumbley contends that money laundering occurs in multiple instances—from the local school board to the university setting. Learn the keys to identify the misappropriation and misuse of funds in an academic setting.
-
Testing the high risk waters in today’s business environment The absence of a fraud risk management (FRM) program exposes a company to financial losses and legal liability if a fraud investigation is not properly handled and the employee is wrongfully discharged, or his or her privacy rights are violated. A FRM program addresses the above concerns and establishes controls every company should have to identify risk factors.
-
The fictional character Fleet Walker provides real world advice Assessing, improving and monitoring anti-fraud programs are key elements of an effective internal control structure. Many companies have a long way to go to address the challenges of fraud and corruption. In this brief article, Professor Crumbley suggests that as a starting point, we consider the steps taken by Fleet Walker (a fictional character of his novels).
-
Fraudsters Are SophisticatedThis article examines the technology associated with Wi-Fi, vulnerabilities to commit fraud and preventative measures that can be taken to avoid becoming a victim of fraud.
-
How Can You Defend “Reasonable Certainty”? Here are Some Tips One of the common issues raised when an expert calculates damages is “reasonable certainty.” It is not uncommon for opposing counsel to suggest that the expert’s calculated damages are speculative, explain the editors at the Fraud Files blog. The calculation of damages necessarily requires estimates and assumptions. Something has happened, and a company or individual is claiming that there are lost profits because of it. We can never know with complete certainty what revenue or profits would have been if that incident or action had not taken place. Mathematical precision…
-
Case Studies, Strategies for Detecting Fraud, and a Framework for Prevention Corporate governance legislation has become increasingly concerned with the ongoing resilience of organizations, and, particularly, with their ability to resist corporate fraud from the lowest levels to the upper echelons of corporate management. These titles offer both case studies on recent fraud cases as well as guidance for strategies on fraud detection and prevention.