Insights: Article

The 90 Percent: 4 Things to Do If You Suspect Fraud at Your Company

By Brett Johnson

September 05, 2017

Fraud prevention. Those sweet words are music to any forensic accountant’s ears. Not only do we preach the importance of having internal control examinations, but we actually take quite a bit of pride knowing our clients risk for fraud can be significantly decreased as a result of our advice.

Now let’s talk about the other 90 percent of our clients—90 percent of our time as forensic accountants is spent assisting clients who suffered a loss from employee theft. And the majority of those clients have never had any type of fraud risk assessment performed. That’s right. As much as we prefer to help businesses prevent a disaster, the truth is, we make 90 percent of our revenue helping detect, examine, investigate, and litigate these matters. As a result, I think it’s wise to discuss what’s on the minds of the 90 percent. Instead of discussing the “how”, let’s talk about the “what now?”

Initial Steps
Dealing with fraud is a unique situation for most businesses and individuals. Each instance is different, and not everyone prefers to handle it the same. However, the three main goals remain consistent:

  1. Identify theft amounts
  2. Recoup assets
  3. Avoid liability

Here are a few things to keep in mind to reach these goals.

  1. Act Timely Once a fraud is detected, the clock begins to run. The statute of limitations for fraud can vary by location, but most states agree that the time period begins when the fraud is, or should have been, detected. This also applies to insurance claims. If you plan on filing an employee dishonesty claim with your insurance provider, put them on notice immediately so you can take the proper steps to a successful claim.
  2. Gather Information Gather as much supporting proof as possible. Do not jump to conclusions based on a red flag and a hunch. Utilize third-party documentation, such as bank records and vendor invoices. The evidence you gather should not be produced or made known to the person of interest. This will only provide them with time—time to obtain an attorney, create excuses, or even blame others.
  3. Utilize Consultants Utilizing consultants to get a third-party perspective is extremely helpful in making decisions for your organization. These include attorneys, forensic accountants and computer forensic specialists. They can walk you through the process and help keep business interruption to a minimum.
  4. Do Not Make Accusations Premature accusations or discipline can lead to unwanted or unnecessary liability. This can include wrongful termination, slander, defamation, or libel claims. Paid administrative leave can be an option until the situation is corrected. Use caution because it can inadvertently tip the fraudster that they are being investigated, giving them a chance to obtain an attorney, which can make obtaining future information from them very difficult.

Dealing with fraud is never easy and almost always unexpected. Utilizing the tips above can assist your organization to identify theft amounts, recoup assets and avoid liability. Of course, having a consultant examine your internal controls can help mitigate this problem from ever occurring—as long as you’re willing to be part of the 10 percent.

If you suspect fraud at your organization, don’t delay. Follow these steps and call a forensic accountant now.

Latest Insights

September 21, 2018
Article
In the wake of hurricanes, devastating results have been experienced by communities and businesses throughout the Texas Gulf Coast, Caribbean, Florida and southeastern United States. As a result of these catastrophes, businesses will turn to…
September 20, 2018
Firm News
Eide Bailly LLP announced the winners of its 2018 Nonprofit Resourcefullness Awards, recognizing creative and sustainable revenue ideas from nonprofits in Arizona, Colorado, Minnesota, North Dakota and Utah.
September 19, 2018
Article
The IRS has started sending out Letter 5699 asking businesses to verify if they should have filed Forms 1094/1095-C. These forms are required for all ALEs.
September 19, 2018
Recorded Webinar
Are you considering doing business or having employees in Pennsylvania? Have you had issues with your state tax filing? Join our state and local tax team for some helpful insights into Pennsylvania tax filings.
September 19, 2018
Recorded Webinar
Are you considering doing business or having employees in Nevada? Have you had issues with your state tax filing? Join our state and local tax team for some helpful insights into North Dakota tax filings. This webinar will cover registration,…
September 19, 2018
Recorded Webinar
Are you considering doing business or having employees in North Dakota? Have you had issues with your state tax filing? Join our state and local tax team for some helpful insights into North Dakota tax filings. This webinar will cover registration,…
September 18, 2018
Article
As the largest tax reform legislation in the past 30 years becomes reality, it is important to stay up-to-date on planning opportunities and how reform may impact you and your business. Our Tax Reform: Practical Insights examples aim to break down…
September 18, 2018
Tool
Get ahead of tax season with the Eide Bailly Tax Planning Guide. A supplemental strategy guide to help guide year-end and make the tax laws work for you.
September 18, 2018
Article
The SCOTUS Wayfair decision has prompted a new focus on state and local tax compliance. The decision to register, report, and comply is important.