Fraud and Forensic Accounting

What is Accounting Fraud?

Accounting fraud is an intentional alteration of financial statements by an employee or accountant, which leads to the falsifying of financial statements. Accounting fraud can overstate the revenue or misrepresent the assets and liabilities of the business.

Examples of Accounting Fraud

To simplify fraud can be defined as lying, cheating and/or stealing.

Lying: Financial Statement Fraud occurs when unrecorded inventory losses are not accurately reported causing the net worth/net income to be under- or overstated. Misrepresenting financial statements to shareholders and lenders can lead to fraud charges against the person committing the fraud as well as ownership.
Cheating: Purchasing schemes, bid-rigging and kickbacks are examples of cheating scams. These scenarios put money into the pockets of the employee rather than showing actual costs of doing business.
Stealing: Misstating or inaccurate reporting of assets to cover the employee theft of cash, inventory or other assets are examples of stealing. Examples of this include creating fictitious vendors to generate false payments or using the company credit card for personal purchases.

BIZ TIP: Common Types of Fraud Happening in Businesses

Why is Fraud Prevention Important for My Business?

Embezzlement, corporate fraud, skimming, insurance fraud, pyramid schemes, money laundering, financial statement fraud – no matter the method, the result is always the same…lost profits. Suspected or alleged fraud can shake a business to its very core. The violation of trust affects everyone – owners, employees, current customers, and potential prospects.

BIZ TIP: The Fraud Triangle: Incentive, Opportunity, and Rationalization

What is Forensic Accounting?

Forensic accountants are trained to audit and investigate financials to uncover fraud and embezzlement situations. It is more than just reviewing numbers, but also looking into the conditions occurring in a business. Forensic accounting is often used in fraud and embezzlement cases to provide the background of the court case. Tracing funds, due diligence reviews, and asset identification are part of the process and are used to establish damages for accurate reporting and to submit an insurance claim.

How Fraud and Forensic Accounting Services Can Help Your Business

If you suspect fraud in your organization, contact a professional to investigate the situation. You will need accurate details if you want to submit an insurance claim or press legal charges. Even if you are not planning legal action, you will want to know how long the fraud has been occurring and how much your business has been impacted. Enlist a Certified Fraud Examiner (CFE), along with your CPA, to get to the root of the suspected fraud.

Resources

Fraud Prevention Check-Up

Fraud is something that has to be proactively managed. Start with this 7 question fraud assessment to gauge if your business may be at risk.

Learn More

The Importance of Internal Controls

Do you know how your internal control system rates? Check out the defining features of internal controls with this eGuide.

Learn More

Services Offered: How SVA Can Help

Business professionals need easy access to information to make timely decisions. SVA has what you need, when you need it. Choose a topic below or just contact us directly. Our expertise is ready anytime you need it.

Our team of expertly trained forensic accounting and investigative professionals is skilled in collecting and analyzing financial information for evidence of illegal activity (such as suspected embezzlement, fraud, or theft) and then creating the comprehensive documentation necessary to be used in legal proceedings.

SVA provides these services to financial institutions, insurance companies, attorneys, and public and private companies.

SVA's fraud and forensic professionals are well-versed in the preparation of complex fidelity bond insurance claims.

Our team can work with you to prepare the appropriate documentation to substantiate your insurance claim to maximize financial recovery.

Being a potential victim of embezzlement is an emotional situation for any business owner. It is challenging when the one who is victimizing your organization is someone you know and trust.

But the recovery of your assets and your company's financial well-being are at stake, so emotions need to be set aside for now.

Our team of forensic accountants will find the truth in the numbers. We will:

Investigate theft of money, inventory, equipment, or other resources
Reconstruct records
Quantify fraud losses
Investigate financial reporting irregularities
Analyze and prepare insurance claims
Assist with communicating to law enforcement, insurance agents, and attorneys

Opportunity, combined with motive and rationalization, create the conditions necessary for fraud to occur. You can implement "best practices" to reduce fraud opportunities.

SVA's fraud prevention consulting services are designed to identify weaknesses in accounting and internal control systems. Specific procedures unique to each company are developed to help you determine your company's fraud exposure risk.

Professionals

Todd Clemens

CPA, CFE, CGMA

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Common Types of Fraud Happening in Businesses

The Fraud Triangle: Incentive, Opportunity, and Rationalization

How Well Do You Know Your Employees? The Harsh Reality of Employee Theft

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Attorney For Financial Institution Officer

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