The Risks of Conducting Your Own Internal
Fraud Investigation?
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I’m often asked why a company should hire an external fraud examiner rather conduct its own investigation. The answer is quite simple, an untrained evaluator can compound the problem and cost your firm a lot of money.
First, you could miss the physical and verbal clues that might encourage a dishonest employee to stand by their story. Second, you can expose the company to potential labor law violations, allegations of imprisonment and emotional distress, equipment costs, and even ridicule by your staff.
By conducting your own investigation, you could tip off dishonest employees to what you know and don’t know about the suspected fraud. This could empower employees to lie, develop alibis, alert co-conspirators, destroy evidence, run or obtain legal counsel.
Rather than conducting your own investigation, alerting the police or even calling your attorney, contact us. We’ll evaluate the wrongful activity, conduct an examination and identify the culprits. We’ll save you time and money, obtain a confession and often restitution.
~ John Capizzi, Principal, IAS
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How a Lack of Employee Recognition Can Cause an Increase in Internal Theft
Red Flags of Fraud
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Employees are motivated by many things: good benefits, company culture, short commute, profit-sharing, workplace conditions. However, the one thing that most of them crave above all else is recognition for their work.
People want to be heard. They want their ideas to be considered. They want to feel that their bosses appreciate the job they are doing and the value they bring to the company.
On the contrary, employees who feel under-appreciated or unappreciated can become a fraud risk. They may feel that if the company doesn’t care about them, why should they care about it. They may feel that the company owes them something, e.g., money, supplies, intellectual property.
The solution: Improve communication, recognize achievement and listen to your staff.
Check out 23 Red Flags of Fraud to learn about other areas where your business may be vulnerable to fraud.
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Do You Know How to
Spot a Fraudster?
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Can you spot the people in your company who are most likely to commit fraud? Their traits may amaze you.
For example, while most occupational frauds are committed by employee-level or manger-level personnel, fraud by owners and executives is much more harmful.
Believe it or not, 64% of occupational fraudsters have a college degree or higher. Older fraudsters cause significantly larger losses than their younger coworkers.
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Why Nonprofits Are Particularly Vulnerable to Fraud |
Nonprofits are more susceptible to fraud than their for-profit counterparts because they have fewer resources available to help prevent and recover from a fraud loss. As a result, the losses can be particularly devasting.
For example, a lack of internal controls and proper procedures for authorizing payments have recently created a nightmare scenario for Volunteers of America Southwest. The organization’s managers are accused of engaging in mismanagement, misuse of funds, conflicts of interest, potential fraud and double-billing of clients.
The nonprofit faces two whistleblower lawsuits, a $650M repayment demand by San Diego County and immeasurable damage to its brand.
In its 2020 Report to the Nations, ACFE found that the top three control weaknesses in nonprofits are lack of internal controls, lack of management review and an override of existing internal controls.
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How We Can Help
IAS can help you identify, deter, investigate and resolve fraud in your company. We can audit your internal controls, create a loss prevention and internal audit program, conduct loss prevention workshops, and most importantly investigate suspected fraud.
Our investigations can obtain signed confessions, restitution and even prosecutions.
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