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APRIL 2021
Fight Fraud Newsletter
Welcome to the First Edition of the Fight Fraud Newsletter
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John Capizzi, Principal, IAS
Internal fraud can destroy your business. It exists across industries, demographics, and departments. Virtually no organization, including yours, is immune.

Fraud can take many forms. The vast majority of cases involve employees stealing or misusing resources. Financial fraud is the least common but costliest type of occupational fraud. Bribery, conflicts of interest and extortion lie in the middle in terms of frequency and financial loss.

Quick detection is vital to protecting your organization from damage. According to the Association of Certified Fraud Examiners, the time between when a fraud begins and when it is detected is typically 14 months. The longer it lasts, the more it costs.

Preventing and detecting fraud involves not only implementing strong internal controls, but also knowing who commits fraud, why they do it, how they do it and how to uncover it.

We’ve created the Fighting Fraud Newsletter to not only help you identify and prevent fraud, but also show you what’s involved in investigating fraud, gaining restitution and, when needed, obtaining convictions. Each edition will be filled with strategies, trends, news and examples to help you win the battle.
Are you Placing Too Much Trust in One Employee?
Red Flags of Fraud
Are there red flags of fraud flying over your company? There could be if you bestowed too much control upon one employee.

You might be surprised to learn that one of your most trusted employees could represent one of the biggest threats to your organization's financial health, especially if they are vested with too much internal control. Roughly 15% of all internal fraud is committed by employees who have total control over accounts payable, bank accounts, inventory, physical controls, etc.

Employees that display control issues and are unwilling to share duties should raise an immediate red flag.

You can protect your business by dividing responsibilities among multiple employees, conducting regular audits, establishing an anonymous system for reporting suspicious activity and identifying potential blind spots.

Check out 23 Red Flags of Fraud to learn about other areas where your business may be vulnerable to fraud.
Top Five Fraud Schemes Due to Coronavirus
Where Experts Expect Fraud to Grow This Year
Fraud Schemes
Thanks to the coronavirus, fraud is expected to increase significantly this year. Cyberfraud could rise 90% while fraud by vendors and sellers is expected to grow as much as 83%.

According to Experian's 2021 Future of Fraud Forecast, digital acceleration "has created a perfect storm for fraudsters to quickly find new ways to steal funds."

The huge rise in unemployment fraud extends beyond fraudulently applying for benefits to include the Payment Protection Program and the rush to outfit companies with personal protective equipment.
Wanted: Employee Thieves
Fraud can affect your company's morale, profit margins, success and reputation. In his book, Wanted: Employee Thieves: How a Forensic Fraud Examiner Can Save You Time, Money and Stress by Getting Them to Voluntarily Confess, John Capizzi provides an inside look at addressing internal fraud and explains how to:

  • Discover and prevent internal fraud from developing
  • Identify red flags and the significant benefits of loss prevention training
  • Identify dishonest employees
  • Discover weak or compromised internal areas that can trigger fraud
  • Demonstrate to employees that they are an asset to the company rather than just a body or number
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.
How Technology is Being Used to Fight Fraud
The use of exception reporting and automated monitoring to track fraud is expected to grow 72% over the next two years. See how companies are using biometrics, artificial intelligence and other technologies to fight losses.

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Internal Audit Services Inc., Int'l.
Phone: 561.602.0571
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