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July 2021
Fight Fraud Newsletter
How to Fight Fraud on a Limited Budget
Training
A recent article in the Journal of Accountancy details several ways companies can fight fraud during the pandemic. According to the author, they should start by identifying the greatest threats to the organization and then close internal control gaps in high-risk areas.

They should support employees by offering an avenue for them to seek help with personal and financial pressures. Otherwise, employees under financial strain "could resort to dishonest or fraudulent acts out of self-preservation."

Additionally, they should reinforce anti-fraud controls. Specifically, companies should revisit anti-fraud training for employees and update the content to cover the "risk, concerns and processes in the current environment."


~ John Capizzi, Principal, IAS
Do you Have Employees Living Beyond Their Means?
Red Flags
An employee living beyond their means should set off a red flag alert. When an employee is living a lifestyle that appears to unreasonably exceed their income, they could be enriching themselves at your company's expense. They could be skimming receivables, tampering with checks, falsifying disbursements, overstating expenses and more.

In fact, every year since 2008, individuals living beyond their means topped ACFE's list of the key warning signs exhibited by fraudsters. (See the chart below.)

When an employee feels financial pressure, has the opportunity to steal and can rationalize their behavior, they could easily become a liability to your business.

Check out 23 Red Flags of Fraud to learn about other areas where your business may be vulnerable to fraud.
Five Ways to Improve Fraud Preparedness During COVID-19
PwC's Global Economic Crime and Fraud Survey 2020 found that 47% of respondents had experienced fraud in the prior 24 months. Thanks to COVID-19 disruptions and economic uncertainties, "disturbances in normal processes, controls and working conditions gave malicious actors opportunities to commit fraud."

The report offered five recommendations to fight fraud:

  1. Prepare for extended remote working - provide your workforce with secure access while staying alert to additional fraud threats.
  2. Educate your workforce on threats - reinforce your code of ethics and rules, and ensure workers of their value as anti-fraud partners.
  3. Communicate across your stakeholder base - keep them aware of perceived risks, prevention strategies and contingency plans.
  4. Keep an eye on your partner network - are they positioned to support your fraud management efforts in a time of crisis?
  5. Sharpen your fraud detection - recalibration can reduce false positive fraud alerts and increase the effectiveness of your detection program.
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.
View the IAS Newsletter Archive
Behavioral Red Flags of Fraud
A fraudster living beyond his or her means is the most common red flag by a sizable margin. This has ranked as the number one red flag of fraud every year since 2008. Source: ACFE's Report to the Nations: 2020 Global Study on Occupational Fraud and Abuse.
warning signs
Internal Audit Services Inc., Int'l.
Phone: 561.602.0571
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