Fraud Prevention Tip #48: Suggestions for Small Businesses, Small Government and Not-for-Profits

Fraud Prevention Tip #48: Suggestions for Small Businesses, Small Government and Not-for-Profits

The Anti-Fraud Toolkit

The Anti-Fraud Toolkit Structure
In 9 modules, more than 6 hours of recorded video lecture, over 250 PowerPoint slides, and many practice ‘To-Do’ action items and practice tools (downloadable in each module), you’ll get the step-by-step, turn-by-turn instructions you need to take action right now. Short on theory and long on action steps, the lectures and tools in each module will enable you to take confident, effective action by building on the successes I’ve witnessed in my clients all of these years.
You’ll also get guidance on what not to do in the fight against fraud – to help you avoid common mistakes, focus your precious limited energy, and avoid undermining your own efforts through inefficiency and uncertainly!

Most smaller businesses, local governmental entities, and not-for-profits face the inherent risk of insufficient staff and limited control resources. These special challenges require extra effort by anti-fraud leaders. Here are seven ideas that will help.

  • Create a written Code of Conduct that addresses routine and non-routine situations staff will encounter in performing their work. Provide examples, short cases and answers to Frequently Asked Questions. Be wary of boilerplate terminology. Focus instead on meaningful real-world guidance for conduct.
  • Due to limitations in staffing and inadequate segregation of duties controls, managers should compensate by spot checking and re-performing the work of subordinates. Make this ‘quality check’ a daily habit.
  • Require that approvers carefully review all disbursement documentation prior to approval. Verify details, ask questions, and when in doubt, choose to follow up until a valid verifiable conclusion is reached.
  • Have organization bank account and credit card statements sent unopened directly to the chief executive. This executive should review all statements in detail as soon as they are received.
  • Verify the existence and legitimacy of all first-time payment recipients.
  • Make everyone take uninterrupted vacations or other time away from their jobs. Have other staff fill in for them and complete their work while they are away. This practice builds skills and acts as a deterrent to wrongdoing.
  • You simply must perform meaningful criminal background checks on employees and higher-risk volunteers. There’s no easy way around this one. Those terminated for cheating at prior employers know they need a new job right now. No delay. And prime targets for new jobs for these folks are the smaller business, governmental entity or not-for-profit that everyone knows has limited resources and staff to check backgrounds.

Comply with the privacy, anti-discrimination and other applicable laws. Beware of blanket policies that prevent hiring those with prior criminal records. Get competent legal advice and find a way to get these reviews done

John J. Hall, CPA

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 38-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”

 

 

preparation for fraud incident

Fraud Prevention Tip #43: Build The Response Team Before It’s Needed

Near our home, there’s a city firehouse. Inside 24 hours a day are trained professionals ready to go when the alarm sounds. Their equipment is maintained in outstanding condition, their trucks are fueled, and their protective jackets, boots and helmets are already in place. They don’t wait for the alarm to go off before thinking through what they might need, recruiting their staff, buying equipment and getting their training. That’s already done.

That’s exactly the way you should look at you ability to respond to fraud incidents. Evaluate your fraud response needs during periods of calm. Not crisis.

Gaps in capabilities should be addressed before a fraud incident is being pursued.

As part of fraud risk brainstorming, think through what skills might be needed later if identified risks become reality. In many organizations, these skills do not necessarily need to be available in-house. But you should know exactly who to call if you need them in a hurry. Assess internal capabilities. Build relationships with outsiders before they are needed.

Here is a list of good places to start.

Legal Oversight

At the center of the response team are lawyers skilled in criminal matters. These attorneys should be able to provide quick response guidance to members of the investigative team. They should be available when needed, and provide oversight of the investigative process. Consider other legal needs that may arise, such as employment law, government contracting, procurement, international commerce, real estate, technology, intellectual property, and environmental law.

Investigators, Fraud Examiners, and Forensic Accountants

This group will comprise the core investigative team. While the roles of the three groups mentioned in the title above are similar, the specific subspecialties of each are important to have available. These skills may all be found in one person, or we may need multiple experts to fill the investigative needs.

Certified Fraud Examiners

While there are many sources of help, many Certified Fraud Examiners (Association of Certified Fraud Examiners, Austin, TX www.acfe.com) are experts in fraud issues and can bring first-hand experience to your fraud incidents. In many organizations, CFEs are an integral part of the investigative team.

Internal Auditors

If your organization has a formal internal audit function, this resource should be utilized in pursuing reported suspicions. Internal auditors have the capability to review issues from the inside: that is, they can often pull data, double check facts and interview employees quietly. This allows the organization to take initial steps in the incident response process without attracting a lot of attention.

Experienced internal auditors have expertise in internal controls as a core skill. They should be an active part of efforts to identify fraud risks and assess the adequacy of prevention and detection controls. Using auditing analytical procedures and tools (including computer-assisted audit techniques), internal audit can also surface fraud indicators for further investigation. Last, they are a critical resource to management in efforts to strengthen controls after a fraud incident has surfaced.

Information Technology and Computer Forensics

Few business fraud cases fail to touch on electronic records. Information technology expertise is needed to assess the risks to these records and to assist in the collection of necessary data stored in electronic form.

Computer forensics expertise is often necessary to preserve data that will be used as evidence in legal proceedings. Qualified experts in these fields should be formally on call if not on staff. These skills should be found before you need them, as response time to collect and protect critical data may be very short.

Human Resources

The response team should include human resources specialists with fraud background. Fraud involves people, and often those people are employees.

Rights and obligations need to be honored. Laws and employment contracts must be respected. Decisions must be adequately and appropriately documented. Mistakes must be avoided. The qualified HR representative can assist in all of these concerns, and should be a core member of the response team.

John J. Hall, CPA

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”

 

 

he Anti-Fraud Toolkit Structure

Fraud Prevention Tip #42: Be Ready to Respond

Here’s an exercise that will keep you awake at night. Assume that despite your best efforts at fraud prevention, you get hit anyway. What should you expect when fraud is detected?

Explode False Beliefs

Start by exploding these three myths:

1. We’re ready to address what might come up
2. The authorities will take care of most of it for us
3. The insurance company will give us protection from loss

It would be great if these three statements were true – and sometimes they are. But often they’re not.

• Unless you deal with fraud on a regular schedule, you’ll find that you and your leaders may be very much unprepared to respond.
• The authorities will do their best to assist you in pursuing wrongdoing – if you cooperate fully with them and you are willing to supply the information they need to proceed. They are busy people just like you. They have limited resources and other priorities – again just like you.
• The insurance policy is a contract with requirements you must meet before any losses covered by the policy are paid. Are you in compliance? Have you ever read the insurance contract?

Once you have counterbalanced any existing myths and flawed beliefs, then do these three things:

The Anti-Fraud Toolkit Structure

The Anti-Fraud Toolkit Structure

In 9 modules, more than 6 hours of recorded video lecture, over 250 PowerPoint slides, and many practice ‘To-Do’ action items and practice tools (downloadable in each module), you’ll get the step-by-step, turn-by-turn instructions you need to take action right now. Short on theory and long on action steps, the lectures and tools in each module will enable you to take confident, effective action by building on the successes I’ve witnessed in my clients all of these years.
You’ll also get guidance on what not to do in the fight against fraud – to help you avoid common mistakes, focus your precious limited energy, and avoid undermining your own efforts through inefficiency and uncertainly!

Assemble the Team

There are inherent risks in responding to wrongdoing, misconduct and fraud. Legal, physical, career, reputation, regulatory, human resources and other risks should be managed by professionals with the requisite authority, background, resources, and interest. List the skills and relationships that will be needed when fraud is found. Recruit and prepare your team of experts in advance.

Prepare the Message

Before fraud is found (right now is a good time!) craft the basics of the message you may need to deliver to employees, customers, the press and others. Write out the bullet points of these messages before they’re needed. Be fully prepared to deliver these messages in an organized confident manner at the appropriate time and place, and by the appropriate authorized spokesperson. But get the basics on paper now when things are calm.

Put the Fraud Response Plan in Writing

Make sure that everyone in the organization knows who’s authorized (and who isn’t) to investigate, handle formal and informal information requests, and interact with any outside parties. Put this ‘crisis response plan’ in writing.

Correcting myths, preparing the team and messages and putting it all in writing isn’t everything, but it a foundation that will pay off many times over if you take care of it right now.

John J. Hall, CPA

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”

 

 

webinar training

Fraud Prevention Tip #40: Record an Anti-Fraud Webinar or Teleconference

Here’s where you get to have some real fun. Prepare and personally lead a 15-minute Webinar or audio conference call addressing one of the anti-fraud ideas on your list. Use any of the ideas in these Fraud Prevention articles as the basis for your script and slides.

Webinars and teleconference calls are an inexpensive, easy, low-risk way to teach. Avoid the theory and the normal long introduction of concepts and agenda. Don’t overthink it. Parachute right in like this:

“Hi, everyone. I’m John from the Corporate staff. Thanks for joining us today.”

Have you ever wondered about what details you should check before approving supplier invoices for payment [time cards, procurement cards, reconciliations, journal entries, standard month-end reports…]? Well, in this program I’ll give you great questions you should ask yourself before you put your good name on that payment. Let’s jump right in.

Question 1… Example 1… (Use the same ‘script’ in Fraud Prevention Tip #36 in this series as a format guide to all topics presented). Question 2… Example 2… (And so forth.)

Thanks for being part of this short Webinar. I hope I answered your questions about invoice approval. And if you want more – including our assistance on how to brainstorm risks in your department – just let us know. You can reach us at [email address] and [phone number].

Always remember, you’re the solution to our fraud risks. Don’t let it happen on your watch!”

You’re off and running. Get ready to be recognized as an expert-hero who is interested in helping everyone else do a better job.

One last point. You may be wondering if this Webinar suggestion steps on any print articles you have published addressing the same topic. Is it redundant? Maybe – but who cares. DO BOTH! Reach as many people as you can. And both ideas are easy and virtually free.

John J. Hall, CPA

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”

 

 

Group of Diverse People Holding Honesty

Better! Results Idea #9: Be Honest – What’s Holding You Back?

Better! Results Idea #9: Be Honest – What’s Holding You Back?

Coaching client Katie expressed her frustration with great passion and clarity. “I just can’t get the traction I need to move my career forward at the speed I want. Or any speed most days!”

Bang! She nailed it! So while she was in this charged-up state, we immediately invested 15 minutes in a simple exercise you or I can easily do on our own. We made a list of specific factors Katie believed were holding her back in her career.

Here are ten items from Katie’s list. She rattled these off in this order in less than three minutes!

1. A tendency to stall; to procrastinate rather than to take even simple first steps.sexy business woman with elegant suit climbing ladder with ambition
2. A difficult boss – who has a consistent habit of refusing to coach his subordinates in any area of their skills.
3. Time, or rather the apparent lack of it.
4. Inexperience and fear of speaking in front of others.
5. Fatigue. Feeling tired and worn down from the pace of daily commuting in traffic, deadlines, other staff who don’t pull their own weight, excessive email volume, and dozens of daily interruptions by others that break her concentration.
6. Lack of access or difficulty building rapport with those higher up in the organization.
7. A business environment where collaboration is outwardly discouraged.
8. Too many ‘bends’ in even the most simple of processes – a bend being any step, approval, document or other administrative hurdle that slows the process down for no apparent benefit.
9. Constant low priority busy work – draining limited energy away from getting important things done.
10. Unclear performance criteria.

I acknowledge that the creation of a list doesn’t solve anything. Far from it. But rather than a foggy feeling of general frustration, it gives us clear a baseline to work from. From your list, you can take the next steps of identifying the factors you have control over and lay out a plan of action. You can also focus in on factors you can’t control, and devise a plan to work around, over, under or with these barriers.

The first step of any improvement plan is the gift of quiet time to assess where we are right now, what specific factors around us move us forward and which ones get in our way. From that analysis, a plan comes next.

Be honest – what’s holding you back? Give yourself the gift of 15 minutes of quiet time to develop your list. Decide right now which factors you can address and the ones you have to tolerate at least for the short run. Write it out in a bullet point list. It it’s not written, it’s not a plan. Then act on the issues you can influence. Simple steps every day add up to measurable results.

No one else is responsible for your progress except you. Like Katie, take complete control of your future. Right now – make a list, build a plan, and start taking action.

John J. Hall, CPA

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”

 

 

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