Fraud Reviews

Fraud Reviews: In case of emergency, don’t break glass – call us!

Fraud often results in a financial loss, and if fraud goes undetected for a long period of time, these material losses can be significant. Beyond material losses, fraud occurring within an organization can create a culture of distrust that may last for years after the incident.

Our fraud reviews are designed to help identify the variety of forms where fraud may exist:

  • Misappropriation or inappropriate use of assets
  • Falsely reporting of operations or performance
  • Avoidance of liabilities and expenditures
  • Improperly obtained revenue or assets
  • Otherwise harming the organization’s finances, operations or reputation

Every individual involved in an activity or situation has three attributes that determines whether he or she will commit the fraud: Incentive, Opportunity, and Rationalization. Together, these attributes create the fraud “triangle”.  Based upon specific circumstances in your organization, all three of these factors may be contributing to someone considering a fraud at this very moment. Current economic conditions, illness of a loved one, stress at home, addictions, overspending, animosity for manager/management, etc. may all contribute to shifting the triangle to the point that a fraud occurs.

If you’re concerned about the risk of fraud or worried that it has already occurred, our fraud review can help. The benefits of this type of review can go beyond the discovery itself, because fraud reviews also help set the tone within your organization that you are serious about reducing the risk of fraud and can deter potential “fraudsters” from even attempting such actions. Clark Schaefer Consulting applies a multi-phased approach to assisting our clients in this process:

Phase I – Assessment

  • Assess the current and historic accounting records available to understand balance sheet accounts as well as cash flow. If records are unavailable or incomplete, we will recreate statements based on bank account statements.
  • Perform data analytics using computer assisted audit techniques (CAAT). We use CAAT routines to evaluate financial transactions and we use a tiered-exception filtering process whereby we first exclude transactions most likely to be properly recorded, and successively isolate categories and classes of transactions susceptible to mis-recording, manipulation, or fraud.
  • Identify one or more groups of transactions warranting further investigation. We will discuss with you the investigative procedures to be applied.

Phase II – Investigation

Implement investigative steps based upon the information obtained and patterns identified in Phase I. The specific steps will depend on the Phase I results; however, the following types of procedures may apply:

  • Following transaction postings from sub-systems to the general ledger.
  • Reviewing supporting documentation such as correspondence, scheduling events, emails, system authorizations, bank records, control logs, and tax returns.
  • Identifying the individual(s) whose work affected the exception transactions; identify other areas of custodianship and reporting accessible by this person(s).

Phase III – Preliminary conclusion and follow-on procedures

  • Quantify any errors, irregularities, or mis-reported results identified.
  • Identify whether any records or other input from outside sources (e.g., vendors, financial institutions, intermediaries, customers/patients) is required to be able to conclusively resolve the noted exceptions.
  • Consult with you about whether to pursue outside input and the advisability of retaining legal counsel.

Phase IV – Reporting & Beyond

Present our findings as a written report describing the nature of our engagement, our procedures performed, and our findings. Our team provides support for all levels of investigations up to and including claim documentation and, if required, through judicial and legal processes.

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A regional CPA consulting practive serving elite and emerging companies with practical solutions in finance, control, and technology. Offering a compelling alternative to national accounting and consulting firms, executing strategies and delivering results. We dedicate intellect, methodologies, and resources to ensure your success. A virtual extension of your department to enhance your capabilities and capacity.
One East Fourth Street
Cincinnati
Ohio
45202
USA