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MANAGEMENT

Five Simple Controls to Prevent Fraud

Businessman holding up magnifying glass

Strengthen your processes and your deterrence.

By Ed Mendlowitz
77 Ways to Wow!

I’ve talked about fraud in not-for-profits, but it is also a serious issue for business firms. Here are some cash fraud scenarios and prevention techniques that can apply to all types of organizations.

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SCENARIO: One employee who is responsible for, or has access to, the handling, recording and mailing of cash disbursements creates a non-existing vendor who sends the company invoices, which are paid.
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ADVISORY & CONSULTING

Help Not-For-Profits Avoid Fraud

Five ways to reassure both regulators and donors.

By Ed Mendlowitz
77 Ways to Wow!

Again and again, stories appear in newspapers about abuse and misuse of funds in not-for-profit organizations. In many cases, these frauds have been schemes that have been going on for numerous years.

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The frauds are usually carried out by long-serving employees who earned reputation and trust that resulted in relaxation of controls or oversight. Many times, this provides temptation and ample opportunity to commit and sustain fraudulent activity over long periods paired with a reduction in the “fear” of being caught!
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PRO Member Exclusive

Give Tax Clients Better Instructions

Eleven steps that will help them help you.

By Ed Mendlowitz
Tax Season Opportunity Guide

Providing instructions of what a client needs to do must be clear enough so that the client doesn’t call you to find out what to do.

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Sometimes taking an extra minute to lay out what the client should do can eliminate that call or indecisive moment a client might feel.
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BUSY SEASON MANAGEMENT

Five Procedures to Simplify Your Tax Season

Three young businessmen in office training session

Yes, there are checklists.

By Ed Mendlowitz
Tax Season Opportunity Guide

One way to guarantee extra work is to have everything always done differently each time it is done.

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Not establishing uniform procedures is bad business and unnecessarily consumes part of your life. Consistency in performance reduces work and review time and creates a greater reliance on the staff people.
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ADVISORY & CONSULTING

Three Ways to Prevent Charity Theft

Directors must read and understand financials.

By Ed Mendlowitz
77 Ways to Wow!

Hardly a week goes by that I do not read about a theft, fraud, misappropriation, defalcation or egregious wasteful spending at some charitable organization. Some are perpetuated over many years – perhaps as many as seven years.

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Lack of controls, oversight, disinterest or lackadaisical care creates an atmosphere where an already weak person can spot an opportunity, or perhaps an uncaught or unguarded careless mistake gives birth to a pattern of ongoing criminal action by someone who never had an unlawful thought.
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MANAGEMENT

When You Might Need a Forensic Professional

Numbers floating around man examining calculator with magnifying glass

Four ways to add control to your systems.

By Ed Mendlowitz
77 Ways to Wow!

Various professionals and consultants can set up controls with in-house accountants, the CFO and financial professionals employed by the firm, but they then leave, and the organization is left with administering it. Unless there is a highly disciplined and committed leadership within the company, the initial enthusiasm dissipates soon after.

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A trained forensic professional will detect flaws and cracks in systems and plug them up. They are also transaction-oriented, more than procedure-oriented, so they examine more closely how things are being done and look for subtle deviations from how they are supposed to be done. This skill should be employed in oversight and periodic monitoring of the controls they helped establish.
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MANAGEMENT

Deter Fraud with Forensic Techniques

person taking inventory on a tablet

BONUS: 11 services that create a “control culture.”

By Ed Mendlowitz
77 Ways to Wow!

Trained forensic professionals investigate accounting and financial transactions that are, or will become, subject to legal proceedings. It is an early step in a potential war, and many times it is the first shot.

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Attorneys and c-level executives are often not familiar with forensic techniques and see them as a means to quantify a loss. Financial forensics also provides a means to deter and detect fraud. Today, I share my views on the value of forensic techniques used to deter fraud and encourage CVAs to consider attending the CTI’s Forensic Accounting Academy™ or Fraud Risk Management courses offered through the MAFF programs.
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AUDIT & ASSURANCE

Six Ways an Internal Audit Helps

The six principal tasks required.

By Ed Mendlowitz
77 Ways to Wow!

Every business has a system of internal controls. Very small businesses likely rely on luck and the honesty of their one or two office staff. Small businesses rely on their independent auditors to check their system once a year and large companies employ one or more internal auditors on their staff.

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This post explains the internal audit process that applies to every size business. Businesses have voluminous transactions; multiple people involved, companywide; and assets that need protection.
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MANAGEMENT

Systems Must Be Used, Not Just Implemented

 

Internal controls are no good on their own.

By Ed Mendlowitz
77 Ways to Wow!

I have addressed the importance of controls when trying to get a client. But it is also important to retain the client. A good system that is not monitored is a sure way to not only lose the client but be kept awake at night.

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If you have been around long enough, you’ve experienced a theft at a business or not-for-profit organization. For nearly ever fraud I have seen, the slightest effort would have thwarted those frauds. Nowadays the only frauds I encounter are new engagements, where I try to quantify what was taken.
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MANAGEMENT

What Internal Controls Mean to Clients

man writing in notebook

And how to explain them.

By Ed Mendlowitz
77 Ways to Wow!

What are internal controls? Auditors widely use this term. It also appears multiple times in engagement letters for audits of businesses and not-for-profits, but I do not believe many outside of the accounting profession really know or understand what internal controls are. I will try to explain it here.

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Internal controls refer to an organization’s system of deterrence, oversight, checks and balances. An illustration is where someone in a business writes and mails the checks to pay a bill. If this same person then receives the bank statement and performs the reconciliation of that account, there would not be any control or oversight on that person and whether the payment was proper and not misdirected. They are checking their own work. This is how many frauds occur.
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