Where Can You Find Fraud? Start with This Department First

According to the ACFE 2010 Report to the Nation, 80 percent of the fraudulent acts were committed by employees in six departments: accounting, operations, sales, executive/upper management, customer service and purchasing.  Overall, the Accounting Department had the highest percentage of cases at 22 percent, but only had a median loss of $180,000, compared to $829,000 for Executive/Upper Management. In the United States, the Accounting Department accounted for 24.3 percent of the cases.

For the Accounting Department, the five most common fraud schemes were check tampering, billing, skimming, cash larceny and payroll. (ACFE 2010 Report to the Nation)

Behavioral red flags are not proof that someone has committed fraud, but they can be a warning to management and others.  These red flags can include living beyond their means, financial difficulties, control issues, close relationship with customers or vendors, family issues.

If your organization suspects fraud, start with the Accounting Department, but don’t overlook the other departments that have access to financial data as well, like the executive management.


Case Study from Fraud Magazine: Trusting Assistants with Access

By Monica Dalwadi, CFE, CPA, CIA; Aaron Raddock, CFE, CFCM, Fraud Magazine

Explore the case study of Evelyn Reynolds, a trusted executive assistant, who embezzled more than $100,000 from a children’s charity for her own nefarious use. The authors outline how she did it and their investigation.

Many executives are lost without their professional assistants who control their daily activities — calendar appointments, meetings, telephone calls and expenses. But what if an assistant has too much control and exploits an executive’s trust?

Evelyn Reynolds, a supposedly faithful assistant to the chief operating officer at a prominent non-profit organization, perpetrated a multi-faceted fraud totaling more than $100,000. In less than 10 months, she provided herself with a rhinoplasty, a recreational vehicle and a pile of cash that she didn’t earn.

Click here to read more of the article in Fraud Magazine, or contact us for a PDF of the full piece (only ACFE members have full access to the online articles).