Forensic Focus Summaries:

APR/MAY 2008 Issue of FORENSIC FOCUS

Use a risk assessment to fight fraud before it starts

Under the Sarbanes-Oxley Act (SOX), publicly traded companies must conduct fraud risk assessments, though SOX and federal regulators have offered little guidance on how to do that. Privately held businesses are under no such legal obligation. But it's in their best interests to assess their fraud vulnerability with the assistance of a forensic accountant. In fact, a thorough risk assessment, which includes a close examination of internal controls, management and employee interviews, and goal prioritization, should be the core of every company's antifraud program.

Who benefits from your energy program?

Con artists exploit conservation efforts
High oil prices and legislation to reduce greenhouse gas emissions and conserve energy are forcing many businesses to become more eco-conscious. This heightened awareness ultimately may benefit the environment — but it's definitely proving profitable for opportunistic con artists perpetrating energy investment scams. As this article explains, companies also need to look out for brokers selling worthless carbon credits and services that claim to eliminate greenhouse gases in manufacturing plants.

Trust isn't enough

Nonprofit organizations must guard against fraud
Because their cultures are oriented toward helping others, nonprofits often find it impossible to imagine that anyone working for them would steal. The reality is that people who defraud nonprofit organizations typically are liked and trusted employees and volunteers who otherwise appear committed to the cause. This can make rooting them out difficult. This article lists several fraud schemes common to nonprofits and provides prevention tips, including limiting access to sensitive information and comparing cash receipts to the amount of event tickets sold.

“ Red flags rule” boosts business security requirements

The short article summarizes the new federal “red flags rule” intended to curb fraud.
By Nov. 1, 2008, all financial institutions and creditors — including many auto dealers
and retailers — must have programs in place that enable them to detect and prevent identity theft and to identify certain patterns and practices that suggest fraud.

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