Fraud is a critical issue that can severely impact any business, and understanding how perpetrators conceal their activities is essential to safeguarding your company’s financial health. In McAllen, CPA professionals like those at Burton McCumber & Longoria are equipped to identify and address these illicit actions before they result in significant losses.
Identity and Fraud Patterns
According to the Association of Certified Fraud Examiners (ACFE) in their report, Occupational Fraud 2024: A Report to the Nations, the identity of the perpetrator and their position within the company significantly influences the potential damage of fraud. Employees typically cause median losses of $60,000, while managers account for $184,000, and owners or executives can lead to a staggering $500,000 in median losses. Notably, men, long-tenured employees, those with higher education, and individuals over 50 are often associated with more costly schemes.
While these statistics do not imply that individuals fitting these profiles will commit fraud, they serve as a guide for organizations to implement effective monitoring and safeguards. Recognizing these patterns is the first step in protecting your business.
The Role of Physical Documents in Concealing Fraud
The ACFE report highlights that 89% of fraud incidents involve some form of concealment, with 41% of fraudsters creating or altering physical documents. This is often because many internal controls rely on paperwork, making it a primary target for fraudulent activity. For instance, executives might alter documents and inhibit queries from other employees.
Employees should be trained to spot red flags such as typos, font inconsistencies, and calculation errors in documents. Encouraging a culture where employees feel comfortable reporting suspicious activities, through tiplines or anonymous web portals, is vital.
To combat the destruction or withholding of physical documents, which accounts for 23% of cases, establish strict checklists for required documents for every financial transaction. Missing documents should trigger alerts and halt transactions until resolved. Tracking these incidents can reveal patterns indicative of fraud.
Electronic Files and Digital Deception
Fraudsters frequently create or alter electronic documents, noted in 31% and 28% of cases respectively. Employees responsible for reviewing transactions and digital documents should be trained to scrutinize the properties of these files for signs of unauthorized use, such as the document’s author, creation date, and revision history.
If you find a document authored or updated by someone outside of the expected department, like a non-accounting employee handling accounting documents, raise the alarm.
Engage a McAllen CPA for Fraud Investigation
Understanding these concealment methods enables businesses to interrupt potential fraud schemes early. If you suspect an employee of fraudulent activity, it’s imperative to act swiftly and decisively. Contacting a McAllen CPA from Burton McCumber & Longoria can ensure that a thorough investigation is conducted, minimizing the risk and impact on your business.
At Burton McCumber & Longoria, we understand the complexities of occupational fraud and have the expertise to uncover and address these issues effectively. If you suspect fraud within your organization, don’t hesitate to reach out to us for professional guidance and support in protecting your assets and ensuring the integrity of your financial operations.
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