Читать книгу Fraud Examination Casebook with Documents - Beecken William H. - Страница 6

WHEN YOU EXAMINE AN ALLEGED FRAUD, many of the facts are not readily apparent. Fraud examiners must dig up the hidden facts. In this casebook, you will learn a few fraud examiner tools and how to prepare a fraud examination report, associated schedules, and trial‐ready audiovisuals.

Fraud examiners work in public and private entities: law enforcement agencies, insurance companies, Certified Public Accounting (CPA) firms, Certified Fraud Examination (CFE) firms, consulting firms, and corporate and university internal audit departments, to name a few. In these cases, you are working for an independent forensic accounting firm that specializes in forensic accounting and fraud examination. You work for an attorney under attorney‐client privilege (i.e., your report is not readily available to other parties).

Fraudsters have hidden personal and/or financial problems that function as the pressure (motive) for committing the fraud. In these cases, you must discover their hidden problems by response to the requirements of the insurance contract, subpoena, and after serving a properly signed authorization to release financial records to the correct source and requesting the correct information. If you want to learn more about hidden personal and/or financial problems, review the doctoral research of Donald R. Cressey.

All five cases in this book are connected via marriage. Greg and Tonya Larsen are husband and wife and their finances are intertwined. Greg's finances impacts Tonya's finances, and vice versa. Greg owns and operates Larsen Convenience Store, Canton, Georgia, as a sole proprietorship. Tonya is the office manager for Anderson Internal Medicine in Lawrenceville, Georgia. As a sole proprietor, Greg must file an Internal Revenue Service (IRS) Schedule C (Profit or Loss from Business – Sole Proprietorship) with his personal federal income taxes.

FRAUDULENT FINANCIAL STATEMENTS

Around midnight on December 31, 2015, a fire breaks out at Larsen Convenience Store.

Under his business insurance policy, Greg must submit a proof of loss and financial documents to his insurance company and submit to an examination under oath (EUO). Insurance companies often hire independent forensic accounting firms to perform a business interruption (BI) calculation that covers the loss of income as a result of the disaster. The BI calculation, which is also used as a fraud examination tool, includes net profits that would have been earned, fixed costs that continue to be incurred during the business interruption, and reimbursement of reasonable extra expenses. The calculation starts with a horizontal and vertical analysis of several months, quarters, or years of financial statements (whatever is available). This analysis often detects anomalies for closer examination and is used to calculate an estimate of the actual loss. It also detects trends (e.g., seasonality, increases/decreases in revenue and expenses) and can be compared to benchmarks (comparisons with similar‐sized companies in the same industry), budgets, and required reports to franchisers and industry suppliers.

In large or suspicious disasters, insurance companies also hire attorneys to conduct the EUO. Crucial to developing EUO questions is the BI and/or fraud examination report.

The BI calculation often takes four to eight months because of delays in receiving needed financial information. During this period, the insured often receives no income from the business.

CHECK FRAUD, DEBIT CARD FRAUD, CASH LARCENY

Just after Greg submits the proof of loss and requested financial documents (last three IRS individual tax returns [including Schedules C] and last three SBA personal financial statements) to the insurance company in late March, Anderson Internal Medicine receives a call from its banker. The business checking account is overdrawn by thousands of dollars. Working late into the night, Tonya changes IDs and passwords, shreds patient billing files, and quits.