Barb Bartlein’s article about my book, Essentials of Corporate Fraud, was featured on Networking Today last week. A big thank you to Barb for creating such great buzz about my book, and for help getting the word out about what executives need to know about employee fraud. Read the rest of this entry »
Financial Executives International polled companies for the 7th year in a row to determine how much it costs to comply with Section 404 of the Sarbanes-Oxley Act. This year, they talked to 185 companies with average annual revenues of $4.7 billion.
The total average cost of compliance was $1.7 million in 2007. This is a decrease from the prior years.
The survey also asked “accelerated filers” (companies with market capitalization above $75 million) about their audit fees for 2007. The total audit fees for these companies averaged $3.6 million, up a bit from 2006. Read the rest of this entry »
Ken and Daria Dolan had a really good post on WalletPop today about the tricks credit card companies play. Yes, they’re all legal. Yes, they’re all outlined in your credit card agreement. But they are a bit sneaky and can catch you off guard.
Unfortunately, if you want to play the credit card game today, it’s your responsibility to know and abide by these rules, sneaky or not.
Here are the seven… if you want all the details you’ll have to check WalletPop:
The website RealScoop uses voice analysis to analyze statements made by corporate executives (or others), with the result shown on the “Believability Meter”. How cool is this? (UPDATE: Likely all a fraud and/or complete coincidence as voice analysis is unreliable. See comments below.)
The recently posted some video of Alan Schwartz, CEO of Bear Stearns, talking about liquidity problems at the firm just a couple of days before the firm imploded. The more questionable the statements of the person, the more red you see on the meter… Read the rest of this entry »
Cynthia Cooper was a true corporate whistleblower. She became famous, not by choice, but because of the WorldCom financial statement fraud valued at $11 billion. She was the Vice President of Internal Audit at WorldCom, a position that was not easily obtained. She almost single-handedly created the internal audit department at WorldCom, and her book Extraordinary Circumstances: The Journey of a Corporate Whistleblower
Things started going wrong at WorldCom very early. The company went on an acquisition spree, and the merging of many small companies, managers, and accounting systems was a disaster waiting to happen. Cynthia says that WorldCom was much better at acquiring companies than integrating them, and that is clear.
From an accounting perspective, it was next to impossible to create a properly controlled system. There were too many small systems being pieced together, and it was easy for numbers and authorizations to get lost in the shuffle. This struggle is well-documented by Cynthia, who no doubt painstakingly researched the various acquisitions in order to give such a complete history. Read the rest of this entry »
I’m doing another round of interesting search engine queries. Most of these were from Google. Some were from other search engines. But these are the things people are looking for, and it just happens to lead them to this site:
Search: sarbanes oxley act positive benefit
Answer: Not so much. I maintain that there has been little improvement in fraud prevention in companies, at too high a cost from Sarbanes-Oxley. There may have been incremental improvements, but they haven’t offered any significant reduction in fraud so far. (Reflections on Sarbanes-Oxley Act of 2002)
Search: Employee Expense Report theft Read the rest of this entry »
Barb Bartlein is known nationally as “The People Pro“… offering advice and strategic assistance in dealing with people issues. She assists clients with management training, professional mentoring, and employee management issues. She’s a nationally syndicated columnist for The Business Journal, a successful author, and one funny lady. Her humor his lit up audiences for years.
She featured Essentials of Corporate Fraud in her recent newsletter, and this is the article she wrote about it: Read the rest of this entry »
From the AOL Small Business welcome screen:
The actual post is on WalletPop today - When employees steal: Five reasons your business could be vulnerable to fraud. And the post links to my book, Essentials of Corporate Fraud.
There are already a couple of interesting comments. And they should get better throughout the day. AOL readers are always sure to leave unusual comments.
Question: why would companies overstate inventory
Answer: There are a couple of reasons why a company might overstate inventory. They both relate to reducing expenses and therefore increasing the company’s profit.
If inventory is overstated, it means that cost of goods sold is understated. This could be a case of not writing down inventory that has lost value, or of simply not expensing out items of inventory that have already been sold.
Inventory can also be overstated by dumping business expenses into inventory. What better place to hide expenses that you don’t want to properly recognize in the current year.
And it’s pretty easy to manipulate inventory figures. There are a ton of individual transactions throughout the year, and the auditors can’t possibly test many of them. And inventory counting procedures at year end are easily circumvented to cover fraud. This is a financial statement line item with a very high risk of fraud.
No matter the motivation or the mechanics of how it’s carried out, overstated inventory quite simply causes a company’s profits to be overstated as well.
If there’s one silver lining to this case, it’s that the defendants are apparently admitting that they cheated Social Security. But now the bigger problem is that they’re saying it’s the government’s fault.
Last month 83 people were charged with participating in a $663,000 fraud that spanned 15 years. The defendants are accused of falsely telling the Social Security Administration that their benefit checks were lost. They would receive a replacement check, and cash both the replacement and the original (which was never really lost).
But in true American style, the defendants say it’s not their fault. It’s actually the government’s fault that they stole money with this scheme. How could it be the government’s fault? The defense says that when the government found that both checks were cashed, they asked the defendants to repay it. *gasp* Really? Read the rest of this entry »
