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         Tuesday Tips and Tricks
               June 24, 2014


Is Your Organization Susceptible To Fraud?



The Association of Certified Fraud Examiners recently released its 2014 Report to the Nations. While there were no significant changes, there were some key points worth mentioning.


Educating management and business owners on how to implement internal controls seems to have paid off over the past four years. Fraud related activities due to the lack of internet controls have decreased by 5.6% since 2010 for all size businesses, but not quite as much for smaller organizations. Companies having anti-fraud processes in place correlated with reduced losses and shorter duration to detection.


Fraud cases due to lack of management review have increase by 2.1% over the same four year time period. It is estimated that one-fifth of fraud related activities in this area could have been prevented if management had done a better job of reviewing transactions, accounts or processes. Since the average age of a perpetrator is between 30 and 50 and have tenure with the company or organization, management becomes less diligent in its oversight of prevention controls.


Asset misappropriation is still the most common type of theft, representing 85% of all cases in the study. Lack of internal controls, lack of management review, and override of existing internal controls continue to be the top three vulnerable areas when it comes to employee fraud.


Small businesses continue to be the most vulnerable to fraud because they generally don't have the staff or financial resources larger companies do for prevention. But even with limited resources, there are controls that can be put in place to deter fraud. Having an anti-fraud policy, formal management review of procedures and anti-fraud training for employees are just a few.


To see if your organization is at risk for employee fraud, ask for our Fraud Checklist. Then call us for a free evaluation of your checklist.



Keep Track Of Your Outsourced Work


A software developer at a U.S. company secretly outsourced his job to China so he could spend his work days watching cat videos, browsing Reddit and shopping on eBay, according to Verizon's security team.


The developer, described as an unassuming man in his 40's who worked for a "critical infrastructure company,", paid a company in Shenyang, China, just fifth of his six-figure salary to do his work while he goofed around on web all day, according to investigators for Verizon, which handled the company's tech operations.


The unidentified company began investigating last May after noticing someone logged onto their private network from China. The person was using the unidentified office drone's log-in info.  


The programmer, meanwhile, identified as "Bob," was at work at the time, "right there, sitting at his desk, staring into his monitor," Verizon inspector Andrew Valentine wrote on the security blog.


Verizon investigators searched Bob's computer and found hundreds of invoices from a third-party developer in Shenyang, as well as evidence he had sent the company his log-in credentials.


Investigators also got a peek into Bob's daily web activity.


He spent most mornings watching cat videos and surfing Reddit. In the afternoons, he browsed for bargains eBay and cruised Facebook before clocking out at 5 p.m.  


"Evidence even suggested he had the same scam going across multiple companies in the area. All told, it looked like he earned several hundred thousand dollars a year, and only had to pay the Chinese consulting firm about fifty grand annually," Valentine wrote.


He'd been running the scam for at least six months, the blog said. During that time, he received sparkling performance reviews from the company's HR department. "Quarter after quarter, his performance review noted him as the best developer in the building," Valentine said.


British tech news site The Register said Bob was fired.




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