Bond Beebe http://www.bbforensic.com Thu, 24 May 2012 06:54:30 +0100 FeedCreator 1.7.2 BBforensichttp://feedburner.google.com http://www.bbforensic.com/fraud-prevention/benefit-plan-fraud-prevention.html Posting by Jennifer Hohman, CPA P: 301.272.6011 | E: hohman@bbcpa.com (mailto:hohman@bbcpa.com) There are several fraud risks inherent in the payroll audit process for multiemployer employee benefit plans, as well as risk that the revenue will be lost from inefficient operations. When was the last time you analyzed your payroll audit process to see if it complies with your internal control policies? How efficient are your payroll audits? Wed, 16 May 2012 13:31:36 +0100 http://www.bbforensic.com/forensic-accounting/hiring-a-forensic-accountant.html Posting by Jennifer Hohman, CPA P: 301.272.6011 | E: hohman@bbcpa.com (mailto:hohman@bbcpa.com) Not all forensic accountants are created equal. Just as you would with any service provider, you must exercise due diligence when selecting a forensic professional, ensuring that you choose an individual with the right credentials for your case. There are four key factors to consider: Certifications, Experience, Reputation and Capabilities. Thu, 03 May 2012 14:32:11 +0100 http://www.bbforensic.com/computer-forensics/computer-forensics.html Posting by Alex Helfand, EnCE P: 301.272.6022 | E: helfand@bbcpa.com (mailto:helfand@bbcpa.com) In a world so dependent on technology, it is becoming more important than ever for computers to be investigated as part of accounting fraud cases. It may be obvious to assume that when looking at a hard drive, an investigator will be able to see the files saved on the computer. However, there is much more value to performing a computer forensic investigation than the aforementioned. Mon, 30 Apr 2012 09:23:31 +0100 http://www.bbforensic.com/fraud-investigation/guide-to-fraud-investigation-2.html Posting by Joshua Smith, CPA, CFE P: 301.272.6076 | E: smithj@bbcpa.com (mailto:smithj@bbcpa.com) In my previous post (fraud-investigation/guide-to-fraud-investigation.html) , I detailed the initial stages of a fraud investigation. This post reviews the final stages of an investigation and how a conclusion is reached. Creating the Hypothesis and Collecting the Data Once the interviewing process has concluded, I will brainstorm possible ways the fraud could have occurred and then formulates a hypothesis of how I believe the fraud occurred. This is the point in which I begin to collect “hard” evidence to substantiate the case. Evidence can be obtained in a variety of means and it is important to conduct the investigation in a manner that will maintain the credibility and admissibility of the evidence obtained in the courtroom, should the case go to trial. There are many ways to collect information to substantiate a hypothesis - reviewing physical documents, analyzing computer equipment, additional interviews with employees, and attempting to recreate the fraud. In an increasingly technological age, it is essential to obtain information from computers and other digital devices (articles/digital-forensics-litigation-support.html) in order to properly determine how the fraudulent activity may have occurred and to build a sufficient case against the perpetrator. Normally, the investigation focuses on employees believed to be directly involved with the crime. At this stage in the investigation, it is important to look for any other sources of potential fraudulent activity so that the total loss to the organization can be determined. Once the examination has been concluded, the findings of the investigation are communicated to the client. Tue, 24 Apr 2012 09:53:39 +0100 http://www.bbforensic.com/fraud-investigation/guide-to-fraud-investigation.html Posting by Joshua Smith, CPA, CFE P: 301.272.6076 | E: smithj@bbcpa.com (mailto:smithj@bbcpa.com) (mailto:) Recreating fraudulent employee activity can be difficult, but with a well-organized approach, a Certified Fraud Examiner (CFE) may be able to determine how, and to what extent, fraud has occurred. In this two-part blog post, I will discuss the basic procedures employed in fraud investigation and provide some real-world examples of their applications. While the procedures are fairly universal, it is important to note that no two frauds are alike, and these procedures may not be useful in every investigation. Wed, 11 Apr 2012 11:00:05 +0100 http://www.bbforensic.com/blog/closed-bank-account.html Posting by John Merchant, CPA, CFE, CFF P: 301.272.6030 | E: merchant@bbcpa.com (mailto:merchant@bbcpa.com) Senior management of businesses, non-profit organizations and employee benefit plans often find that their organizations are maintaining bank accounts that are no longer needed. Consequently, they instruct someone within the organization - often the chief financial officer, the controller, or a bookkeeper - to close the account. The person charged with closing the account will normally provide a bank statement showing that the account balance has been reduced to zero as evidence of completion of the task. Executives must understand that this is not sufficient evidence and beware the fraudster that knows this, as well. Tue, 03 Apr 2012 16:16:22 +0100 http://www.bbforensic.com/fraud-investigation/financial-statement-fraud-2.html Posting by Tara McKinney, CPA, CFE P: 301.272.6018 | E: (mailto:) mckinney@bbcpa.com (mailto:mckinney@bbcpa.com) In the previous post (fraud-investigation/financial-statement-fraud.html) , I reviewed common motivations for committing financial statement fraud, as well as several common ways that financial statements can be manipulated. This post covers additional misrepresentations and how forensic accountants identify them. Concealed Liabilities and Expenses: Concealed liabilities can include warranties attached to sales, underreported Incurred-but-not-Reported (IBNR) health benefits, or simple omission of liabilities. Expenses can be concealed by capitalization that spreads the expense out over a number of years by recording an asset and annual depreciation rather than properly recognizing the entire expense in one year. A red flag for concealed liabilities and expenses includes any significant estimates that are made on financial statement items that require subjective judgment and for which specific support is not available. It is sometimes helpful to compare the entity to another in the same industry – what significant liabilities or expenses are present? In a search for concealed liabilities and expenses, an auditor will review transactions that occurred after the financial statement date, compare expenses by type to the prior year, and ask client personnel questions for additional information. The use of gross profit margin (sales less cost of goods sold/total sales) and the current ratio (current assets/current liabilities) can be helpful to detect irregularities with liabilities and expenses. Improper Disclosures: Financial statements should include all information necessary to prevent an informed reader from being misled. So, the information that is disclosed must be accurate and presented in a way that is not misleading. This means that items such as subsequent events, related-party transactions, contingent liabilities, and changes in accounting principles must all be disclosed when they are material. Reviewing subsequent transactions, inquiring of employees, and reviewing minutes of those charged with governance (Board of Trustees) are always excellent steps to take to ensure proper disclosures. Highly complex transactions or organizational structures might cause auditors to question the appropriateness of the disclosures. Improper Asset Valuations: Estimates are often used in accounting, and each estimate used increases risk. Inventory, investments, and accounts receivable all require a valuation of some type. Inventory should be carried at lower of acquisition cost or current market value; therefore the value shown on the financial statements should be the acquisition cost unless that cost is higher than the current market value, in which case that market value is used. A simple way to test this is to review a listing of all inventories and determine if cost for each of the items included appears to be high based on current prices, and to look at the inventory and determine if it appears to be out dated or obsolete. Confirmations can be sent to determine the collectability of accounts receivable. To investigate the value of investments, tracing purchases and sales and testing the value of individual securities at year end is appropriate. Fixed assets should be recorded at cost; however, impairments of value should be recorded. Comparing the relationship between fixed assets and depreciation recorded from year to year may help identify fraudulent activity. It is important to remember that there isn’t one sure way to detect fraud in financial statements. It is helpful to start by determining any motivation to manipulate the statements, attempt to determine how a person with intent to mislead would do so with the controls in place, then, create a plan of investigation. This list, while limited, can provide the basis for efficient financial statement fraud detection and prevention. Wed, 21 Mar 2012 13:56:52 +0100 http://www.bbforensic.com/fraud-investigation/financial-statement-fraud.html Posting by Tara McKinney, CPA, CFE P: 301.272.6018 | E: (mailto:)mckinney@bbcpa.com (mailto:mckinney@bbcpa.com) Of the three types of occupational fraud – corruption, asset misappropriation, and fraudulent financial statements – financial statement manipulation has the potential to cause the greatest impact. Just as there are many motives to commit an intentional misstatement or omission of amounts on the face of the financial statements or in the note disclosures, there are also many items forensic accountants, and users of the financial statements, can look for to ensure that they are fairly presented. In this two-part post, I will review the basics of financial statement manipulation, motivations to commit this type of fraud, and how forensic accountants ensure that financial statements are fairly represented. Tue, 13 Mar 2012 15:42:03 +0100 http://www.bbforensic.com/latest/three-bond-beebe-auditors-become-certified-fraud-examiners.html BETHESDA, Maryland (January 13, 2012) – Bond Beebe, a certified public accounting and advisory firm with offices in Bethesda, Maryland and Alexandria, Virginia, announced today that Senior Auditor Jennifer Hohman, CPA, CFE, and Staff Auditors Tara McKinney, CPA, CFE and Josh Smith, CPA, CFE, have all passed the examination to become Certified Fraud Examiners (CFEs). All four sections that comprise the CFE examination must be passed before the certificate is earned: Investigation; Law; Financial Transactions; and Fraud Detection and Deterrence. Exams are administered and reviewed by the Association of Certified Fraud Examiners (ACFE), and all CFE candidates must be an Associate Member of the ACFE in order to be able to register for the test. Celebrating almost 80 years in the Greater Washington DC area, Bond Beebe is a certified public accounting advisory firm that works with small to mid-sized businesses, membership organizations, employee benefit plans, other non-profits and high net-worth individuals to help them reach their financial goals. The Firm’s broad range of services includes audit accounting; tax planning compliance; financial planning; management advisory; litigation support; and information technology consulting. From its two offices in Bethesda, Maryland and Alexandria, Virginia, Bond Beebe provides exceptional responsiveness and quality to every client it serves. Mon, 05 Mar 2012 18:24:07 +0100 http://www.bbforensic.com/computer-forensics/digital-forensics-litigation-support.html Posting by John Merchant, CPA, CFE P: 301.272.6030 | E: merchant@bbcpa.com (mailto:merchant@bbcpa.com)This e-mail address is being protected from spam bots, you need JavaScript enabled to view it Computer forensics used to be synonymous with digital forensics, which has been defined as pertaining to the legal evidence found in computers and digital storage media. However, with multiple digital data types and technologies available, the umbrella term for the recovery and investigation of material found in digital devices (including computers and digital storage media) is known as digital forensic science. In an article recently pulished in the International Legal Technology Association (http://www.iltanet.org/) (ILTA)'s Tech Potpourri white paper, I evaluate the changing landscape of digital forensics. Read more about the implications of mobile technology, social media, and cloud computuing on today's digital forensic methods, and the opportunities that have emerged for litigation support as a result. The Evolution of Digital Forensics in Litigation Support (images/stories/itla_article.pdf) Mon, 27 Feb 2012 17:38:31 +0100