“Headed to Mississippi for a peer review. Looking forward to it.”
Does your government have hidden fraud? Are there ways you can mend control weaknesses that lead to thefts?
Here is a presentation concerning local government fraud. Though the slides address Georgia frauds, you’ll see practical fraud prevention steps you can take, regardless of where your government is.
Scanbot — Document Scanner App
The Scanbot app enables you to scan documents with your phone.
Would you like to scan your travel and expense documents with your phone and place them directly into Evernote? Then they will be ready for month-end filing.
This app turns your phone into a scanner.
Scanbot allows you to take multiple pictures and place them in one document–then you can upload the scan directly to Evernote, iCloud, Box, Google Drive, OneDrive or Dropbox.
Another use? Take a picture of handwritten meeting notes and upload them to your favorite cloud service.
The Pro version provides optical character recognition, so you can copy and paste text from scanned documents.
The app is available for Apple and Android phones.
For more information, check out Scanbot’s blog.
You are leading the audit team discussion concerning disbursements, and a staff member asks, “why don’t we ever perform fraud tests?”
Your rejoinder, somewhat lacking, but said with authority, is, “We are only required to perform such tests in certain circumstances. What do you suggest?”
“I don’t know,” the staff member sheepishly responds. “What are some possibilities?”
You pause to consider the question, and you remember a blog post addressing how fraud can sting auditors. You begin to think, “what can we do?”
Five Disbursement Fraud Tests
1. Test for duplicate payments.
Theft may occur as the accounts payable clerk generates the same check twice, stealing and converting the second check to cash. The second check may be created in a separate check batch, a week or two later. This threat increases if (1) checks are signed electronically or (2) the check-signer commonly does not examine supporting documentation and the payee name.
How to test?
Obtain a download of the full check register in Excel. Sort by dollar amount and vendor name. Then investigate same-dollar payments with same-vendor names above a certain threshold (e.g., $25,000).
2. Review the accounts payable vendor file for similar names.
Fictitious vendor names may mimic real vendor names (e.g., ABC Company is the real vendor name while the fictitious name is ABC Co.). Additionally, the home address of the accounts payable clerk is assigned to the fake vendor (alternatively, P.O. boxes may be used).
The check-signer will not recognize the payee name as fictitious.
How to test?
Obtain a download of all vendor names in Excel. Sort by name and visually compare any vendors with similar names. Investigate any near-matches.
3. Check for fictitious vendors.
The accounts payable clerk may add a fictitious vendor (one in which no similar vendor name exists, as we saw in the preceding example).
The fictitious vendor address? You guessed it: the clerk’s home address (or P.O. Box).
Pay particular attention to new vendors that provide services (e.g., consulting) rather than physical products (e.g., inventory). Physical products leave audit trails; services, less so.
How to test?
Obtain a download in Excel of new vendors and their addresses for a period of time (e.g., month or quarter). Google the businesses to check for validity; if necessary, call the vendor. Or ask someone familiar with vendors to review the list (preferably someone without vendor set-up capabilities).
4. Compare vendor and payroll addresses.
Those with vendor-setup ability can create fictitious vendors associated with their own home address. If you compare all addresses in the vendor file with addresses in the payroll file, you may find a match. (Careful – sometimes the match is legitimate, such as travel checks being processed through accounts payable.) Investigate any suspicious matches.
How to test?
Obtain a download in Excel of (1) vendor names and addresses and (2) payroll names and addresses. Merge the two files; sort the addresses and visually inspect for matches.
5. Scan all checks for proper signatures and payees.
Fraudsters will forge signatures or complete checks with improper payees such as themselves.
How to test?
Pick a period of time (e.g., two months), obtain the related bank statements, and scan the checks for appropriate signatures and payees. Also consider scanning endorsements.
Those are a few of my ideas. Please share yours.
My fraud book provides more insights into why fraud occurs, how to detect it, and–most importantly–how to prevent it. Check it out.
An Easy Way to Keep Up With Changes in Standards
Are you looking for a way to keep up with changes in standards with minimal effort?
Here’s a tip: Review your accounting and auditing publisher’s list of substantive changes (usually located in the first part of the publication).
For example, I print the List of Substantive Changes and Additions from PPC’s Guide to Audits of Nonprofit Organizations; then I review the printed copy with yellow highlighter in hand. This one document fully encapsulates all significant changes in standards, regardless of the source.
When I’m done, I look up the highlighted areas as needed (PPC’s List of Substantive Changes and Additions provides references to related information in the publication).
Do you have a habit you can’t break? Or maybe you want to create a habit–like jogging–but you can’t seem to make it happen (and stick).
Here are a few habits accountants have:
- We don’t take breaks, resulting in unclear thinking or a lack of focus.
- We consume too much caffeine, making us edgy.
- We cut people off in mid-sentence, not allowing the other person to finish.
- We have messy desks, again leading to a lack of focus.
- We don’t exercise.
- We have meetings without written agendas.
- We make too many promises.
- We wait to take all our CPE in the last month of the year.
- We don’t say thank you enough.
Duhigg’s book allowed me to better understand why I do what I do. Yes, I have some of the aforementioned habits. (I guess that’s why I found it so easy to create the list?) The book provides practical–some say “actionable”–information.
Here’s a short summary of the key points I noted in the book (my interpretations):
- We develop habits, sometimes on purpose and sometimes unknowingly.
- Habits involve a cue, an action and a reward.
- Habits create neurological associations (sometimes addictions).
- Changing a habit requires belief (faith, often in God).
- Changing a habit requires one to determine what the cues are; there is so much noise (activity) around us that we often don’t realize what the cue is. Write down potential cues and then alter your routines to ferret out the cue.
Know thy self. Slow down long enough to recognize your cues.
- Habits (the cue, action and reward sequence) can’t be eradicated. The neurological patterns are too strong. But routines can be changed so that one action is replaced by another action.
- Start with small wins and build on them.
- In terms of selling, people don’t like unfamiliar things. Sandwich the new between the familiar to enhance acceptability.
- Organizations have habits built on cues, actions and rewards. Hospitals have for decades advised subordinates to keep quite about mistakes, leading to more mistakes. Opaqueness allows poor habits to live. Peer pressure, whether from within or without a business, will drive the organization to better quality.
- Habits allow us to perform with excellence while under pressure. The quarterback that throws a great pass in the last seconds of a game has developed habits that allow the pass to occur naturally.
Keynote vs. Power Point
After using Power Point for several years, I decided to switch to an Apple presentation software called Keynote. While Power Point has improved, I still find Keynote to be a better, more professional presentation package.
I have Keynote on the following devices:
- Mac Air
I usually create and save my presentations in iCloud, so they are accessible from any of the three devices.
Here are some of the advantages to using Keynote:
- Better graphics
- Easier to arrange pictures and words
- Nice special effects
One disadvantage: some places may not accommodate the use of Apple products (they may only allow Windows OS machines). So make sure your place of presentation can handle your Apple machine.
“2013 Version of COSO – Effective Date is fast approaching: December 15, 2014”
As iron sharpens iron, so one person sharpens another. (Proverbs 27:17 NIV)
We all need someone in our lives to encourage us, someone to cheer us on. For me, one of those people who has always been there for me (even in my mother’s womb), is my twin brother, Harry Hall.
Here are a few ways he encourages me:
- He listens, as in, really listens to me.
- He corrects me when my attitudes or actions are wrong (which I often need).
- He shares good books that help me grow.
- He provides constancy in friendship–no matter what happens, I know he is there.
- He prays for me (and doesn’t just say he will).
- He models good character.
- He runs with me, encouraging good health.
So which one is Harry? That’s him on the left.