Note: Running weekly in FromGregsHead.com, PKF Texas – Entrepreneur’s Playbook® is a continuing series of tips brought to you by Greg Price. These run Sunday evenings during the BusinessMakers Radio Show on KPRC 950AM.
Greg: This is PKF Texas and another chapter of The Entrepreneur’s Playbook. I’m Greg Price, director of Consulting Solutions, and I’m here with Dan Ramey, an audit director at PKF Texas. Dan, welcome to the playbook.
Dan: Thank you, Greg.
Greg: So Dan, today’s topic is fraud, and you’re one of our advisors in the forensics area. So what’s going on in the workplace today having to deal with fraud and forensics?
Dan: Quite a bit, Greg. Actually, the Association of Certified Fraud Examiners says that between five to seven percent of top line revenues of companies is being lost through internal fraud. This accounts for about $944 billion a year in the US.
Greg: Wow, that’s a very large number. So is anyone specifically involved in these frauds?
Dan: It’s actually spread evenly almost between all of the areas. Between employees, managers, and executives. So whether it’s an AP clerk or an inventory clerk or senior management, they’re all involved.
Greg: So Dan, I could understand how people closer to the transaction might be involved, but senior management as well?
Dan: Senior management is involved through overriding their controls either for their bonus program or for bank covenants, bank loans, things like that that have to be accounted for.
Greg: So Dan, I understand you do a number of investigations in this area. Have you come across any common themes or topics that might be something we want to share with our audience today?
Dan: One of the things that we find frequently is there has been a breakdown of the internal controls. And so as people are supposed to be monitoring and reviewing documents and processes, they fail to do that.
Greg: Dan, I appreciate you sharing that with us today. I can see why this is such an up and coming area for our practice.
Dan: Thank you, Greg.
Greg: We’ll have you back again to talk about some of your other specialties.
Dan: Sounds good.
Greg: All right, very good. This has been another Thought Leader Production, brought to you by PKF Texas, The Entrepreneur’s Playbook. Tune in next week for another chapter. And remember, if you have any questions about fraud or forensics, give PKF Texas a call.