Fraud Control & Deterrence

Fraud Control and Deterrence is an integrated service-line comprising
the elements of Fraud Risk Assessment, Control Procedure
Development, and Hotline Services.

Fraud schemes almost always begin when a perpetrator identifies a
weakness in existing control procedures. Next the wrongdoer conducts
a simple cost-benefit analysis: do the probable consequences
outweigh the potential rewards?

This fraud scenario depicts our two-phase approach to fraud
prevention: First, ensure that opportunities for fraud are minimized
(control); and second, ensure that potential wrongdoers believe they
will be exposed and held accountable (deterrence).

A control assessment examines key company systems and views them
from the perspective of a white-collar criminal. A thorough review often
indicates one or more points of weakness. Once identified, these
areas are strengthened with new or different controls. Simple controls
are often the most effective. For example, all bank statement must be
received and reviewed by staff members outside of the cash
management area.

Fraud risk can be managed extremely effectively when potential
criminals believe fraud will be detected and when whistle-blowers
believe they will be protected. Tips, including whistle-blowers and
anonymous tips, accounted for over 46% of all frauds discovered, and
were the most common form of discovery.

Consequently, on the deterrence side, our policy is simple: to
encourage anonymous informants and reward whistle-blowers. This
objective is best achieved through the implementation of an
anonymous employee hotline. The Sarbanes-Oxley Act, enacted in
2002, requires publicly traded corporations to provide a mechanism for
reporting financial irregularities. The positive results achieved through
these programs in large public corporations have prompted
non-profits, private companies, and government agencies to adopt
similar reporting mechanisms for detecting and deterring
organizational malfeasance.

EP Forensics offers a turnkey solution for hotline reporting services.
We undertake detailed research to understand your business and
your specific needs. We implement a customized strategy, and
respond to all hotline tips.

To learn more about anonymous hotlines, review the whitepaper
entitled "Best Practices in Ethics Hotlines." Link below.

Do your existing control
procedures effectively manage the
risk of fraud?

If you don't know the answer, the answer is
no.

Internal controls are the managerial
mechanisms that monitor and measure the
usage of an organization's resources.
Internal controls play a crucial role in
prevention and detection of fraud.

At an organizational level, internal control
objectives generally relate to the reliability
of financial information and compliance
with laws and regulations.

At a transaction level, internal control
refers to the rules created to achieve a
specific objective, e.g., to ensure that
disbursements from a corporate bank
account are valid and authorized.

In the post-Sarbanes business
environment, all organizations need to
perform regular fraud risk assessments.
Experts become familiar with your
organization, and then deploy customized
scenarios in which fraud may occur. Next
tests are run to determine if existing
control procedures effectively manage the
risk to an acceptable level.

To review this area in greater detail,
download the handbook entitled
"Managing the Business Risk of Fraud: A
Practical Guide." Link below.

Managing the Business Risk
of Fraud: A Practical Guide

This is an informative guide published
cooperatively by the AICPA, IIA, and
ACFE, which includes an outline to assist
organizations in understanding fraud
risk.

Best Practices in Ethics Hotlines

This detailed reference paper answers many
questions posed by management, and sets out a
framework for creating an effective anonymous
reporting program.