When starting a new business venture, most entrepreneurs have a myriad of issues to deal with to get it off the ground. Typically, you are primarily focused on the basics of starting the business and perhaps less concerned about internal controls, fraud prevention and other similar concerns. More importantly, new business owners may be working with partners with whom they have limited working relationships, which are often based on trust. This can invariably lead to misconduct if the right ‘checks and balances’ are not put in place from the get-go. Its often difficult to have basic controls such as segregation of duties, when the same 2 or 3 employees are doing the equivalent job of 5 or 7 employees.
As organizations grow from a start-up to larger size organization, the importance of having a sustainable and robust fraud management framework is that much more critical to success/failure of the organization.
Many organizations retain a forensic accounting / fraud investigation firm because they are concerned about the potential risk of fraud, even though they have not been victimized (or are not yet aware that they have been victimized).
Specifically, they are concerned about a particular accounting cycle or process such as procurement or payroll, where the risk of fraud is typically high in most companies due to the nature and volume of transactions.
Edward Nagel is a seasoned Chartered Accountant and recognized specialist in investigative and forensic accounting, and Principal and founder of nagel + associates, a Toronto-based boutique forensic and investigative accounting firm.
"We work closely with clients to firstly understand their business, the processes/people/systems involved in order to identify where internal controls are weak, non-existent or not effective to mitigate fraud risk. This can be accomplished through a variety of initiatives, including surveys, interviews with key process owners and review of documentation. We then provide recommendations for remediation of deficiencies identified."
Their experience has shown that if you empower employees with the knowledge and skills about what are the red flags of frauds and how to spot them, you increase the likelihood of deterring a would-be fraudster and of early detection of fraud schemes.
"nagel + associates recognizes that each organization is unique —therefore, we work closely with management and boards to understand an organization’s specific risks and concerns (such as through employee surveys and fraud risk assessments) in order to develop and deliver customized anti-fraud training."
When a fraud is suspected, how—and how quickly an organization responds to such allegations will drive the potential impact, including financial, reputational and otherwise.
"Our firm is frequently retained and works closely with legal counsel, management and boards of directors to help them understand allegations, identify and preserve evidence and conduct investigations."
The objective of a forensic investigation is to substantiate allegations and to quantify a loss, if any, resulting from fraud. They will prepare an investigation report that can be used to pursue civil/criminal litigation; to submit a claim through the organization’s fidelity policy (insurance policy against employee malfeasance); to assist with HR decisions (including unions); etc. Irrespective of the company’s objective, the net result is to uncover the truth.
Click here to view a recently published article that Mr. Nagel authored on payroll fraud for the Canadian Payroll Association’s Dialogue magazine.
nagel + associates is a Toronto-based boutique forensic and investigative accounting firm that specializes in forensic investigations, anti-fraud consulting, and anti-fraud training. Visit http://nagel-forensics.com or contact Edward Nagel directly at edward@nagel-forensics.com.
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