As professionals, many of us have had or will have the opportunity to serve on the Board of Directors of a nonprofit organization. This can be a rewarding experience and a way to maintain civic involvement and a connection to the community. But what if the nonprofit organization is defrauded by an employee, or worse yet, by the CEO? This event can have serious ramifications, especially if the organization receives government grants, not to mention the effects on those whom the nonprofit benefits.
Larger organizations are more likely to experience fraud by an employee’s misuse of influence in a business transaction in order to gain a direct or indirect benefit. Small organizations, however, typically fall victim to the rogue employee who directly steals the organization’s assets or misuses its resources.
A man by the name of Frank Benford. In the 1930s, physicist Benford developed a theory of leading digits, now known as Benford’s Law. Benford’s Law tells us that in a variety of data sets, the probability of occurrence of each digit (0 through 9) as the first digit in a number follows a certain distribution. That is, the digit 1 will occur with about a 30% frequency, followed by the digit 2 at 17.6%, through the digit 9 at 4.6%. See Figure 1.
“Bring your own device,” or “B.Y.O.D,” is a concept that an increasing number of companies are implementing. B.Y.O.D allows employees to use their personally-owned devices in the work place. These devices can range from laptops and tablets to cell phones and flash drives. While B.Y.O.D may be a good plan in theory – employees can work with devices they are comfortable using - It is important for employers to thoroughly consider the implications and potential pitfalls before implementing a B.Y.O.D policy. Consider, for example, the following key areas regarding the security of corporate information and infrastructure:
As accountants, we know the significance of numbers. But in the process of balancing our debits and credits, it is easy to forget the significance of words. Although it’s important to develop and maintain our skills in spreadsheets, calculations, and analysis, our writing skills are just as important.
There’s no denying it: social media has changed the way we interact with each other. People are tweeting live from events, “checking in” on Facebook, posting pictures to Instagram and commenting on, liking or sharing just about everything. The amount of personal information that social media users willingly put “out there” is staggering.
CPA’s have close relationships with their clients (especially in smaller accounting practices) and rightfully so. Who else is better to understand their client’s financial and business affairs than their trusted CPA? And the relationship generally remains close…
Employers, if you use QuickBooks for your company’s accounting needs, you have a built-in tool for fraud prevention and detection at no additional cost to you: the QuickBooks Audit Trail.
Increasingly, the answers to the most fundamental litigation questions – the “who, what, where, when, and why” – are contained in electronically stored information (ESI), which can be retrieved through electronic discovery (e-discovery) and/or computer forensics.
In our case study, gas station owner, Morris, has alleged that Green Fuel, a small gasoline distributor, overcharged him. Both parties had inadequate and unsophisticated documentation, making determining losses very difficult.
You might not think that a small business would have useful or accessible electronically stored information (ESI). Consider this example of identifying and obtaining relevant forensic evidence to determine lost profit damages with this particular small business.
Think twice before you assume that an unsophisticated small business cannot possibly have any useful or accessible electronically stored information (ESI).
