Copyright 2018 All Rights Reserved. Reproduction without permission is prohibited. Rise of the Accounting Guardians

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1 Rise of the Accounting Guardians

2 Education Coaching Community Resources Joe Woodard Published author McGraw Hill, Accounting Today, CPA Practice Advisor, AccountingWEB, The Journal of Accountancy and Insightful Accountant. Career Trainer to over 100,000 accounting professionals 2012, Top 100 Most Influential People by Accounting Today

3 Become Transformative!

4 Dawn Brolin CEO of Powerful Accounting, LLC, a nationallyrecognized practice specializing in fraud detection and prevention services CPA and Certified Fraud Examiner 2018 Top 100 Most Influential People in Accounting by Accounting Today Named Top 25 Most Powerful Women in Accounting by CPA Practice Advisor Top 10 Managing Partner Elite Great Accounting Firm Leader in 2017 by Accounting Today Subject Matter Expert with Multiple Appearances on MSNBC Your Business

5 Learning Objectives: The Fraud Triangle and Internal Controls Reducing the Risk for the Most Common Employee Fraud Situations Reducing the Risk for the Most Common Vendor Fraud Situations Dawn s Top 10 List for Reducing the Risk of Small Business Fraud

6 The Importance of Guarding Your Clients 3% Out of Policy Spending 5% Overcharges by Vendors 3% Maverick Spending 2% Process Cost 2% Fraud Exposure 1% Software Cost

7 The Fraud Triangle

8 The Fraud Triangle

9 Detecting and Preventing Employee Fraud

10 Payroll Fraud Time Theft Padding of Billable Time* Embezzlement of Payroll Tax Payments Ghost Employee Paychecks Employee Collusion (with Payroll Manager) Unreported Tips Extorted Wages/Bonus *Results in Vendor Fraud by Employer

11 Theft and Misuse of Company Assets Inventory Receipt Redirection* Shorting Inventory during Stocking* Redirection of Vendor Over Shipments (e.g. for Breakage Allowance) Shipping to Alternative Address or Parcel Box Company Assets Direct Theft Unauthorized Use of Production Equipment/Fixed Assets (e.g. tools, vehicles, computer hardware/software) Toner Theft through Unauthorized Printing/Copying Intellectual Property (e.g., Data, Processes, Templates, etc.) *Results in Vendor Fraud by Employer

12 Transaction Fraud Skimming Point of Sale (Cash) Short Shipping (Product)* Padding Expense Reports Payment of Personal Bills through Company AP Redirection of Corporate Rewards Programs Breach of Non Compete* Income Tax Fraud Padded, Duplicate and False Invoicing* Vendor/Employee Collusion (e.g. for Kickbacks)* *Results in Vendor Fraud by Employer

13 Common Vendor Fraud Erroneous Invoicing Professional and Contractor Over Reporting of Time Solicitation of Employees in Breach of Non Solicitation Agreements Short Shipping Note: Management and/or Ownership at the Vendor Company May not be Aware or Complicit with this Activity. They may themselves, be the victim of employee fraud.

14 Dawn s Top 10 List Reducing Fraud Risk 1. Don t Shortcut Internal Controls Segregation of Duties Permissions and Passwords (Including Local Desktop Auto Log Off) Company managed e commerce Accounts Etc. 2. Inventory of All Company Assets (Not Just Product Inventory) with Asset Tags Tracked by Serial Number 3. Outsource Payroll 4. Create Airtight Employee and Supplier Agreements with Non Solicitation, Non Compete and Non Disclosure Clauses

15 Dawn s Top 10 List Reducing Fraud Risk 5. Document Processes and Procedures (including Procedures for Managing Rewards Programs, Purchasing Approval, Travel Policies, etc.) 6. Track Time (Especially for Virtual Employees) with GPS Tracking and Bio Metric Sign In 7. Deploy a File Management Solution that Includes Deletion and Modification Restrictions, Audit Trails and Revision Levels 8. Tightly Control Spending on Company Cards

16 Tightly Control Spending on Company Cards Using Divvy s virtual card platform, tighten vendor security by: Creating unique credit card numbers for each vendor to monitor invoicing and spend closely. Eliminate risk of overbilling by setting tight controls on how much and when a card can be spent on. Instantly cancel cards when a vendor is compromised or the relationship is terminated. Eliminate expense reports Eliminate padding of expense reports Visit to learn more about Divvy and to receive the special offers detailed in this webinar. Divvy is a powerful solution in the fight against small business fraud. Frank Abagnale

17 Tightly Control Spending on Company Cards Visit to learn more about Divvy and to receive the special offers detailed in this webinar. Overcharges No Visibility No Security Control Convenience Security

18 Poll Let us know if you are interested in partnering with Divvy to guard your clients from fraud, over spending, and risk of loss from credit card theft.

19 Dawn s Top 10 List Reducing Fraud Risk 9. Be Observant and Appropriately Skeptical (e.g. Spot Checking of Company Assets, Use of Company Equipment, Use of Personal Devices during Company Time, etc.) 10. Conduct Due Diligence Mini Audits (Review Bank Statements, Tie Cash Basis Income to Receipts, Consistent Shortages on Physical Inventories, Expense Reports that are Consistently Missing Receipts, etc.)

20 Questions

21 Additional Resource: Interview with Frank Abagnale Scaling New Heights Podcast Episodes 1 and 2

22 A Brand New Resource Offered by Dawn Brolin Weekly Fraud Cast

23 Rise of the Accounting Guardians