Fraud News Post
“Too many corporate managers, auditors, and analysts are participants in a game of nods and winks. Managing may be giving way to manipulation; integrity may be losing out to illusion… How difficult it is to hold the line on good practices when their competitors operate in the gray area between legitimacy and outright fraud. The gray area where the accounting is being perverted; where managers are cutting corners; and where earnings reports reflect the desires of management rather than the underlying performance of the company.”
Arthur Levitt,” numbers game”, speech delivered at New York University, September 28, 1998.
Fraud is everywhere and is unavoidable but the frequency of the rate of occurrence can be mitigated through simple, fundamental internal controls set forth and implemented by a company’s management. A separation of duties is crucial to prevent one person from having access to multiple systems or processes. In a small business, this may or may not be possible due to budget and staffing constraints so it is imperative that the owners of these companies remain actively involved with managers on a daily basis. Contractual intervention by an unrelated third party is one of several ways to help monitor revenue cycle management with the owners, ensuring that an independent “eye” is consistently focused on financial performance.