It's often all to easy to focus on areas where data exists and ignore things where data is hard to come by. Ideally, you'd start with all accounting evidence and conduct full population substantive testing so identify exactly where the risk is and quantify how much is there. Now auditors can structure their procedures to focus on the risk.
With the advent of FinTech, it may seem archaic to pay someone by check in 2021. However, for the last twenty years the United States has seen only a moderate decline in the number of checks issued for noncash payments. Electronic Automated Clearing House (ACH) credit transfers have skyrocketed in comparison, as have the use of both credit and debit cards. Is the check here to stay, or is it about to go the way of the dinosaur?
Most professional groups and industry associations provide a platform to engage with colleagues and networking opportunities. Rarely do they have the leadership, talent, and commitment to actually drive change and propel the industry or profession forward. The AICPA is one of these rare professional institutions.
In this webinar, Jeff George from Baker Tilly and Tod McDonald from Valid8 provide the best practice procedures used in high-profile fraud investigations. Jeff and Tod use examples from cases they've both worked on in the past to highlight tools and procedures that help professionals avoid pitfalls, accelerate the next steps, deliver superior analysis, and develop compelling case narratives.
This two-part webinar session addresses how to identify fraud before it happens and what happens after professionals are called in to investigate. By understanding both sides of fraud cases, best practices of prevention, and investigators’ procedures, accounting professionals will be better equipped to identify, prevent, and investigate fraud.
The Paycheck Protection Program (PPP) was intended by Congress to mitigate the devastating economic effects of COVID-19 on small businesses. While the PPP has distributed $525 billion in relief funds to more than 5.2 million small business applicants, reports of PPP-related fraud are rampant. To date, the U.S. Department of Justice has charged more than 80 criminals accused of stealing $127 million from the program, and that is just the tip of the iceberg.
Top 3 impacts of the COVID-19 pandemic on professional accounting services that will stick around. The COVID-19 pandemic has dramatically reshaped the professional accounting industry. In this article, we explore the top three COVID impacts on professional accounting services. From the crucial role of cloud-based technology to the importance of re-evaluating the client relationship to understanding the emergence of COVID-related fraud, learn how the pandemic rewrote the rules of “traditional” professional accounting services.
New cloud platforms use machine learning to recognize financial evidence like bank statement transactions and check images within bank statements make testing for asset misappropriation simple. These systems not only can recognize evidentiary artifacts within documents but extracts the data to map back into client accounting records.
Demonstration of new computer vision used to identify, extract, and match check and deposit slip images to banking transactions. Jason Wright, Managing Director from Stout and Kevin Hanff, CIO from Integritas3 share their perspectives on the value of using Valid8 to automate data prep for both large and small firms alike.
Valid8 has trained image recognition algorithms to find images of evidence that exist in financial documents like bank statements. Computer vision scans each page looking for checks and deposit slips. When found, the image is clipped out of the document and sent to specialized extraction software to identify the critical data fields (payee, payor, etc...) missing from banking transactions. Additionally, incoming checks get associated to deposit slips so that the single deposit that shows up on a bank statement can be broken down into it's specific sources. Then each check and deposit slip item is matched back to the original bank statement transaction.
Speed and accuracy are the most valuable assets that an accounting professional can bring to any financial dispute or investigation. Based on over 20 years of CPA experience and dozens of high stakes, high profile investigations and disputes, this guide attempts to establish a framework to help accounting professionals avoid pitfalls, follow best practices, and deliver the fastest, most accurate analysis for financial disputes and investigations.
Wirecard, a German Fintech company, just lost 1.9 Billion Euros. A more accurate description is that it likely never existed (Business Insider article). Wirecard inflated revenue by round-tripping transactions. Basically creating potentially fraudulent transactions across borders to avoid scrutiny of local auditors. Fraudulent revenue can be used to increase the cash accounts on the balance sheet fooling lenders into providing more loans. How does this happen and why wasn't it uncovered sooner?
When audits go sideways and the Forensic Accountants, Trustees, and Receivers are called in, techniques like random sampling and confirmations are not enough. To get comfortable with client data in a distressed situation, professionals often resort to recreating the books from evidence. In these high stakes scenarios, tens of thousands of dollars are paid to low skilled labor to manually transcribe data from bank statements.
“During our analysis, we found that the majority, approximately 75% of our incurred time, was spent up front preparing data to be both accurate and standardized. Once we had clean, accurate data, the categorization, analysis, and formatting of the results was straightforward.” – Jeffrey Bussell
A trustee’s chapter 11 commercial bankruptcy case objectives are simple.Ensure everyone associated with the case follows adheres to the laws established for federal bankruptcy court. Maximize the return and payment to creditors and stakeholders. To achieve these goals, one thing matters more than anything else, establish command and control of the operations cash flow. These three steps provide every trustee with knowledge, information, and intelligence required to achieve case objectives.
Assembling a database of independently sourced transaction evidence is critical for any Fraudulent Transfer or Financial Litigation. Gregory Hays, CTP, CIRA, Past President NAFER, published some guidance as a chapter of a publication called Fraud and Forensics, Piercing Through The Deception of a Commercial Fraud Case. This blog contains a few excerpts from the book along with VALID8 recommended best practices.
Day 1 with perpetrator: “All the financial statements and most assets are falsified.” One of the first statements given by the perpetrator during our first discussion. That meant we couldn’t trust any accounting records or financial statements. The only thing left was the money came in and went out of several dozens of bank accounts from a handful of financial institutions over a decade or so. We worked with attorneys to draft subpoenas for every single bank statement and use those documents to recreate what had happened.
Cash flow is everything. Standard accounting procedures if controlled properly, do a fine job of tracking how/where money is made and spent. However, after spending a lot of time with distressed business clients in the underwriting, restructuring, workout, and Chapter 11 commercial bankruptcy world, you quickly realize accounting procedures aren’t always followed as they should be and management controlled books are often incomplete at best and inaccurate at worst.