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The Thief in Your Company

By Tiffany Couch

In spite of costly accounting systems and regularly scheduled audits, hundreds of millions of dollars are skimmed, siphoned or blatantly stolen by employees each year. Tiffany Couch, a Certified Forensics Fraud Examiner (CFE) shows us the “nitty gritty” of deception and theft in a white collar world and how to avoid a thief in our company.

Caution – Emotions run high when someone uses his or her ability to be liked and trusted yet perpetrates a crime against you. This book can be upsetting as it reveals the manipulating tactics used all too frequently by a person who’s behavior appears to be caring, hardworking and loyal but steals from you.

It’s easy to move through this book to learn about both small and large businesses that have been scammed. But, it can take your breath away when reading about the “perfect” and beloved employee who has up-scaled her lifestyle with fancy vacations, designer wardrobes and expensive private school for her children with hundreds of thousands of stolen money from her employer.

Each chapter describes specific scams or frauds and how to avoid them. Couch has an experienced eye and uses her well-developed “hunches” to quickly target and investigate frauds.

Some surprises are: Official audits and professionally created statements and accounting practices are not a guarantee to eliminate fraud. On the contrary, income statements are easily manipulated. Audits are often performed by auditors who rely on documents given to them by the very person engaged in embezzling funds.

False documents, double billing and bogus vendors are commonly overlooked by auditors. Chapter six is a must read. Titled “Why Auditors Don’t Find Fraud,” it includes a wealth of information to show that conventional controls simply are overrated. The human factor plays a major role in missing fraud by trusting the employees who go out of their way to be nice and friendly to auditors. The major missed opportunity is that auditors have high status and whistle blowers will rarely feel comfortable to approach an auditor to investigate another employee.

Nevertheless, a significant portion of frauds are first revealed by coworkers who get suspicious about unusual behavior or procedure. Young and temporary interns may spot fraud while working hard to be thorough and make a good impression. Tech savvy interns have been known to easily pick up discrepancies or unusual procedures that regular employees miss.

Whistleblowers may be the key to identify fraudulent practices. Internal detection requires an organizational culture that support inquiry. The “red flags” of fraud are listed throughout the book and include:

Employees who consistently come in early and stay late – this can be a sign that a person manipulates the books when others are not watching.

  • Employees that do not take vacations or time off.
  • Employees that do not want to share responsibilities or have an assistant.
  • Employees who establish excessive social relationships with vendors.
  • Employees who live beyond their means or have gambling habits.

The list goes on.

The simplest and often most overlooked detection of fraud is to verify bank statements each month. Disbursements need to be verified by a person other than the person who has control of the checkbook. Unfortunately, owners or managers too often delegate this responsibility to a person who appears honest and is overly helpful to “do it all.”

Fraud happens everywhere including government or public entities such as cities, counties and states and their various agencies. Yet it can be controlled. The book is a must read for anyone who wants to understand human nature and the potential for fraud.

Lucia Worthington’s first career in banking made her a conservative regarding financial controls. She teaches business and management at Clark College.

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