PEOPLE. PRINCIPLES. POSSIBILITIES.

EideBailly SM

FORENSIC ACCOUNTING& INVESTIGATIVE SERVICES

Managing Workplace Fraud

� Prevention

� Detection

� Investigation

Forensic Accounting

we listen

raudulent behavior in giant corporations is making headlines throughout the country, but they are not the only ones that are susceptible to wrongdoings. A recent study by the Association of Certifi ed Fraud Examiners shows that busi-nesses with less than 100 workers are actually more susceptible to accounting fraud than large companies with more than 10,000 employees.

We hear questions from our clients like, “Why do my books show a profi t, but I am loosing money?” ... “My controller has made some extravagant lifestyle changes lately, should I be concerned?” ... “I want to see the fi nancial re-cords, but no one can seem to fi nd them.” Theses are red fl ags that should be watched for in any company.

Three essential elements are common to all types of fraud schemes: opportunity, pressure and rationalization. It is important for companies—of all sizes—to understand this fraud triangle. By understanding and managing these components, you can reduce your company’s risk of fraudulent behavior.

Experience the Eide Bailly Difference• Work with Certifi ed Fraud Investigators, licensed Private Detectives and

Certifi ed Public Accountants who have the investigative techniques and technical skills needed to get to the bottom of the situation.

• Benefi t from our proactive approach to fraudulent behavior. We can help your company or organization develop and implement a prevention program to minimize your risk to fraud.

• Gain insights from our industry and service specialists. Eide Bailly is a nationally recognized fi rm, specializing in accounting, audit, tax and consulting. Not only do you have access to our forensic accounting and investigative services team, but also to more than 800 professionals with specialized skills.

• Enjoy the Eide Bailly experience, in which our people will serve you with passion and integrity.

Fraud occurs in every type of business and in every size of business. We will assign an experienced team to help you prevent and detect fraudulent activity to minimize your risk/damages. When fraud has occurred, we are here to help you investigate the situation–and then help you move on.

f� The Fraud TriangleOpportunity: taking advantage of one’s employment responsibil-ities to defraud their employer.

Pressure: if someone is under pressure s/he is a greater risk to your company. Pressures can come from a variety of sources, including lifestyle, personal debt and business losses.

Rationalization: the individual can justify the fraud by thinking, “They owe it to me,” “I deserve to get paid more,” “I’m only borrowing the money,” or “I’m not hurting anyone.”

you get resultsSituation Solution Results

Une

xpla

inab

le L

ow M

argi

ns A client in the service industry was experiencing unexplainable low margins. This was unacceptable to the client. He hired Eide Bailly’s forensic team to help him analyze the situation.

Our experienced forensic investigators performed behavioral assessment inter-views to determine each employee’s level of fraud awareness. They also looked for internal control defi ciencies and reasons for low margins. We provided the cli-ent with a complete report regarding the fi ndings and our recommendations.

• Two employees were profi led as deceptive during the interviews—due to their responses and behavioral characteristics.

• One employee, who confessed to stealing, was fi red. The case was turned over to local law enforcement; we helped the client fi le an insurance claim.

• The client implemented our recommendations for improved internal controls over cash, resulting in increased margins.

Hig

h Tu

rnov

er

A manufacturing company was experiencing unusu-ally high employee turnover, which resulted in greater recruiting and training costs. The fi rm knew it must fi nd ways to reduce its turnover to control costs and to rebuild an experienced team.

Eide Bailly’s forensic team analyzed the company’s employment history, and found a pattern for short-time employees. We recom-mended the company include an employ-ment background screening on all prospec-tive employees—a practice that has become critical to all industries.

• The fi rm formally added background checks to its recruiting/hiring process.

• The fi rm has reduced turnover by 40%, therefore, saving money by reducing employee training costs.

• The company is experiencing higher productivity due to a more experienced production line.

Dec

line

in P

rofi t

s

A client was experiencing an unexplainable decline in profi ts. The Chief Financial Offi cer was suspected of embezzling corporate funds, so the client hired Eide Bailly’s forensic account-ing and investigative team to look into the situation.

We analyzed the company’s fi nancial state-ments and records and uncovered a large fraud scheme. From available documents and records, and from interviews with key employees, we produced a fraud report that revealed the CFO’s fraudulent activities. The primary suspect was interviewed and con-fessed. We assisted the client in fi ling an em-ployee dishonesty claim, and further assisted law enforcement in the prosecution process.

• Chief fi nancial offi cer gave a written confession and was then fi red. The case was turned over to law enforcement and charges were fi led by the local prosecutor.

• New chief fi nancial offi cer was hired.• Company is experiencing increased

profi ts.

Inve

ntor

y Lo

sses

A large recreational whole-saler was experiencing signifi cant inventory losses, a high number of customer complaints and a loss in reve-nue in the warehouse depart-ment. They decided to bring in an independent team.

After meeting with the company’s executives, our team of forensic investigators deter-mined the company needed to proceed with some investigative work. We con-ducted covert surveillance of the warehouse department, onsite interviews of warehouse employees, and analyzed the fi nancial statements for key account anomalies.

• Obtained key confessions from the warehouse supervisor and two warehouse employees.

• Installed proper internal controls designed to safeguard the assets of the company.

• Inventory variances have greatly improved.

• Proper controls are in place, giving owners peace of mind.

“The cost of a single investigation is insignifi cant compared to the cost of losing and replacing an employee who has been on payroll for any length of time.”

~ Angela Summers, Vice President - OperationsSummers Mfg Co., Inc.

Fraud Prevention• Background checks• Fraud Hotline• Review of internal controls and management

practices• Fraud program recommendations/implementation• Fraud awareness training

Fraud Detection• Detection of asset theft fraud• Detection of fi nancial statement fraud• Asset verifi cation• Discovery of hidden assets• Professional negligence

Fraud Investigation• Asset theft investigations• Litigation support• Insurance support• Computer data recovery

Background ChecksBecause resume fraud is on the rise, we recommend you implement a company policy to conduct background checks on all new hires. Deception on resumes commonly entails falsifying education, stretching dates to cover employment gaps, increasing earned salaries, enhancing job titles, embellishing job duties and achievements, and inventing employers to satisfy your company’s needs or relevant laws. Background checks can range from a basic informational report to a comprehensive investigation.

Fraud HotlineThis program encourages and provides anonymity to employees who call to report issues affecting them, their co-workers or their company. These issues include fraud embezzlement, theft of trade secrets, sexual harassment, threats/harassment, Internet offenders, discriminations, abuse of time/equipment, tampering of data and pornography.

Our Fraud Hotline Program includes:• Access to the Fraud Hotline, 24 hours

a day, 7 days a week, answered by a trained fraud investigator.

• Educational posters to place within your company’s facilities.

Rev: 12/2005

Member of HLB International