Blog

Dan Packard Featured in the East Idaho News

Brooke Eppa
Jan 23, 2018 05:44 PM
Dan Packard, CPA, CFE, CVA was recently featured in the East Idaho News giving tips on how to avoid fraud like the case he helped to uncover of a local woman guilty of embezzling over $2 Million. 
4 of the specific tips Dan gives are:
  1. Be aware, fraud can happen to anyone.
  2. Investing resources in fraud prevention is cheaper than detecting fraud after the fact.
  3. Separate business functions:
    • Custody of assets.
      Authorization.
      Record keeping.
      Auditing the books.
  4. Get quarterly check-ups.
If you'd like to read the rest of the article, you can find it here.
No Comments | Post a Comment

Forensic Work by Cooper Norman cited by Jonathan Shipley at AmeriBen

Brooke Eppa
Nov 10, 2017 12:55 PM
Jon Shipley, an HR Consultant with AmeriBen, recently wrote an article on fraud and self deception. The article appeared in the AmeriBen newsletter "The Explorer". Shipley cites the case of Charlotte Pottorff. The forensic audit that uncovered this fraud was performed by Dan Packard and Misty Martinell in our Idaho Falls office of Cooper Norman. We're proud that the work they did has had an impact. 
 
"In September of 2017, a woman by the name of Charlotte Pottorff pled guilty to embezzling $2.3 million over 10 years from Dura-Bilt Transmissions in Idaho Falls, ID. She had been an employee of the company – a trusted bookkeeper – since 1999. While extreme, her case is not unique; there are over 500 major embezzlement cases every year within the United Sates, and the vast majority of those are committed by long-time employees who generally fly under the radar because of their perceived character. And they are able to steal largely unsuspected: the average length of time for an embezzlement scheme lasts 4.6 years before they are caught."
-Jon Shipley, PHD, HR Consultant
Publication: "The Explorer Edition 570" 
 
 
To read the full article, please follow this link.
No Comments | Post a Comment

Disclaimer

Brooke Eppa
Jun 9, 2014 10:17 AM
Any material appearing in communication or shared third party content from Cooper Norman is for informational purposes only and is not intended as legal, accounting, or tax advice provided by Cooper Norman. Opinions expressed in communications from Cooper Norman professionals or shared third party content do not necessarily reflect the opinion of Cooper Norman or its associates. These communications are not intended to create, and receipt does not constitute, a legal relationship, including, but not limited to, an accountant-client relationship. Often these materials have been prepared by professionals, but the user should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Cooper Norman assumes no obligation to provide notification of changes in tax laws or other factors that could affect the information provided.
No Comments | Post a Comment

Reactions to Numbers Investigated by Dan Packard

Brooke Eppa
Apr 30, 2014 01:06 PM
Certified Fraud Examiners (CFEs) utilize several techniques to detect and deter fraud. Daniel Packard, MAcc, CPA, CFE recently published an article exploring the link between human psychology and traditional forensic detection procedures.  The article was published in the May/June issue of Fraud Magazine, titled “Emotional reaction to numbers.”  Perpetrators continually display psychological behavioral traits consistent with the stress or fear of committing fraud, including living beyond one's means, having an unusually close association with vendors or customers, irritability, suspiciousness, defensiveness, complaining, addictive problems and excessive control issues. While fraudsters' circumstances may vary, all are subject to the psychological behavior traits inherent to perpetrating fraud.  Daniel’s article endeavors to substantiate that of all the sophisticated tools used to detect fraud, a fraud examiner's most powerful and effective instrument is the ability to emotionally and psychologically profile the perpetrator. Furthermore, a CFE could potentially generalize and exploit other subconscious responses associated with the stress and fear of perpetrating fraud in the computational detection of fraud.
 
Daniel Packard, MAcc, CPA, CFE, Accountant, Certified Fraud Examiner, Cooper Norman, Idaho Falls, Idaho  
Published in Fraud Magazine May/June 2014
 
No Comments | Post a Comment

CN Mobile App

Dec 13, 2013 06:10 PM
Cooper Norman is proud to announce the release of CN Mobile, an Apple-based app to help you with your everyday business needs.  Cooper Norman recognizes that mobile applications have become a fundamental expectation of the modern taxpayer. Our team is focused on resolving your ongoing needs and is dedicated to keeping you connected and informed.

 CN Mobile is designed to help individuals and business owners manage their day-to-day operations quickly and efficiently. CN Mobile is perfect for when you're on the go, need to make a quick reference, or need to calculate the implications of a business decision. CN Mobile connects you to today’s financial news or market trends. CN Mobile also keeps you involved in tax law changes and offers planning ideas.

 

CN Mobile features the following:

 

  • Blog Feed to Cooper Norman’s most recent news and events.
  • Web resources to help you quickly navigate to frequently referenced sites.
  • Current and pertinent tax facts, including our annual tax fact brochure.
  • Business and financial calculators, INCLUDING:
    • Basic Calculator - The basic calculator is designed to perform basic addition, subtraction, multiplication, and division functions. Great for quick use and reference.
    • Breakeven Analysis - The breakeven analysis calculator is designed to demonstrate how many units of your product must be sold to make a profit.
    • Cost of Missing a Discount Calculator - Cost of missing a discount is the equivalent annual interest rate of a discount on early payment to a supplier. Calculate the annual cost of missing a discount.
    • Economic Order Quantity Calculator - Economic order quantity is used to determine the most efficient order size for a company. EOQ applies only when demand for a product is constant and each new order is delivered in full when inventory reaches zero.
    • (iPad Only) Financial Ratio Analysis - The financial ratio analysis offers insight into the profitability, performance, and solvency of any given company's operations.
    • Idaho Investment Tax Credit Calculator - Determine the amount of Idaho income tax credit you qualify for based on capital expenditures made in Idaho during the current year.
    • Like Kind Exchange - If you exchange either business or investment property that is of the same nature or character, gain can be deferred. This calculator is designed to calculate recognized loss, gains and the basis for your newly received property.
    • Loan Calculator - Enter the total loan amount, the annual interest rate, and the number of years the loan will be in existence to determine your monthly payment and total interest.
    • (iPad Only) Net Present Value/Capital Budgeting Calculator - Annual cash flows are used to analyze potential investments by companies, known as capital budgeting. Projected cash flows are generated, and analyzed to determine whether a project meets required criteria for approval.
    • Pay or Play Optimization Calculator - Determine whether it is more advantageous to provide your employees qualified health coverage or subject yourself to the penalties imposed by healthcare reform.
    • (iPad Only) Regular Income Tax Calculator - Use this calculator to get a general idea of what your eventual tax liability may be. Begin by selecting your filing status.
    • Retirement Plan Contribution Calculator - Use this calculator to determine your maximum contribution amount for the different types of small business retirement plans, such as Individual 401(k), SIMPLE IRA, or SEP IRA.
    • (iPad Only) Self Employment Income Tax Calculator - Normally, these taxes are withheld by your employer. However, if you are self-employed, operate a farm, or are a church employee, you may owe self-employment taxes.
  • Portal Access to your personal tax and financial information.
  • Links to Cooper Norman’s social media, as well as comprehensive information about Cooper Norman and the services offered.
  • For iPhone users, quick phone links to each office.

 CN Mobile App, Cooper Norman, CPAs and Business Advisors, Twin Falls, Idaho Falls, Pocatello, Idaho, Accountant, Calculators

Download the app today!  In celebration of our  60th anniversary, Cooper Norman is making the mobile app free to download during the month of January, 2014.
No Comments | Post a Comment

Safeguarding Your Operations Fraud Prevention and Internal Controls

Sep 4, 2013 04:40 PM

Are you vulnerable to fraud? Do you have adequate controls in place to prevent it?

Occupational fraud continues to be threat to small business.  As regional producers, we often forego critical safeguards necessary in preventing fraud due to perceived costs and unnecessary redundancies. This deficiency results in an increased vulnerability to fraud, and accounts for larger median losses than larger operating counterparts. Recent surveys estimate that the typical organization loses 5% of its revenues to fraud each year. Applied to the estimated 2011 Gross World Product, this figure translates to a potential projected global fraud loss of more than $3.5 trillion.  These surveys estimate the median loss caused by the occupational fraud to be $140,000.  More than one-fifth cases caused losses of at least $1 million.

My experience as a fraud examiner has afforded me many unique insights.  I have met several business owners, observed many business structures, and evaluated just about every method of embezzlement and theft.  One commonality among all these examinations is the reason it happened – failure to implement adequate internal controls.   Many business owners feel they’ve safeguarded their business by surrounding themselves with people they know and trust.  Unfortunately, these relationships of familiarity and trust often create an ideal environment for fraud to occur.  It sedates the business owner, making him or her numb to the warning signs of fraud.  No amount of familiarity can completely acquaint us with the reasons a person commits fraud.  The fraud triangle is a model for explaining the factors that cause someone to commit occupational fraud. It consists of three components which, together, lead to fraudulent behavior:

  • Perceived unshareable financial need
  • Perceived opportunity
  • Rationalization

The financial needs and rationalization an employee may have to commit fraud cannot be adequately diagnosed in a conventional business environment.  However, the opportunity he or she may have to commit fraud is within the control of the business owner.  It is the responsibility of the business owner to put roadblocks in place.  According to recent surveys, the presence of anti-fraud controls is notably correlated with significant decreases in the cost and duration of occupational fraud schemes. Victim organizations that had implemented any of the common anti-fraud controls experienced considerably lower losses and time-to-detection than organizations lacking these controls.  Many of these controls do not have substantial costs associated with them and can be easily implemented in any business structure.

The following are useful controls that should be considered in your organization:

Separation of Duties

Separation of duty, as a security principle, has as its primary objective in the prevention of fraud and errors. This objective is achieved by disseminating the tasks and associated privileges for a specific business process among multiple users. This principle is demonstrated in the traditional example of requiring two signatures on a check.  An organization should maintain appropriate separation of duties between accounting functions and provide necessary review and oversight to these functions.

When separation of duties is performed appropriately, the following functions will occur separately:

  • Authorization function (e.g. sign checks).
  • Recording function and preparing source documents (e.g. printing checks).
  • Custody of asset whether directly or indirectly (e.g. receiving payments in the mail, or mailing payments to vendors).
  • Reconciliation or audit (e.g. monthly bank reconciliations).

Bank Reconciliations and Control of Bank Statements

Monthly bank reconciliations should be performed on all cash accounts by someone who does not make bank deposits or initiate cash disbursements. This reconciliation should be performed before the end of the month in which the bank statement is received.  All bank reconciliation should also be reviewed by a member of management to ensure that correct balances were used and that there are no unusual reconciling items.  A member of management should also open the monthly bank statement and review it for any unusual items (e.g. checks with one signature) prior to giving the statement to the individual performing the reconciliation.

Petty Cash Reconciliation

Your organization should keep all petty cash in a secure lock box.  A simple log should be maintained with a record of when petty cash is disbursed, who petty cash was distributed to, and what the petty cash was used for.  The log should also show when petty cash is added to the lock box.  Reconciliation should be performed between checks on the bank statement made out to petty cash and deposits recorded on the petty cash log.

Physical Controls

Measures to control physical access include the obvious practice of locking doors, desks, and file cabinets so that unauthorized personnel cannot gain access. Other measures are becoming increasing important (and affordable).  These measures include employee IDs and passwords, computerized security systems, and electronic surveillance systems.  Measures like electronic surveillance systems also lend to an operation’s productivity.

Physical controls will help to reduce the risk of fraud in the following ways:

  • Many frauds require that the perpetrator come into physical contact with either the asset being misappropriated, or the related asset records, in order to conceal the fraud. Reducing physical access reduces opportunity.
  • Physical access controls are often the most visible to potential perpetrators. Strong controls in this area send a powerful deterrent message. Conversely, loose physical controls invite challenge.
  • Access controls that do not prevent fraud often assist in the fraud investigation process (for example, determining what actually happened and narrowing down suspects).

Administrative Rights, Passwords, and Closing Dates in Accounting Software

Management’s login should be the only login in your accounting system that has been given all administrative rights.  Usernames and passwords should not be shared. Closing dates should also be used to ensure that data from prior periods cannot be modified once it has been finalized.  All members of management should have equal rights and authority in the accounting software.

Be Sensitive to “Red-Flag” Behavior

Fraudulent behavior often manifests itself through an employee’s behavior.  The following have been identified as potential signs of fraudulent behavior:

  • Does the employee never call in sick regardless of how physically ill they appear, or has the employee stopped taking full weeks of vacation in which someone else performs their duties?  A reluctance to take regular holidays may be due to the need to conceal an on-going fraud.  Fraud can often come to light during a sudden and unexpected absence of the person perpetrating it.  Some organizations have a rule that staff must take several consecutive days’ of vacation each year – both for the physical well-being of the employee and to reduce the opportunity for long-term fraud to go undetected.  During the employee’s absence, another employee should be asked to perform the job functions of the vacationing employee.
  • Is the employee working odd hours when no one else is there?  Regular late working by individual employees should always be investigated, as it may result from a need to cover up fraudulent activities in absence of other members or staff.  A trusted employee can be in a powerful position, especially if management has become relaxed about monitoring their activities.
  • Has an employee’s lifestyle suddenly greatly improved with no explanation?  An apparent discrepancy between an employee’s earnings and their lifestyle is a common indicator of fraud.

A Fraud Response Plan

A fraud response plan should include the general company policy on fraud and should also set out the action to be taken when fraud is suspected.  Having a detailed fraud response plan in place helps ensure that everyone is clear about the action that needs to be taken if and when fraud is identified or suspected.  Thinking about the issues in advance helps management ensure all the relevant aspects are covered.  It is difficult to react promptly without a plan to follow.  A detailed document setting out the policies and procedures to be followed in the case of fraud has the following benefits:

  • It demonstrates that management is in control of the situation
  • It can help to minimize the risk of further loss once fraud is detected
  • It should improve the chance of recovering the loss already incurred, or maximize the amount recoverable
  • It provides a clear statement to employees that management will not condone fraud and will take appropriate action against anyone found to be involved in fraudulent activity

The Control Environment

A functional control environment is best maintained by management.  Management can encourage an anti-fraud culture emphasizing corporate responsibility.  Management should define fraud; so that employees are aware of what actions constitute fraud and/or misconduct and what consequences exist for engaging in fraudulent behavior.  They should also ensure that all employees know the procedures in the event of a fraud being discovered or suspected, including how to report fraud.

Occupational fraud is more likely to be detected by a tip than by any other method. The majority of tips reporting fraud come from employees of the victim organization. Identifying the most common sources of tips is essential to crafting a system that encourages individuals to step forward with information. While just over half of all tips originated from employees, research reveals that several other parties (customers, vendors, etc.) tip off organizations to a substantial number of frauds.  Creating an environment where the reporting of fraudulent behavior is encouraged will be of great benefit to your organization.

Implement Sporadic Fraud Prevention Check-Ups

It is always cheaper to prevent fraud than to detect it. Since fraud can be a catastrophic risk, implementing sporadic fraud prevention check-ups can save your company from disaster. Research suggests that the strongest deterrent to fraud is perceived invigilation.  If your employees think someone is looking, they will likely not risk being discovered.  The Fraud Prevention Check-Up can pinpoint weaknesses in your organization and help you mitigate the risk.  A certified fraud examiner will be a necessary element of this prevention measure.

Fraud is an expensive drain on a company’s financial resources. In today’s globally competitive environment, no one can afford to throw away the five percent of revenues that represents the largely hidden cost of fraud. If your organization is not identifying and tackling its fraud costs, it is vulnerable to competitors who lower their costs by doing so. Strong fraud prevention processes help increase the confidence investors, regulators, audit committee members and the general public have in the integrity of your company’s financial reports.

 

This article appears in the September 2013 edition of Potato Grower Magazine.

Sources:

www.acfe.com

www.aicpa.org

Dan Packard, MAcc, CPA, CFE, Certified Fraud Examiner, Idaho Falls, Idaho

Author:

Daniel Packard, MAcc, CPA, CFE

Certified Fraud Examiner

Cooper Norman

1000 Riverwalk Drive, Suite 100

Idaho Falls, ID  83402

(208) 523-0862 Work

(208) 523-5656 Home

(208) 201-6205 Cell

dpackard@coopernorman.com

www.coopernorman.com

 

No Comments | Post a Comment

Embezzlers Beware

Brooke Eppa
Mar 18, 2013 12:58 PM

Protect Your Company From Fraud

Cooper Norman was brought in by Foothills Dental Care and RiverWest Dental to perform an audit. The embezzlement uncovered by that audit goes to trial March 27th. We would like to recognize Dan Packard, MAcc, CPA, CFE for his excellent work on this case.
Got 'em! BAM! Cooper Norman CFE Dan Packard Successfully tracks down embezzlement in Idaho Falls
 
Embezzlement article in the Post Register
 

 
 
Detecting embezzlement and collecting evidence to bring the situation to light is the job of a Certified Fraud Examiner. If you suspect fraud within your organization, you can enlist a CFE to help you track down what is going on. A CFE can help navigate you through the steps necessary to stop fraudulent activity. They can also help put internal control procedures in place to prevent fraud in organizations that have been victims of fraud as well as organizations that want to protect themselves proactively.
 
For more information on our Forensic Accounting services. Please visit our Forensic Accounting Service Page.
 

No Comments | Post a Comment

Certified Fraud Examiners At Your Service

Brooke Eppa
Jan 10, 2013 04:10 PM

Stand Back! We'll Catch 'em!

Feeling the need for an accountant, lawyer, cop, and psychologist fused into one fraud detecting superhero? Then you're looking for a Certified Fraud Examiner!
 

 
What is a CFE?
  • A CFE is a professional that obtains certification through the Association of Certified Fraud Examiners
  • Certified Fraud Examiners have a unique set of skills that combine knowledge of complex fnancial transactions with an understanding of methods, law, and how to resolve allegations of fraud
  • CFEs can come from different backgrounds including accountants, lawyers, law enforcement officers, internal auditors, and other business professionals
  • They prevent, detect, and deter fraud in all types of businesses, organizations, and associations
  • CFEs resolve cases of potential fraud

 

Association of Certified Fraud Examiners

  • The world's largest anti-fraud organization and premier provider of anti-fraud training and education
  • The ACFE is reducing business fraud worldwide and inspiring public confidence in the integrity and objectivity within the profession
  • There are 65,000 Certified Fraud Examiners worldwide

 


Do you need the services of a CFE? We've got that kind of mental muscle on staff. In fact, we've got THREE of them!

Ryan Mathews, MAcc, CPA, CFE was awarded his Certified Fraud Examiner certification this January of 2013, and joins Dave Stoddard, CPA, CVA, CFE and Dan Packard, MAcc, CPA, CFE as the third CFE at Cooper Norman.
 
Want more information on the specific fraud and internal control services Cooper Norman provides?

Visit the Forensic Accounting Services page.

One of Cooper Norman's success stories is available here.

 

 

No Comments | Post a Comment