“Red Flag” Behaviors of Occupational Fraud Perpetrators

By Lowers & Associates,

fraud perpetrators

Most crimes of occupational fraud are motivated, at least in part, by some kind of financial pressure. And while committing a fraud, the perpetrator will frequently display certain behavioral traits associated with the stress or fear of being caught.

These “red flags” are behavioral and system-based clues that can be picked up by attentive managers, colleagues, internal auditors, or subordinates. In turn, these clues can put an organization “on notice” that a trusted individual may be engaging in some form of improper or fraudulent conduct.

The Association of Certified Fraud Examiners (ACFE) in its 2012 Report to the Nations pinpointed the most common behavioral red flags associated with occupational fraud. The ACFE examined the frequency with which certain behavioral red flags were identified during a fraudulent scheme. … Continue reading

The Fraud Triangle [Infographic]

By Lowers & Associates,

According to ACFE estimates, fraud costs organizations fully 5% of annual top-line revenue. This enormous cost is serious enough, but it is compounded by the fact that fraud is a hidden crime that erodes an organization’s capacity from within.

Consequences can go beyond monetary losses to inflict damage on morale, trust and transparency. These kinds of costs endure far beyond the triggering event.

Recognition is the First Step in Fighting Fraud

In 1973, criminologist Donald Cressey first published his theory about fraud, highlighting the now famous “fraud triangle”, which says fraud occurs when the fraudster feels financial pressure, his or her organization presents an opportunity, and the person can rationalize the theft.

The first few words of his hypothesis capture the essence of this crime, and why it is difficult to confront: “Trusted persons become trust violators…” In other words, there is an internal conversion that turns an employee (at any level) into a thief.

The value of the fraud triangle is that it helps us to look at the objective factors that have to be present for fraud to occur. Recognizing these objective factors helps to define actions you can take to help prevent fraud, partly through organizational policy controls and partly through managing the relationship with employees to encourage openness and trust.

Our latest infographic summarizes the factors that must be present for fraud to occur, and gives you a few ideas about how to combat it.

fraud triangle

Click to view full version and download PDF.

For more information, explore our fraud investigation and loss prevention services, or contact us for a fraud prevention consultation.

The Case for Litigation Support

By Lowers & Associates,

attorneys

This is a guest article from Andrew Carraway, Esquire, Attorney with Lowers & Associates

In our current fast-paced business environment, it is getting harder and harder for a company to solely rely on its in-house staff to resolve legal disputes and conduct the necessary due diligence reviews of customers and suppliers.  Out sourcing and specialized consultants have become necessities.  It is now likely that any company that has retained the services of a law firm will find the category of “litigation support” featured prominently on invoices for services provided by the law firm.  In this short article, we will explore what the concept of “litigation support” entails and the necessity for law firms and other businesses to utilize these services.

Litigation support has been defined as “the process of providing consultation and support services to attorneys or others in regard to current and pending cases.”[1] Litigation support services can range from legal research, to the valuation of property, to determining the extent of damages incurred in an accident or injury, and perhaps forensic accounting services to trace out fraud, waste, and abuse in financial activities.  As our world becomes more complex and information transforms from the written page to digital material maintained on a server or in a cloud, more and more litigation support is being focused on digital formats, coining a new term E-Discovery. E-Discovery refers to the discovery of information in civil litigation which deals with the exchange of information in electronic format, i.e. electronically stored information.[2] E-Discovery is frequently utilized by law firm and business support staff, outsourced by the firm to specialty groups whose sole role is to extract and analyze evidence supplied by attorneys using digital forensic procedures which are incorporated into a document review format.[3]

… Continue reading

7 Habits of Highly Effective Fraud Prevention Programs

By Lowers & Associates,

fraud perpetrators

Avoiding the losses that result in cases of fraud is not a matter of luck or good fortune. Strategic fraud prevention programs, strategies, and processes form the front line of fraud defense by identifying and filling gaps before losses happen.

The Association of Certified Fraud Examiners (ACFE) has a valuable resource available to help assess the health of your existing fraud prevention processes. Known as the ACFE Fraud Prevention Check-Up, the self-administered ‘check-up’ can give you a candid view into your company’s vulnerability to fraud and identify major gaps in your processes. … Continue reading