Fraud in Accounts Payable: How to Prevent It

Preface.

Acknowledgments.

PART ONE: WHERE ACCOUNTS PAYABLE FRAUD CAN HAPPEN IN YOUR ORGANIZATION.

1. Profiles of Fraud in the Business World.

Three Big Myths.

Fraud Statistics.

Occupational Fraud: It's a Big Problem.

Definitions and Frequency.

Who Gets Hit the Hardest?

How Fraud Is Detected.

Who Commits Occupational Fraud?

To Prosecute or Not.

Is Fraud an Equal Opportunity Crime?

Fraud in the Eyes of the Beholder.

Effect of Status of Fraudster.

Big Boss Issue.

Why Do Insiders Steal?

Conditions that Permit Frauds to Occur.

Why Aren't More Fraudsters Prosecuted?

Fraud in the Real World.

Concluding Thoughts.

2. Check Fraud: Still a Huge Problem.

Internal Controls to Prevent Check Fraud by Insiders.

Recommended Controls.

What Else Can You Do?

How Bad Is the Check Fraud Problem?

What Does the Law Say?

Impact on Accounts Payable.

What Should You Do?

Positive Pay and Its Cousins.

Internal Controls, Segregation of Duties, and Positive Pay Exceptions.

Internal Controls and Paper Checks.

What Can Go Wrong.

Consequences of Poor Internal Check Production Processes.

The Right Way.

The Best Way.

Questions that Reveal Your Internal Check Controls.

Best Check-Handling Practices between Printing and Mailing.

Mailing Checks.

From Printing to Mailing: Do You Know Where Your Checks Are?

When the Checks Are Signed and Returned.

Wire Transfers.

Rebate and Refund Checks.

Rush Checks.

Why Returning Checks to Requisitioners Can Be a Problem.

How Companies Handle Check Return Requests by Requisitioners.

Fraud in the Real World.

Concluding Thoughts.

3. Check Stock: Stop the Fraudstersâ?? Presses.

Security Features in Your Check Stock.

What Else?

Some Check Fraud Security Features.

A Word about Void Pantographs.

Void Pantographs and Positive Pay.

Fraud in the Real World.

Concluding Thoughts.

4. P-Card: Not as Big an Issue as You Might Think.

Printing of the Invoice.

Start Off on the Right Foot.

Policy and Procedures Manual.

Spell Out Consequences.

Require Documentation.

Donâ??t Overlook Receipts.

Role of a Program Administrator in Fraud Prevention.

Approvals and Compliance.

Role of Limits with Respect to Fraud.

Train, Train, and Then Train Again.

What About Inappropriate Use?

Fraud in the Real World.

Closing Thoughts.

5. Electronic Payment Fraud: Not a Growth Industryâ??Yet!

ACH Blocks.

ACH Filters.

ACH Positive Pay.

Payment Account Data: Is It Accurate?

Ach Data Accuracy: Real-Life Solutions to a Very Practical Problem.

CPAâ??s Perspective.

Fraud in the Real World.

Closing Thoughts.

6. Desktop Fraud: Few Think About Thisâ??But Everyone Should.

Example.

Overview.

Issues.

Recommendation.

Lovalloâ??s Guidelines.

Bringing It All Together.

Fraud in the Real World.

Concluding Thoughts.

7. Travel and Entertainment Fraud: Not All Your Employees Are Honest.

The Book that Teaches Your Employees How to Steal.

Danger Signs.

Other T&E Scams.

Drawing a Line.

Latest T&E Issue: Verifying Boarding Passes Printed at Home.

Solutions to the Boarding Pass Issue.

T&E Fraud Prevention Best Practices.

Detecting Expense Reimbursement Fraud.

Uniform Enforcement of the T&E Policy.

What to Do When Expense Reimbursement Fraud Is Detected.

Last-Ditch Collection Efforts.

Fraud in the Real World.

Closing Thoughts.

8. Petty Cash Fraud: Petty Indeed.

Petty Cash Awful Practices.

How Much Money Should the Box Have?

Petty Cash Box.

Surprise Audits.

Where Does Responsibility for the Box Lie?

Do We Still Need Petty Cash?

Receipt Review.

Petty Cash versus T&E.

Fraud in the Real World.

Concluding Thoughts.

9. Vendor and Invoice Fraud: Not Every Invoice (Or Vendor!) Is Legit.

Fraudulent Invoicesâ??or Not.

Solicitations that Look Like Invoices.

Other Common Invoice Frauds.

Fraud and Poor Payment Practices.

A Word about Collusion.

Brief Commentary on Purchasing.

Up-Front Vendor Verification.

Control Challenge in Real Life.

Advice from the Better Business Bureau.

Fraud in the Real World.

Concluding Thoughts.

10. Master Vendor File Fraud: How Employees Play Games with Your Records.

Some Really Bad Master Vendor File Practices.

Master Vendor File Reports.

Coding Standards Prevent Fraud.

Cleansing the Master Vendor File.

Who Has Responsibility for the Master Vendor File.

A New System.

Master Vendor File and Your Employees.

Fraud in the Real World.

Closing Thoughts.

11. Payroll Fraud: Ghostbusting and More.

Phantom Employees.

What You Can Do to Detect and Prevent Ghost Employees.

Falsified Hours and/or Salary.

What You Can Do to Detect and Prevent Employees from Falsifying Data.

Commission Schemes.

False Workers' Compensation Claims.

Some Overall Prevention Tactics.

Fraud in the Real World.

Concluding Thoughts.

12. Telecom Fraud: Yes, It Can Happen to You.

Types of Phone Fraud.

Nuisance Fraud.

Examples of Cramming.

Getting Refunds and Combating Cramming.

Slamming.

Phone System and Voice Mail Fraud.

Social Engineering Fraud.

Call Forwarding/Conferencing Problems.

VOIP Fraud.

Fraud in the Real World.

Concluding Thoughts.

PART TWO: STRATEGIES TO DETER, PREVENT, AND DETECT ALL SORTSOF ACCOUNTS PAYABLE FRAUD.

13. Best Practicesâ??Not: Tactics that Unintentionally Promote Fraud.

Closing Thoughts.

14. Fraud Monitoring Reports: A Necessary Evil.

Automated Monitoring.

How Anyone Can Run Reports.

A Word about More Sophisticated Monitoring.

How Much Checking Is Enough?

The Big Report Everyone Should Run.

The Easy Report.

Other Fraud Detection Reports.

The ACT List.

Closing Thoughts.

15. Fraud Detection and Prevention: Simple Tactics You Can Use.

2006 Report to the Nation Fraud Detection.

PricewaterhouseCoopers 2007 Global Economic Crime Survey Fraud Detection.

Anonymous Hotlines.

What Companies Can Do to Prevent Fraud.

Simple Tactics to Make Sure No One Robs the Till on Your Watch.

Fraud in the Real World.

Closing Thoughts.

16. Sarbanes-Oxley.

Sarbanes-Oxley.

Overview of the Act.

Sarbanes-Oxley Survey.

Impact of the Act on Accounts Payable Operations.

Outside Influences.

Functions Improved.

T&E Reimbursement and Review Processes.

Internal Audit Reviews.

Backup for Check Requests.

Records Retention Policy.

1099 Reporting.

Invoices.

Master Vendor File.

Other Regulatory Concerns.

Using the Act to Enforce Needed Change.

The Act and Its Effects on Private Companies.

Whistle-Blower Protections.

The Anonymous Hotline.

Concluding Thoughts.

Appendix A: Fraud Schemes: Physical and Virtual Checks.

Appendix B: 2007 Top Frauds.

Appendix C: Segregation of Duties.

AppendixD: The Sarbanes-Oxley Act of 2002 Titles.

Resources.

Index.