“Corporate Vigilance in Desperate Times” was the title of a presentation I made to a group of corporate controllers on behalf of the Ohio Society of Certified Public Accountants.
It’s hard not to pick up a newspaper these days and see dismal economic results. The next article discusses employee layoffs. “Happy Days Are Here Again” will not be heard on your car radio on the way home. And once home, chances are that you don’t want to look at your stock portfolio or 401k statement that came in the mail.
Many employees are scared. Financial pressures are fierce. A spouse may have been laid off thus crippling the family cash flow. Retirement, carefully planned for years, may now have to be delayed since the market has halved your nest egg. With foreclosures at record numbers not seen since the Great Depression, many must evaluate whether they can provide a house for one’s family?
In troubling times such as this severe economic downturn, the opportunity is ripe for fraudsters to shake cash from unsuspecting companies. Companies must be more vigilant than ever to protect their financial resources.
Unfortunately, we have become aware of some companies cutting jobs within accounting departments and as a result potentially compromising their internal controls – controls vital to not only good financial reporting, but safeguards in general to the overall corporate assets.
Is there a correlation between a downturn in the economy and an increase in fraudulent acts such as embezzlement? Sure there is. In larger corporations there is intense pressure to “make the numbers” thus resulting in tempting financial statement crimes.
Eliminating staff in an accounting department will usually reduce the effectiveness of established internal controls. Less effective internal controls is an invitation for embezzlement. And don’t think that the thieving opportunist doesn’t recognize the void suddenly created.
In tough times, a fraud assessment is prudent medicine. Our CPAs, business and financial advisors are here to help you Cleveland or Akron area business. Contact Frank Suponcic in our Litigation Advisory Services Group at 440-449-6800 for more information.