CPA Warns Business Owners To Be Alert to Signs of Fraud

As cases of theft from Arkansas employers continue making headlines, a local CPA says employee fraud will escalate as long as economic conditions remain challenging.

Sue Talkington, a CPA and certified fraud examiner with Beall Barclay & Co. PLC in Fort Smith, said that in one week recently she found three cases of fraud, each perpetrated by trusted employees and amounting to more than $100,000.

“It’s just a good reminder to business owners to not put too much trust in their people or delegate too much,” she said. “They have to keep involved, and set the tone at the top.”

In the frequent talks she gives to business groups, she stresses business owners must be aware of the red flags such as an employee living beyond her means or having financial problems like medical expenses.

“The behavioral signs are always key,” Talkington said.

Business owners may think they’re safe because audits show no irregularities, she said, but it’s often tips to management that result in a fraudster being caught.

“Having a hotline or open-door policy for tips is very low cost,” Talkington said. “Management review, too, is relatively low cost but high reward.”

Technology provides the means for some people to steal, especially younger, tech-savvy employees. Talkington mentioned one case in which an IT employee set up two Google Checkout accounts and siphoned money into them through the company credit card.

According to the just-released 2012 Report to the Nations from the Association of Certified Fraud Examiners, small businesses remain particularly vulnerable to fraud, largely because they have fewer resources than larger companies to prevent and detect fraud.

The report recommends managers and owners of small businesses focus their anti-fraud efforts on cost-effective measures such as hotlines, employee education and setting a proper ethical tone within the organization.