Security and Risk Management: Protecting Your Assets
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Beware of Business Fraud
FE (Certified Fraud Examiner) Patrick Oki recalls a case where company officers discovered their president had been embezzling company funds to purchase homes, cars and other personal assets. They only discovered this after the president had died.
“Business fraud often takes awhile to detect,” says Oki, who is managing partner of PKF Pacific Hawaii and also Certified in Financial Forensics (CFF). As the leading business fraud investigation firm in Hawaii, PKF is currently examining cases dating back to 2005 to 2007. Oki, who has more than 17 years of experience, anticipates more fraud cases to surface following the recent economic downturn, when businesses downsized staff, resulting in reduced internal oversight.
Business fraud occurs in businesses and organizations (such as churches and nonprofits) of all sizes, across all industries, and is perpetrated by high- level management as well as entry-level workers, according to Oki. It’s a nationwide problem and growing. Oki says about a quarter of all businesses will experience fraud in their organizations and an estimated 6 percent of all business revenues is subject to fraud losses.
“A big part of our work with companies is education,” says Oki. PKF, which specializes in large-scale cases involving significant fraud losses worth millions of dollars, is often called in soon after a loss is discovered to determine the extent of the monies lost.
“We then have to determine how the fraud was perpetrated and what areas of the company were affected,” he explains. In addition to examining accounting processes and interviewing staff, PKF also uses computer forensics (examining emails, deleted documents and hard drives). It is a crime scene investigation, says Oki, who conducts a business presentation titled “CSI Accounting Fraud.”
Changes in internal security controls and risk management are then recommended to improve controls. PKF is also hired by organizations to evaluate and strengthen internal financial and risk management controls to prevent fraud. Company leadership is important, says Oki, in setting an ethical work environment of high standards of trust and zero tolerance for fraud.
PKF Pacific Hawaii also provides a full range of audit, tax and advisory services and serves a wide range of industries, including not-for-profit, hospitality, government, real estate, education, insurance, construction, manufacturing, distribution and retail, technology, renewable energy and financial services.
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