presented to: ochin 11/17/2012 presented by: tiffany couch acuity group pllc how secure is your...
TRANSCRIPT
Presented to: OCHIN11/17/2012
Presented By: Tiff any CouchAcuity Group PLLC
HOW SECURE IS YOUR PRACTICE?
Record Debt
Stock Market Roller Coaster
Housing market crisis….
Unemployment at all-time high
READ THE HEADLINES
Copyright 2012, Acuity Group PLLC
Copyright 2012, Acuity Group PLLC
OCCUPATIONAL FRAUD DEFINED
OPPORTUNITY
PRESSURE RATIONALIZATION
OCCUPATIONAL FRAUD –Using one’s occupation for unauthorized personal gain through deliberate misuse of the employing entity’s resources or assets.
METHODS OF FRAUD 2012 ACFE REPORT TO THE
NATIONS
Copyright 2012, Acuity Group PLLC
6.0%
26.2%
67.9%
Financial Statement Fraud ($1,000,000)
Corruption ($250,000)
Asset Misappropriation ($120,000)
Behaviors Employee rarely absent; refuses to take vacations.
Employee refuses to relinquish control; train new employees.
Employee works long hours and/or when others are not present.
Employee appears to be living beyond means.
Motivators• Addictions
• High personal debt
• Personal crisis
• Attitude of entitlement
Copyright 2012, Acuity Group PLLC
KEY RED FLAGS
YOU ARE THE #1 VICTIM Organizations with fewer than 100 employees
31.8% of all cases reported
Highest median loss ($147,000) than their larger counterparts
Employees with 5+ more years are MOST LIKELY perpetrators
Copyright 2012, Acuity Group PLLC
SMALL BUSINESS BEWARE
The typical U.S. Organization loses 5% of its annual revenues to fraudulent activity. 2012 Report to the Nation on Occupational Fraud and Abuse
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TYPICAL HEALTHCARE FRAUD SCHEMES
Rank Scheme Cases %
1 Billing 33 35.9%
2 Corruption 28 30.4%
3 Expense Reimbursements 19 20.7%
4 Skimming 18 19.6%
5 Check Tampering 17 18.5%
5 Non-Cash 17 18.5%
6 Cash Larceny 16 17.4%
7 Payroll 14 15.2%
7 Cash on Hand 14 15.2%
8 Financial Statement Fraud 9 9.8%
9 Register Disbursements 6 6.5%
Health Care - 92 Cases
WHO’S TAKING THE MONEY?
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Tenure of Perpetrator — Median Loss
Courtesy of Association of Certified Fraud Examiners (2012 Report to the Nations)
Less than 1 year 1 - 5 years 6 - 10 years 10 years or more$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$25,000
$100,000
$200,000
$229,000
$47,000
$114,000
$231,000
$289,000Tenure of Perpetrator - Median Loss
20122010
REALITIES - HOW IS FRAUD DETECTED?
Courtesy of ACFE 2012 Report to the Nations Copyright 2012 Acuity Group PLLC
Notified By Police
External Audit
Management Review
Internal Audit
By Accident
Tip
0.0% 10.0% 20.0% 30.0% 40.0% 50.0%
1.8%
4.6%
15.4%
13.9%
8.3%
40.2%
3.0%
3.3%
14.6%
14.4%
7.0%
43.3%
Initial Detection of Occupational Frauds
20122010
CLIENT PERCEPTIONS– ANTI FRAUD CONTROLS
Anti-fraud Policy
Fraud Training for Employees
Fraud Training for Mgrs/Execs
Hotline
Employee Support Programs
Independent Audit Committee
Management Review
External Audit of ICOFR
Internal Audit/FE Department
Management of Certification of F/S
Code of Conduct
External Audit of F/S
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
42.8%
44.0%
46.2%
51.2%
54.6%
58.4%
58.8%
65.4%
68.2%
67.9%
74.8%
80.9%
46.6%
46.8%
47.4%
54.0%
57.5%
59.8%
60.5%
67.5%
68.4%
68.5%
78.0%
80.1%Frequency of Anti-Fraud Controls
20122010
The sum or percentages in this chart exceed 100$% because many victim organizations had more than one anti-fraud control in place at the time of the fraud
Courtesy of ACFE 2012 Report to the Nations
COMMON MISCONCEPTIONS
Banking Checking signatures Conversion of checks
My Bank Will Cover My Losses
Audits = Fraud Detection Tool
CPA will find it
Background CheckCopyright 2012, Acuity Group PLLC
Bank Statements
Who is reviewing?
Review front and back of cancelled checks
Review electronic debit activity on the statement
Segregate Duties
Even when resources are limited
Cash Business?
Verify cash is listed on the bank deposit slip
Ask Questions
Even if you know the answers – perception is the keyCopyright 2012, Acuity Group PLLC
EASY ACTION PLAN
Front Desk Should not be able to apply credits to patient accounts
Immediate endorsement of checks
Credit card processing – check reports
Disbursements Approve vendors in advance
Insist on proper supporting documentation
Expense reimbursements must have receiptsCopyright 2012, Acuity Group PLLC
ADDITIONAL INTERNAL CONTROLS
Seek Expert OpinionsCPABilling ExpertsBankers Insurance Agents
Bank Products Can Help ProtectPositive PayLockbox ServicesACH Controls
Copyright 2012, Acuity Group PLLC
CONSIDERATIONS
Copyright 2012, Acuity Group PLLC
REMEMBER – TRUST IS NOT AN INTERNAL
CONTROL!
Tiffany R. Couch, CPA/CFF, CFEAcuity Group PLLC