by Deborah Dickson, CPA, CFF, MAFF
As printed in the Orange County Business Journal, “General Counsel Awards” special supplement, October 14, 2019.
Most employers never would expect that a trusted employee might commit fraud, yet every year numerous businesses are forced into bankruptcy due to fraud. Even when it isn’t that extreme, the Association of Certified Fraud Examiners’ (ACFE) 2018 Global Fraud Study revealed that the typical organization loses a median of 5% of revenues each year due to fraud.
The Fraud Triangle
Employers can utilize the “fraud triangle” to monitor and identify factors in the lives of key personnel that can lead to fraud. The fraud triangle is a model for explaining the factors that cause someone to commit occupational fraud. It consists of three components which, together, lead to fraudulent behavior: pressure, perceived opportunity and rationalization.
Pressure originates from a financial problem (personal or professional) that the individual is unable to solve through legitimate means, so he may consider stealing cash or falsifying a financial statement. Next comes opportunity, using a position of trust to solve the financial problem with a low risk of getting caught. It is worth noting that many white collar crimes are committed to maintain social status and pay for lavish lifestyles. The final step is rationalization – fraudsters typically do not see themselves as criminals, instead feeling that they are caught in a bad set of circumstances. They may even justify it by thinking that the employer underpaid them or is dishonest and deserved it.
Forensic Accounting Support
Forensic accounting engagements can be specifically tailored to discover fraud and sometimes even to prevent it. Attorneys engage forensic accountants to determine whether fraud occurred, estimate the extent of monetary loss, and uncover who committed the fraud. When litigation is selected as a means to recover losses, forensic accountants prepare reports on the damages and render expert testimony. At Smith Dickson, our forensic accounting specialists have logged thousands of hours of forensic accounting, deposition and trial experience, both as expert witnesses and consultants in matters ranging from economic damages to fraud and embezzlement. Smith Dickson’s forensic accounting specialists will support your case with the highest level of expertise available.
Deborah Dickson, CPA, CFF, MAFF is President of Smith Dickson, An Accountancy Corporation (www.smithdickson.com) based in Irvine. The firm’s Litigation Support Services include: damage calculations; lost profits; forensic accounting; expert testimony; intellectual property; fraud & embezzlement; real estate; trust & estate beneficiary disputes, tax controversy; business dissolution. Ph. 949.553.1020.
As part of our commitment to the Southern California legal community, Smith Dickson is pleased to be a Silver Sponsor of the “10thAnnual General Counsel Awards,” presented by the Orange County Business Journal. These awards recognize the significant role in-house counsels play in the success of Orange County businesses.
General Counsel Awards are presented in the following categories:
- General Counsel of Public Company
- General Counsel of Privately Held Company
- Specialty Counsel (attorney who focuses in a certain area of law for an organization)
- Rising Star Award (senior-level in-house counsel and recently named GCs)
- In-House Legal Team
The awards program will be held November 13th, 5:00-8:30 p.m. at the Hotel Irvine. Click here for ticket information.
Smith Dickson would like to congratulate and thank all fathers and grandfathers! You help to guide and provide for all generations!
One of the key areas that dads typically help is in the financial realm. Along these lines, we thought it would be interesting to read some survey results.
The Best Financial Advice from Dad
A recent survey by GOBankingRates was done to uncover the best financial advice respondents learned from their dads growing up. The survey asked: What’s the best money advice you learned from your dad?
The responses — in order of most selected — were:
- Don’t spend money you don’t have. (34.4 percent)
- Pay your bills on time. (20.1 percent)
- Save for a rainy day. (18.5 percent)
- Don’t quit your job before you have another. (17.7 percent)
- No risk, no reward. Invest! (9.3 percent)
This study could shed light on how major financial crises in the fathers’ generations affected the way their children approach money management. Here are some excerpts from the survey analysis, focusing on Generations Y and Z (read the full survey results for analysis of other generations):
Studies have shown Gen Y is the best generation when it comes to saving money; the survey found that millennials also heeded their fathers’ advice about spending money. Gen Y participants were more likely than any other age bracket to select “don’t spend money you don’t have” as their fathers’ best money advice, at 32.2 percent.
Why? Millennials are the children of baby boomers — and, like their grandparents, weathered hard financial times in formative years. As Gen Y graduated college and entered the job market, the Great Recession was in full force; it’s no wonder millennials have learned to live within their means.
Generation Z is composed of young children, adolescents and teens on the cusp of entering adulthood. Many in this bracket are still counting on their parents’ financial support and have years ahead to map out their finances.
It comes as no surprise that more of these financially adventurous (yet parent-reliant) 18- to 24-year-old people have taken to heart their fathers’ money advice of, “No risk, no reward. Invest!,” at 14.8 percent, versus just 3.5 percent of respondents age 65 and older.
After all, as the youngest generation polled, members of Gen Z have the most time to take risks before starting to think seriously about retirement.