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7 Fraud Avoidance Truths Every CPA Must Learn.

7 Fraud Avoidance Truths Every CPA Must Learn.

The No-BS Guide Every CPA Needs to Know.

Are you juggling the mind-bending riddles of financial operations and looking for a little help?

Well, in this post, I'm sharing some of my internal secrets.

What's The Deal?

Ever found yourself staring at your business and asking, "Why the hell am I in another mess?"

Let's be real - it's FRAUD, peeps!

Yep, a money-jacking demon that can crash your thriving business party if you slack off. Now, don’t freak out. Understanding and beating fraud isn't as terrifying if you know what to look for.

Why The Mess?

The dreaded “F” word that we hate to utter but can’t look past - is at its heart, an unholy trinity of pressure, opportunity, and rationalization.

I bet a few bad memories & situations already come to mind…

You're probably thinking, "But Ben, I've got a solid business, a kick-ass team, and I'm even turning profits so I don’t have to worry about that”.

Well my overly-trusting friend, I hate to break it to you, but fraud doesn't just live in dark alleyways. It might be sitting at the desk right next to yours!

All sorts of pressures can push a less criminally inclined person over the edge. Personal debts, financial hurdles, or even non-financial stuff like hitting performance goals can cause enough stress for someone to look for a way to beat the system.

Their opportunities usually come from our own bad calls. Weak internal controls, lack of oversight, or poor role division.

When one of those opportunities is jumped on, the demon rationalizes their actions with a series of mental gymnastics to help them sleep at night after screwing us over.

You might wonder, "Ben, what forms does this fraud demon take?"

Here's the shortlist:

  • Asset Misappropriation: Ever found your cash receipts mismatched or not tallying? What about straight-up physical asset theft? Yeah, that’s a major red flag and a harbinger of trouble.

  • Financial Statement Fraud: Inflated revenue or deflated expenses - alarm bells should be ringing!

  • Corruption: Whiffs of bribery, kickbacks and conflicts of interest? Time to get on the defensive.

  • Payroll Fraud: Ghost employees, fake time cards or buddy punching. Sound familiar?

  • Tax Fraud: Unreported income, overstated deductions, hidden assets. The staple moves of a fraudster.

  • Cyber Fraud: Phishing & ransomware. The reason we have to keep attending those annoying email safety classes.

  • Vendor Fraud: Over-billing, internal/external collusion or just plain weak security, “aka” they got hacked. Yep, they’re vulnerable too!

What Can Be Done?

So, how do you kick a fraud demon out of your house?

It's all about creating a controlled environment for your business and navigating the grey areas of your Stewardship Journey.

Here’s the golden rule: Prevent. Detect. Respond.

  • Prevent: Lay down some heavy-duty internal control systems, promote transparency at every level, and push for regular internal audits. Simple and powerful.

  • Detect: Keep your eyes open for red flags with timely financial statements, side-by-side period comparison and variance reporting. Just make sure you help your clients understand how to review these, otherwise they may think you’re just blowing smoke.

  • Respond: Roll out a hardline code of ethics and breed a culture where fraud is as welcome as a root canal.

Feeling pumped? Just remember, your greatest weapon on your Stewardship Journey is to be fearless, capable, and ethically creative.

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