Fraud Protection - Lenore Romney

 

 

 

          Fairway test: Mark Visintainer is trying to recruit a few more golfers, men and women, for the Valley Rotary charity tournament, Tuesday, May 19, at The Trailhead executive course in Liberty Lake.  Our club is defending champion.

 

          High notes: Melinda Keberle says the tickets will be paid for and desserts served at The Bing, Saturday, May 9, at the club social as members attend a Spokane Jazz Orchestra concert.  She adds that it is the “longest running jazz orchestra in the nation, and maybe the world.”  Sign up now.

 

          Holmes show: Bruce Ellwein volunteered to introduce the Mobius Science Show at the school’s program for kids and parents at Holmes Elementary, Thursday, April 23.

 

          Meal deals: Steve Boharski said diner donations “are filtering in” for raffles and prizes for the club’s June 4 fund raiser at The Backyard.  Proceeds benefit programs at Holmes.

 

 

          In businesses large and small, some of the people who handle and count the beans take advantage of opportunities to keep some beans for themselves.  And rarely do they spill the beans – until they are caught.

 

          That’s where Lenore Romney comes in.  She has spent a career studying fraud and telling business owners and managers how to prevent it.

 

          And the basis of her advice, as she told club members at the April 20 luncheon, is the same message President Reagan had about Russian missile programs: “Trust, but verify.”

 

          So it was not just our club’s president-elect speaking, it was “Lenore Romney, CPA, CFE, CVA” talking.

 

          If you missed the meeting, ask Lenore for a copy of her 12-page handout, which, with great authority, offers businesses, including non-profits, ways to protect against fraud.  The only topic she left out was how to commit fraud and get away with it.

 

          “Most of the time, it’s money, but it could be inventory or drugs.” Romney said, condensing a 2-hour talk to a dental group to a manageable 30 minutes for the club program.

 

          She used the “e” word – embezzlement – to describe when an employee abuses an employer’s trust for personal gain.  In legal terms, she said, “it’s almost always first-degree theft, because the value of what was taken is greater than $5,000.”

 

          She adds: “What makes this different from someone robbing a mini-mart is the element of concealment – trying to cover their tracks, rather than making a fast get-away.”  And the business fraud criminals usually don’t wear a “hoodie.”

 

          Two elements of a good defense against fraud, Romney said, are vigilant owners and managers and a well-designed system that protects the business and protects employees, even from themselves.

 

          The money handlers should know that their bosses are monitoring the cash flow and inventory and just one person should not completely control the asset management system.

 

           “A lot of businesses don’t want to think about the bad side,” Romney said, “but the key take-away from this program is that denial is not an effective fraud deterrent.”

 

           She lists dozens of fraudulent categories in three big areas: Corruption: 6 schemes and 37 percent frequency; Financial Statements – 9 schemes and 9 percent frequency; and, Asset Misappropriation – 28 schemes and 85 percent frequency.

 

           Romney cited the traits of typical perpetrators, including living beyond their means, financial and family problems and unusually close associations with vendors or customers. 

“You think you know your employees well, but many hide what’s really going on,” she said.

 

           She offered a 16-question “fraud risk quiz,” ranging from “who opens the mail and handles payments” to how often accounting software is closed and who checks to match opening and ending monthly balances.

“Business people mistakenly think it’s efficient to have just one person handle and record all the assets,” she said.  “Go through the process and shore up the holes,” she advised.