Five facts of fraud, a growing problem in potato country
“I can tell you these are not just big city cases, these are occurring in eastern Idaho as well,” said eastern Idaho financial fraud investigator Ryan Mathews with accounting firm Cooper Norman. He was one of the speakers at the meeting and advised growers on how to protect their operations as part of a presentation put on by the Idaho Grower Shippers Association.
He said fraud cases are on the rise in the area but that steps can be taken to keep fraud from happening.
“The take away is, in organizations your size the number one reason that fraud would occur is lack of internal controls,” he said. Having policies in place and adequate oversight from managers is important, Mathews said.
Five things to know about financial fraud
- Prevention is always cheaper
- Normal accounting services will not catch fraud
- In ag organizations, especially, most fraud involves cash
- Six business areas account for most fraud – accounting, operations, sales, upper management, customer service, purchasing
- Fraud suspects are likely to not have any criminal record and be well educated
An employee asking to start a new accounting system from scratch is a red flag Mathews said. Normal, year-to-year accounting is not designed to catch fraud, he reiterated, saying it’s important to know what business’ accountant is paid to look for.
Statistically, he said only 1 percent of fraud suspects confess, 3.8 percent are discovered by auditors and 5.6 percent are discovered by accident. Mathews said his firm is currently working on a case where fraud was discovered two years after an employee retired and the estimated costs are currently at $2 million.
—Scott Stuntz, managing editor