Difficult economic times can be the breeding ground for increased fraudulent activities. In July 2009, the Financial Crimes Enforcement Network (www.fincen.gov) published its 12th edition of The SAR Activity Review — By the Numbers. SARs (Suspicious Activity Reports) are one key aspect of FinCEN’s efforts related to its responsibility for regulatory administration of the Bank Secrecy Act of 1970. Many different financial industries such as banks, credit unions, insurance companies, check-cashing services, broker/dealers, and casinos are required to complete and file SARs. more

Two recent and seemingly unrelated articles intrigued me. One is titled “Detroitosaurus Wrecks” and appeared in the June 6 issue of The Economist. The other was “Fraud Triangle Analytics,” in the July/August issue of Fraud Magazine. How do these two tie together? more

Aaron Beam, former CFO of HealthSouth Corp., is interviewed in June’s CFO magazine in an article titled “I Should Have Said No.” Mr. Beam pleaded guilty to criminal charges regarding his participation in that $2.7 billion fraud. When asked “How did the fraud begin?,” Mr. Beam responded “… We committed fraud in the summer of ‘96, when we could no longer change estimates to make earnings. We thought we could make a lot of entries small enough that the auditors wouldn’t detect them. So one night, during the second quarter of ‘96, I said, ‘OK, let’s do it,’ and we credited revenue that did not exist and we debited assets that did not exist.”

The flight path was set … and it was set to fly “under the radar”! more

Will Rogers once said, “Everyone talks about the weather, but nobody ever does anything about it.”

Sometimes I feel like that about business processes. I like to complain about them but don’t do enough to change them.

Think about some of your own experiences. Have you ever wondered who came up with the process being used to “service” you? I have had some recent experiences with major retail and service companies that were mind boggling at best – complicated package deals, pricing terms, and rebate requirements. Not only was I confused, but the customer service employees were struggling, too! It always makes me wonder how organizations establish and maintain effective internal controls around all this complication. more