The Anti-Fraud Collaboration—a partnership between the Center for Audit Quality, Financial Executives International, The Institute of Internal Auditors, and the National Association of Corporate Directors—sifted through more than 530 SEC Accounting and Auditing Enforcement Releases (AAERs) filed between 2014 and 2019 for its newly released report, Mitigating the Risk of Common Fraud Schemes: Insights from SEC Enforcement Actions, and found 140 financial statement fraud schemes across 204 enforcement actions.
The most common? Inventory misstatement and loan impairment issues tied for third with 11%, reserves manipulation was second at 24%, but coming in at No. 1 was improper revenue recognition at 43%.
And in the most unshocking news ever, CFOs of public companies (54%) were charged with fraud in SEC enforcement actions more frequently than any other individual, with CEOs (31%) coming in second.
Earlier this week we shared with you the latest analysis from KPMG that listed “key fraudster traits” and some of them seemed to describe a lot of the people you have worked or are currently working for. Things like “volatile,” “unreliability,” “unhappy,” and “self-interested” describes everyone I’ve ever been in around in the corporate world to one extent or another.
Since I was skeptical of this list, I asked Sam Antar what he thought of it. If you’ve been reading us for awhile, you’re familiar with Sam. If you’re new, I’ll do a quick refresher. Sam was the CFO of Crazy Eddie’s and was one of the masterminds behind one of the biggest financial frauds of the 1980s. While you (and I) were eating cereal in front of the TV on Saturday morning, Sam and his cousin Eddie were selling electronics and home appliances to our parents for rock bottom prices, while ripping off the government and investors for untold millions of dollars. In other words, the guy is a crook and knew/knows lots of crooks and knows their hopes (read: money), their dreams (read: money) all that crap (read: more money) and what they’ll do to get them. With that, Sam told me what he thought of KPMG’s analysis:
I was both a friendly and likable crook who treated my enablers real well as I took advantage of them. I treated my victims even better than my enablers, as I emptied their pockets. Old saying, “You can steal more with a smile, than a gun.” KPMG knows nothing about the character traits of criminals. They couldn’t even catch me as Crazy Eddie’s auditors. They trusted me!
So maybe – JUST MAYBE – you should also be wary of the client or co-worker that you really like because he/she takes you to lunch every day, gets you laid, takes you for rides in a fancy car or invites you to coke-fueled weekend ragers with seemingly no strings attached. Plus any client that has a viral marketing campaign should get an extra look:
That means our neighbor to the north ranks numero uno for North America.* They rank 4th in PwC’s report behind Russia, South Africa, and Kenya with 56% of the Canadian respondents reporting incidents of fraud.
And no, it’s not all because the country is full of crooks, it’s party because Canada has more rats informants:
So does Canada have more thieves in our midst, or are we just better at ferreting out perpetrators?
The study suggests there is a bit of both. Tipoffs from internal or external sources are higher in Canada than in other countries, as is our ability to detect fraud through electronic means. Automated systems used to detect inconsistencies or suspicious transactions accounted for more than 10% of frauds detected by companies in Canada. Thanks to rats and routers, more crimes are being reported in Canada then elsewhere.
By contrast, the PwC report argues that the overall decrease since 2003 in reported crimes elsewhere in the world does not necessarily speak to their better anti-crime fighting abilities, but rather to an “overall breakdown in anti-fraud regime controls which would usually assist in the detection of economic crime.”
So wait a minute, not only does Canada have more tattletales, they also have a superior ability to detect fraud “through electronic means”? Does anyone buy this? That must be the case with the other countries that are keeping Canada company in the top 5, right?
We’re more inclined to go with the notion that Canada doesn’t do such a good job discouraging would-be Mini-Madoffs. According to one expert: ‘We don’t put anyone in jail.’
There you have it. A simple dose of PMITA prison for the Earl Jones and Gary Sorenson types should get The True North out of the top 5. Canada a fraud nation? [Financial Post]
*We will not be splitting hairs with anyone on whether Mexico is technically part of North America or Central America so don’t even bother going there.
First, if you hate your inventory counts, can you only imagine what it’s like to have to keep tabs on tank after tank of frozen bull semen? Count your blessings, people.
A woman in Ohio pleaded not guilty last week to stealing a tank of bull semen valued at $110,000 from her employer. Authorities say 45 year-old Karen Saum planned to use the semen to extort money out of her employer – the rightful owner of the sperm – to start her own business. I can only imagine what kind of business she planned on starting with the seed money.
Detectives said a tip led them to Saum’s garage, where they found the stolen semen. Just a tip.
Det. James Hollopeter told WHIO TV that Saum used her knowledge of the company’s internal workings to lift only the high quality semen. “She knew where this semen would have been located,” he said. “It was actually locked in an interior closet because it was more valuable that some of the other that they had out.”
Right. Because everyone knows you don’t leave the good shit lying around where any old creepy criminal can get their paws on it.
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