David Anderson is principal of David Anderson & Associates, a Philadelphia forensic accounting firm that provides a full range of fraud investigation, fraud deterrence programs and forensic accounting services in Philadelphia and the Delaware Valley.

Every company or organization has them: “Trusted” employees.

These are the long-time, seemingly loyal men and women whose work and tenure has earned them a high degree of trust from their employers/business owners.

However, said Certified Fraud Examiner David Anderson of the Philadelphia forensic account services firm of David Anderson & Associates, you never should forget that these “trusted” employees can pose a significant fraud threat to businesses and organization.

“They may be family members, employees who have worked their way up the management ladder over the years, employees who are hardworking and who put in long hours, and/or employees who have contributed to the past success of the business,” he said.

Because of this “trusted” status, Anderson said, business owners and senior managers tend to exert lesser oversight over these employees than they do over the typical employee.

Most “trusted” employees are worthy of the trust they have earned.  However, a number of other “trusted” employees have used the trust and lack oversight to commit fraud.  Over the past year, investigations of “trusted” employees conducted by David Anderson & Associates have identified the following frauds perpetrated on their employers:

• Use of employers’ business credit cards to charge personal expenses
• Use of expense reimbursements to have the business pay for personal expenses or non-existent expenses
• Manipulation of payroll to take improper salaries and bonuses
• Use of vacation, personal and sick days in excess of those earned
• Running purchases for their own personal business through the purchase accounts of their employer, and having the employer pay for these purchases
• Diverting customer cash payments to themselves, and covering up the diversion by manipulating the employer’s accounting system
• Removing inventory from the employer’s warehouse, and covering up the diversion by manipulating the employers accounting system
• Diverting customers and sales from the employer’s business to their own personal or a friend’s business
• Selling the employer’s fully depreciated assets to a third party and pocketing the proceeds.

In each case, Anderson said, the employer had no fraud deterrence program in place.  These companies could have significantly reduced the likelihood of fraud occurring if management had instituted such procedures as:

• Regular top management or third party consultant review of credit card statements and expense reimbursement requests
• Regular top management or third party consultant review of payroll journals
• Regular top management or third party consultant review of monthly bank statements and monthly financial statements
• Regular periodic review of operations by top management or a third party consultant
• Instituting an anti-fraud policy, disseminating it to all managers and other employees, and holding periodic training sessions on spotting and report fraud
• Letting all employees know that top management does not condone fraud, and is actively watching out for it.

“Trusted” employees continue to be a problem for employers who provide reduced oversight to them.  However, Anderson said, by instituting relatively simple and relatively inexpensive fraud deterrence procedures, management can significantly reduce the risk of such “trusted” employees becoming untrustworthy.

If you require the services of a Certified Fraud Examiner or any other forensic accounting services in Philadelphia and the Delaware Valley, please contact the Philadelphia forensic accounting firm of David Anderson & Associates by calling David Anderson at 267-207-3597 or emailing him at david@davidandersonassociates.com.

About David Anderson & Associates

David Anderson & Associates is a Philadelphia forensic accounting firm that provides a full range of forensic accounting services in Philadelphia and the Delaware Valley.  The experienced professionals at David Anderson & Associates provide forensic accounting, business valuation, fraud investigation, litigation support, economic damage analysis, business consulting and outsourced CFO services.  Company principal David Anderson has more than 30 years of experience in financial and operational leadership positions and is a Certified Public Accountant, a Certified Fraud Examiner and a Certified Valuation Analyst.