David Anderson is principal of David Anderson & Associates, a Philadelphia forensic accounting firm that provides a full range of fraud investigation, fraud deterrence, litigation support and expert witness testimony services in Philadelphia and the Delaware Valley.
Information on how to keep your municipality’s financial operations safe from fraud was the main message of a recent presentation to the Pennsylvania State Association of Township Supervisors (PSATS) by David Anderson, CPA, CFE, CVA.
Anderson co-presented a Webinar entitled “Ten Key Anti-Fraud Controls to Protect Your Township” last month that provided updates to Keystone State municipal officials on the nature of fraud and the Fraud Triangle.
Opening with a discussion of the three Fraud Triangle elements that must be present in order for fraud to occur – Opportunity, Pressure and Rationalization (for more on the Fraud Triangle, see Anderson’s September 14, 2020 blog) – before reviewing key findings from the “2020 Association of Certified Fraud Examiners (ACFE) Report to the Nations on Occupational Fraud and Abuse.”
This year’s ACFE report showed the typical township loses 5 percent of its operating budget to occupational fraud. Anderson also presented other relevant findings regarding fraud risk, duration, and amount of loss as well as how fraud is detected and who reports the fraud.
Anderson then introduced the PSATS officials to the 10 key anti-fraud controls townships can implement to greatly reduce or eliminate the risk of fraud. These ten key anti-fraud controls are:
- Instituting an anti-fraud policy – including defining fraud; emphasizing that the township does not condone fraud; requiring all management and employees to sign a statement that they have read and understand the anti-fraud policy; and widely publishing the anti-fraud policy.
- Implementing regular fraud training for supervisors, management and staff.
- Implementing regular management/supervisor review of budgets and performance against budget; investigation of significant budget variances; and review of bank account reconciliations.
- Installing a tip hotline.
- Protecting passwords and other systems access – including prohibiting of password sharing; using hard to guess passwords; and removing system access for terminated employees.
- Implementing cash controls – including regular and timely bank account reconciliations; separation of cash handling duties; requiring two authorized signatures on larger checks; and requiring original documents for expense reimbursements.
- Implementing credit card controls – including restricting credit card use; requiring management and employees to submit supporting documents for credit card transactions; and cancelling and destroying credit cards of terminated employees.
- Implementing purchasing controls – including competitive bidding; requiring two or more authorized approvals of large dollar purchases; and removing stale vendors from the purchasing system.
- Implementing payroll controls – including management review of all new employee information and all pay changes entered into the payroll system; immediate removal of terminated employees from the payroll system; and regular annual review of payroll lists and W-2s for “ghost” employees.
- Implementing controls over equipment and inventory – including establishing a system to track all equipment over a certain dollar amount; and regular checks of key inventory and equipment to ensure that nothing is missing.
If you want to learn more about how these key anti-fraud controls can be implemented in your organization, or 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, CPA, CFE, CVA, at 267-207-3597 or emailing him at firstname.lastname@example.org.
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.