Internal Control/Anti–Fraud Program Design for the Small Business. A Guide for Companies NOT Subject to the Sarbanes–Oxley Act. Wiley Corporate F&A

  • ID: 3110090
  • Book
  • 224 Pages
  • John Wiley and Sons Ltd
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Praise for
INTERNAL CONTROL/ANTI–FRAUD PROGRAM DESIGN FOR THE SMALL BUSINESS

"Internal Control/Anti–Fraud Program Design for the Small Business presents a straightforward, simplified, and practical approach to establishing an anti–fraud program for the small business. The book recognizes the unique environment and issues faced by small businesses and provides logical and effective solutions. Every small business owner or manager should read this and refer to it often as it establishes or reinforces an anti–fraud program."
David McEndree, CPA, CFE, CEO, and General Manager, Poka Lambro Telephone Cooperative, Inc.

"Mr. Dawson provides a clear, compelling, and interesting step–by–step guide on how to set up a properly designed, properly functioning anti–fraud program without a lot of cost or complexity. His anecdotes add flavor and amusement but, more importantly, plainly reveal to us why occupational fraud is ′alive and well.′ It′s a must read for every small business owner or manager."
Tammy Lehman, CPA, CFE, Principal, UtiliBiz Solutions

"Steve Dawson can smell fraud from a mile away! We utilize him to discover fraud within our clients′ business operations–usually after hearing, ′This can′t be happening to my business!′ Steve′s greatest value is his ability to provide easy to understand and implementable advice as to preventing fraud within any size business. Our clients value his insight into the varied ways fraud is committed in today′s business climate."
Gary R. McLaren, Partner, Phillips & McLaren, L.L.P.

"I have known and worked with Mr. Dawson for the better part of 22 years. He has a passion for fraud prevention. He is both an effective speaker and, now, author. With this book, Mr. Dawson has communicated his passion, experience, and knowledge in a concise, understandable, and practical manual. He compares the process of establishing an anti–fraud program to the process of building a house and provides simple, effective instructions for doing so."
William M. Miller, CPA, Partner, Bolinger, Segars, Gilbert & Moss

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Preface: Maybe It s Time We Get Back to the Basics xi

Acknowledgments xvii

PART I: THE ANTI–FRAUD ENVIRONMENT: THE BLUEPRINTS, THE FOUNDATION, THE GROUND FLOOR

Chapter 1: The Architect s Blueprint: Establishing the Framework 3

The Elements of Anti–Fraud Program Design 3

Anti–Fraud Environment 4

Fraud Risk Assessment 4

Control Activities 5

Information: Program Documentation 6

Communication: The Company Fraud Training Program 6

Monitoring and Routine Maintenance 7

Chapter 2: Foundational Policies: The Fraud Policy 9

Foundational Policies 10

The Fraud Policy: The Essential Elements of an Effective Fraud Policy 10

Case Presentation 17

Chapter 3: Foundational Policies: The Fraud Reporting Policy 19

The Essential Elements of an Effective Fraud Reporting Policy 20

Chapter 4: Foundational Policies: The Expense Reimbursement Policy 29

Case: No Questions Asked 29

Case: It Will Never Be Missed 30

Case: Larry the Chief Financial Officer 31

The Elements of an Effective Expense Reimbursement Policy 32

Appendix 4A: Expense Report Form 39

Appendix 4B: Supplemental Business Meal and Entertainment Charges Form 40

Chapter 5: The Ground Floor: The Fraud Risk Assessment Process 41

Ground Rules for Fraud Risk Assessment 42

An Example of Risk Assessment 43

Procedural Steps for Performing a Fraud Risk Assessment 44

Cash in Bank 48

Case: The Trail Is Gone 50

Case: Friends in Low Places 51

Asset Misappropriation 52

Corruption 53

Financial Statement Fraud 53

PART II: ANTI–FRAUD CONTROL ACTIVITIES: RAISING THE WALLS

Chapter 6: Control Activities: The Absolutes 57

Critical Principles of Control Activity Design 57

Foundational Control Activities 59

Case: The Mail Drop in Las Vegas 64

Appendix 6A: Conflict of Interest Form 67

Appendix 6B: New Vendor Establishment Form 68

Chapter 7: Control Activities: The Segregation of Duties Dilemma 69

But I Only Have Two Employees 69

Prevention versus Detection Controls 70

The Necessary Review Processes 72

Chapter 8: Control Activities: General Processes 75

Two Operational Questions 75

Common Control Activities 81

Case: The Cell Phone Reimbursement 91

Chapter 9: Control Activities: Specific Control Areas 95

Financial Statement Line Item Control Activities 95

PART III: COMPLETING THE ANTI–FRAUD PROGRAM: THE CEILING, THE ROOF, AND ROUTINE MAINTENANCE

Chapter 10: The Ceiling: Documenting the Anti–Fraud Program 103

Information 103

Documentation Keeping It Simple 104

The Elements of High–Quality Documentation 104

Chapter 11: The Ceiling: The Company Fraud Training Program 111

The Elements of Effective Communication 112

The Company Fraud Training Program 114

Chapter 12: The Roof: Monitoring and Routine Maintenance 119

Monitoring and Routine Maintenance Defined 120

The Monitoring and Routine Maintenance Structure 120

Chapter 13: The Sample Anti–Fraud Program 129

Appendix 13A: Fraud Risk Assessment Framework Form 137

Appendix 13B: Control Activities Form 138

Appendix 13C: Documentation of Control Activities 139

Appendix 13D: Compliance Audit Programs and Related Compliance Audit Working Papers 154

Appendix A: The Fraud Policy 171

Appendix B: The Fraud Reporting Policy 175

Appendix C: The Expense Reimbursement Policy 179

Appendix D: Forms 185

About the Author 193

Index 195

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