A financial institution’s understanding and management of financial crimes and their genesis would enhance and strengthen its Corporate Governance programs and internal controls.
Forensic Accountants with a law enforcement background and with an understanding of the provisions of the Bank Secrecy Act (BSA), Title 31, rules and regulations issued by the federal bank supervisory agencies possess a perspective useful for better managing a Corporate Governance program in a Financial Institution and diminishing the risk of a financial institution being utilized as a conduit for money laundering or financial crimes.
Although at times, wrongdoing is unmistakable, there are times when it is not. Evidence of misconduct could be buried in thousands of pages of documents, business records and complex business structures. Successfully uncovering transgressions depends on an understanding of the movement of monies and assets in the context of the surrounding documents in which the movement occurs. In other words, one has must “look beyond the numbers”, “follow the money” and put all relevant information into context.
Forensic accounting analysis provides the context for supporting the existence of patterns of misbehavior. A forensic accountant’s skill set better provides for the detection and identification of red flags earlier in the corporate governance process. Some red flags of violations are:
- Complex corporate structures
- Increases in insider financial activity
- Information that is not recorded, missing or incomplete.
- Significant cash transactions
- Lack of clarity in books and records
- Lack of internal policies and procedures
- Inaccurate financial statements
- Missing Assets
- Sales of assets
- Excessive salaries to executives and loans to corporate officers
- Failure to make payments to vendors
Forensic Accountants play an integral role in the changing landscape of today’s Financial Institution management and oversight
Financial Institutions ought to prepare for the certainty of malware attacks, internal fraud, lawsuits, accounting irregularities and white-collar crimes. The prevalence of fraud and the existing litigious environment have prompted Financial Institutions to build diverse management teams that include independent Forensic Accountants.
Through involvement with matters involving fraud risk assessments, fraud prevention and enhancements to systems of internal controls, forensic accountants support effective corporate governance, the development of anti-fraud programs and the monitoring and enhancement of established compliance programs.
Does your Financial Institution have the right controls and programs in place to protect the business?
Financial Institutions that work with a qualified forensic accountant can more effectively understand the internal control environment surrounding economic activities while providing relevant observations and recommendations for control, risk management and improvement. History shows that taking a proactive approach by bringing in a forensic accountant early instead of waiting for “something” to happen is a way to minimize fraud losses and protect a reputation. Is your Financial Institution working with a qualified Forensic Accountant? ©