Fraud: Its Ripple Effects on the Entire Community
Download MP3Case Overview:
- Discusses a troubling case of corporate fraud involving a bookkeeper at Paul Patrick Electric, a small company that lost over $1.3 million through embezzlement over three to four years.
Key Takeaways:
- Impact on the company’s finances and employees:
- The embezzler stole approximately $300,000 per year.
- This amount represented 30% of the company's annual profit (assuming a 20% profit margin on $4 million in revenue).
- Results in less funding for hiring new employees, giving raises, and marketing efforts.
Ripple Effects on the Community:
- The disappearance of funds affects community support, such as:
- Donations to local schools and sports teams.
- Sponsorships of community events, leading to an invisible impact on local resources and opportunities.
Fraud Prevention Insights:
- Importance of monitoring financial access:
- Implement checks and balances, such as requiring more than one person to access financial records.
- Ensure bookkeepers take vacations to allow for audits and reviews.
- Redirect mail to someone other than the bookkeeper to avoid concealment of fraudulent activity.
Best Practices for Small Businesses:
- Emphasizes the need for best practices to catch fraud early, including:
- Understanding the fraud triangle—recognizing that trusted individuals may still pose a risk.
- Awareness of the potential for embezzlement in small companies.
Resources:
- Invitation to contact for more in-depth conversations with investigators or to learn about investigative services.
- Encouragement to explore more videos for additional insights into corporate fraud and related topics.
