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Who can you trust?

October 28, 2009

Expert advice on spotting fraud.

The New Jersey Chapter of the Turnaround Management Association and the New York Institute of Credit delved into the issue of corporate fraud during a recent seminar held at the Maplewood Country Club in Maplewood, NJ.

Steven A. San Filippo, a managing director at Traxi LLC, a leading restructuring and workout advisory firm, was a featured guest panelist along with top industry executives from Wells Fargo Business Credit, Ruskin Moscou Faltischek PC, Wiss & Company LLP and Cambridge Financial Services.

“Fraud! Who can you trust,” provided insights on a number of topics, including the types of corporate fraud and corruption prevalent today, the reasons behind the crimes committed by corporate executives and employees, detection methodologies and prevention techniques.

San Filippo highlighted data critcal to understanding and preventing fraud, including the fact that in 50% of all corporate fraud cases, only 3.2% of the time the crime is detected by internally-set policies. This is a stark contrast to the 46.2% of the cases made apparent to executives via employee tips.

He also touched on a number of the tell-tale signs of fraud, such as regularly reported financial information not being finalized in a timely manner and excessive numbers of un-reconciled bank accounts. In terms of prevention, he stressed the importance of maintaining a transparent and controlled environment and the ability to reconcile statements on a regular basis through internal audits and controls.

“Having represented clients ranging from mid-sized, owner-managed companies to global organizations and top financial institutions over the past 25 years, I can say that, unfortunately, corporate fraud is prevalent in our society and on the rise,” noted San Filippo.

“For companies to stay ahead of this challenging business environment, its imperative to institute and implement methodologies to first prevent fraud and secondly to be prepared to deal with these situations when, not if, they arise.”

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