Internal Control Review and Analysis
Businesses in the United States lose an estimated 5% of annual revenues due to fraud according to research conducted by the Association of Certified Fraud Examiners. Small businesses (those with fewer than 100 employees) tend to suffer disproportionately larger losses, stemming from fraud schemes such as over billing, false credits, unauthorized shipments, duplicate payments, ghost employees, lapping, and embezzlement. An assessment of internal controls, including
fraud risk examination and
prevention, makes good business sense and can provide cost savings to your organization.
Smaller companies often struggle to segregate duties without hiring significantly more personnel. An effective system of internal controls forms one of the foundations necessary to help your organization reach its full potential. In many, if not most private companies, controls are informal. As a consequence, controls may not be known or adhered to, or not accomplishing their objectives. While management believes controls are in place, they may not be functioning as intended, or not implemented at all.
Although the wide-reaching Sarbanes-Oxley Act currently applies only to public companies, there are internal control components to it that — if proactively applied by private companies and nonprofit organizations — can help improve the value of your organization.
How can we help you?
- Provide you with key services to help your organization prevent losses due to fraud resulting from poor internal control structure.
- Explain how identified weaknesses could adversely affect your organization’s ability to record, process, summarize, and report financial information and provide recommendations to strengthen controls.
- Offer consultation that concentrates on the control structure that produces the financial information and not on the financial information itself.
- Employ experienced professionals that use a multi-phased approach to identify internal control weaknesses.
- Share with you our risk management methodology that follows the Committee of Sponsoring Organizations (COSO) of the Treadway Commission guidelines — the standard for internal control.
- Advise you of the best business practices and recommendations for proper corporate governance under the Sarbanes-Oxley Act.
For further information please contact Jeff@sldcpa.com
Forensic Accounting
In today’s business environment, recouping lost revenues and costs associated with everything from property damage, business interruption, product recalls, employee theft, to potential litigation can strongly impact your business’s ability to maintain its’ competitive advantage, meet stockholders’ expectations — even maintain the confidence and support of your board of directors.
With regulators, stockholders, and the public at large scrutinizing business leaders as perhaps never before, your ability to manage an unforeseen event or crisis, accurately quantify losses, and maximize insurance recoveries is increasingly important.
The American Institute of Certified Public Accountants (AICPA) provides the following definition of forensic accounting:
“The application of accounting principles, theories and discipline to facts or hypotheses at issue in a legal dispute is called forensic accounting. It includes every branch of accounting knowledge.”
Forensic accounting has existed for many years. With the growing complexity of the business environment and the rising number of business related investigations, forensic accounting professionals are increasingly asked to assist in the investigation of financial and business related issues.
CPAs who evaluate business interruption claims refer to the work they do as forensic accounting, and CPAs who are called on to testify about the value of a business or financial matters related to fraud refer to themselves as forensic accountants. At SLD, we have had the opportunity to assist attorneys, profit and nonprofit organizations, and clients in a vast array of forensic accounting needs, including eldercare abuse analysis, lost profits analysis, recreation of records from a specific point in time, and
litigation support services.
How can we help you?
- Utilize accounting, auditing and investigative skills to conduct our investigations.
- Work cooperatively in an adversarial relationship.
- Identify and investigate fraud by combining data extraction software with various data mining techniques to identify financial anomalies and potential asset misappropriations.
- Look beyond the numbers and deal with the business reality of the situation.
- Consider all alternatives, scrutinize the fine details and at the same time see the big picture.
For further information please contact Jeff@sldcpa.com
Attestation and Agreed Upon Procedures
Reliance on information contained in the financial statements will greatly affect business decisions. Attestation and Agreed Upon Procedure services provide an analysis of specific elements of financial statements and/or business operations.
How can we help you?
The following is just a sample of the many services we provide our clients:
- Prepare management letters detailing suggestions for improvements in specific control activities and communication of reportable conditions.
- Assist in due diligence analysis and acquisition assistance by applying general business and financial knowledge in reviewing selected information and attempting to identify any critical areas that our client should be aware of.
- Report on sales in connection with a lease agreement.
- Calculate distributions under profit sharing agreements.
- Calculate revenue and expense allocations or payments due under licensing, royalty, or franchise agreements.
- Review of compliance with debt covenants and other types of contractual agreements.
- Compile prospective financial information that presents financial forecasts or financial projections, and disclosures.
- Apply procedures specifically directed at establishing whether a fraud has occurred and, if so, its nature and extent.
- Design procedures agreed upon with management which are applied to the accounting records in order to determine compliance with established internal controls.
- Advice on designing or improving policies and procedures regarding compliance with industry specific regulations.
For further information please contact Jeff@sldcpa.com
Fraud Risk Examination and Prevention
In today’s business environment with increased legislative and regulatory requirements, there is a greater need for organizations to understand and address fraud risks. The likelihood of fraud occurring can be reduced by implementing effective antifraud programs and controls that can identify fraud in a timely manner and minimize the resulting damage.
Our risk-based approach enables organizations to target their resources, both for improving controls and for pro-active detection, at problem areas. Recent developments in corporate governance create the atmosphere in which fraud can be considered as a set of risks to be managed alongside other business risks. Managing the risk of fraud should be embedded in the entirety of an organization’s risk, control and governance procedures.
How can we help you?
Fraud prevention consulting to assess your internal control environment and develop recommendations that focus on reducing the risk of fraud.
- Assess the organization’s overall vulnerability to fraud.
- Identify the areas most vulnerable to the risk of fraud.
- Evaluate the scale of fraud risk.
For further information please contact Jeff@sldcpa.com
Litigation Support
Litigation support provides assistance of an accounting nature in a matter involving existing or pending litigation. At SLD, we possess the specialized knowledge through licensing education, experience, skill, and training in areas relevant to finding resolution of a legal dispute. Common engagements include, but are not limited to: damage studies, causation of damages, bankruptcy, divorce actions, and valuation of closely held businesses.
How can we help you?
- Assist in obtaining documentation necessary to support or refute a claim.
- Identify, collect, analyze and interpret financial information and accounting data and information.
- Apply the relevant data and information to a legal dispute or issue.
- Review relevant documentation to form an initial assessment of the case and identify areas of loss.
- If called upon to testify, render and communicate an expert opinion, respond immediately, and communicate financial information clearly and concisely in a courtroom setting.
- Assist with Examination for Discovery including the formulation of questions to be asked regarding the financial evidence.
- Attend the Examination for Discovery to review testimony, assist with understanding the financial issues and formulate additional questions to be asked.
- Review of the opposing expert’s damages report and reporting on both the strengths and weaknesses of the positions taken.
- Assist with settlement discussions and negotiations.
- Attend the trial to hear the testimony of the opposing expert and to provide assistance with cross-examination.
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Shea
Labagh Dobberstein Certified Public Accountants, Inc.