Senior Executives Commit More Fraud and Do More Damage Than Managers or Line Staff; Management and Board Members Need to Recognize Red Flags
NEW YORK, NY--(Marketwire - Nov 17, 2011) - Employee fraud hits organizations hard -- especially small businesses and nonprofit organizations that lack internal controls and may miss the warning signs that fraud is taking place, says Marks Paneth & Shron litigation advisor.
Management and board members need to recognize the red flags and act early to stop fraud, according to an authority on forensic accounting.
"Organizations pay a high price for fraud," says Sareena Malik Sawhney, MBA, CFE, CFFA, a forensic accountant who serves as a director in the Litigation and Corporate Financial Advisory Services Group of New York accounting firm Marks Paneth & Shron LLP (MP&S). "The damage can be particularly severe at small organizations where losses can be extremely threatening. These organizations often do not have the systems in place to detect fraud and prevent or limit their losses."
According to the Association of Fraud Examiners 2010 Report to the Nations on Occupational Fraud and Abuse, the typical organization loses five percent of its annual revenues to fraud. Frauds last a median of 18 months before being detected.
The report adds that frauds committed by senior executives or owners were more than three times as costly as frauds committed by managers, and more than nine times as costly as employee frauds. Executive-level frauds also took much longer to detect.
"There are warning signs for the most common types of fraud," Ms. Sawhney says. "If management and board members recognize them, they will be better able to detect fraud early and prevent or minimize the losses."
Ms. Sawhney is available for interviews and can author a bylined article about the impact of fraud on small organizations and the warning signs that a fraud may be occurring. Among the red flags -- and the ways to detect the underlying fraud -- are these:
According to James P. Lagios, a Partner at Iseman, Cunningham, Riester & Hyde, LLP, organizations who detect fraud will need to take several immediate steps:
Forensic accountants and legal counsel working together can and should play a central role in a fraud investigation, Ms. Sawhney says: "Forensic accountants are skilled in detecting schemes, preserving evidence, and developing a case that attorneys can present in court. A forensic accountant should be engaged early and should be involved in all key decisions of the investigative team. Legal counsel can develop a plan to mitigate damages, preserve legal rights, and comply with regulatory and governance requirements."
For more information, or to arrange an interview or bylined article, contact Katarina Wenk-Bodenmiller of Sommerfield Communications at (212) 255-8386 or Katarina@sommerfield.com.
About Marks Paneth & Shron LLP
Marks Paneth & Shron LLP is an accounting firm with nearly 475 people, of whom approximately 60 are partners and principals. The firm provides businesses with a full range of auditing, accounting, tax, consulting, bankruptcy and restructuring services as well as litigation and corporate financial advisory services to domestic and international clients. The firm also specializes in providing tax advisory and consulting for high-net-worth individuals and their families, as well as a wide range of services for international, real estate, media, entertainment, nonprofit, professional and financial services and energy clients. The firm has a strong track record supporting emerging growth companies, entrepreneurs, business owners and investors as they navigate the business life cycle.
The firm's subsidiary, Tailored Technologies, LLC, provides information technology consulting services. In addition, its membership in Morison International, a leading international association for independent business advisers, financial consulting and accounting firms, facilitates service delivery to clients throughout the United States and around the world. Marks Paneth & Shron LLP, whose origins date back to 1907, is the 30th largest firm in the nation and the 13th largest in the New York area. In addition, readers of the New York Law Journal rank MP&S as one of the area's top forensic accounting firms.
Its headquarters are in Manhattan. Additional offices are in Westchester, Long Island and the Cayman Islands. For more information, please visit www.markspaneth.com.
About Sareena Malik Sawhney, MBA, CFE, CFFA
Sareena M. Sawhney, MBA, CFE, CFFA, is a Director in the Litigation and Corporate Financial Advisory Services Group at Marks Paneth & Shron LLP. She has more than 10 years of litigation experience. Ms. Sawhney focuses on providing services in the areas of complex fraud investigations and forensic accounting examinations as well as services related to commercial litigation and comprehensive damage analyses.
Her experience includes conducting complex fraud investigations, including white collar crimes and forensic accounting examinations. She has served as a testifying expert witness and has worked with counsel to develop case strategies.. Ms. Sawhney has earned the designations of Certified Fraud Examiner (CFE) and Certified Forensic Financial Analyst (CFFA). She is a member of the Association of Certified Fraud Examiners and the National Association of Certified Valuation Analysts.
About Iseman, Cunningham, Riester & Hyde, LLP
Iseman, Cunningham, Riester & Hyde, LLP is a seasoned team of transactional and trial lawyers committed to serving clients with effective, efficient legal representation. Our attorneys provide the same service we would expect if we were the client. We combine the broad perspective of generalists with skill in our respective fields. Although we prefer cooperation, we are ready to aggressively represent your interests in court.
Iseman Cunningham Riester & Hyde offers statewide services from two locations, Albany, New York and Poughkeepsie New York. For more information, please visit www.icrh.com
About James P. Lagios, Esq.
James P. Lagios, Esq. is a Partner at Iseman, Cunningham, Riester & Hyde, LLP. Jim maintains a general practice of law with emphasis in the areas of professional liability, business transactions, commercial disputes, and debtor/creditor rights.
Jim has represented professionals accused of negligence, fraud and breach of fiduciary duty and parties that have been the victim of such conduct.
Jim has experience with asset purchase transactions, both inside and outside of bankruptcy proceedings, and with litigation growing out of troubled transactions.
After graduating from Albany Law School of Union University, Jim practiced with the New York City law firm of Shearman & Sterling in the firm's Bank Finance and Bankruptcy Department. He was subsequently appointed to the position of confidential law clerk to the Honorable Albert M. Rosenblatt, Associate Judge of the New York State Court of Appeals.
Jim is a member of the New York State Bar Association; Capital District and Mid-Hudson Bankruptcy Bar Associations; American Health Lawyers Association; Historical Society of the Courts of New York State; and Professional Liability Underwriting Society (PLUS).
Contact Information:
Contact:
Katarina Wenk-Bodenmiller
Sommerfield Communications
212-255-8386
Katarina@sommerfield.com