Financial Fraud Literacy Quiz: How much do you know?

No one wants to think their employees or senior managers are stealing from their business. Consequently, small businesses and nonprofit organizations often overlook the warning signs of employee fraud, especially by senior managers. Management and board members need to recognize the red flags and act early to stop fraud.

According to the Association of Fraud Examiners 2010 Report to the Nations on Occupational Fraud and Abuse, the typical organization loses 5 percent of its annual revenues to fraud, and individual incidents of fraud last a median of 18 months before being detected.

The report found 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.

Signs of fraud can include:

• Shrinking inventories
• Bank deposits that don't match cash records
• Checks made payable to an employee, an unknown person, an unapproved vendor or "cash"
• Payroll fluctuations or poorly documented employees on the payroll
• Changes or unusual patterns in employees' expenses

Would you know how to put in place effective policies and procedures to minimize the risk of financial fraud in your organization?

Take the Financial Executives International Fraud Literacy Quiz and find out how much you know – and how much you need to learn.

If you would like to discuss an Internal Controls Review to determine your organization’s risk for financial fraud, please contact Tony Smeriglio, CPA, or submit the Contact Us form on this page. We are happy to help.