A financial institution’s understanding and management of financial crime and its origin would improve and strengthen its corporate governance programs and internal controls.
Forensic accountants with law enforcement training and an understanding of the provisions of the Banking Secrecy Act (BSA), Title 31, Rules and Regulations issued by Federal Banking Supervisory Agencies have a useful perspective to better manage a business. corporate governance program in a financial sector. Institution and reducing the risk of a financial institution being used as an intermediary for money laundering or financial crimes.
While sometimes wrongdoing is unmistakable, there are times when it is not. Evidence of misconduct could be buried in thousands of pages of documents, business records and complex business structures. Successfully uncovering transgressions depends on an understanding of the movement of money and assets in the context of the surrounding documents in which the movement occurs. In other words, you have to “look beyond the numbers”, “follow the money” and put all the relevant information in context.
Forensic accounting analysis provides the context to support the existence of patterns of misconduct. The skills of a forensic accountant make it easier to detect and identify red flags earlier in the corporate governance process. Some warning signs of violations are:
- Complex business structures
- Increase in insider financial activity
- Unsaved, missing or incomplete information.
- Large cash transactions
- Lack of clarity in books and records
- Lack of internal policies and procedures
- Inaccurate financial statements
- Missing assets
- Asset sales
- Excessive salaries for executives and loans to corporate officers
- Non-payment of suppliers
Forensic Accountants Play a Critical Role in Today’s Changing Landscape of Management and Supervision of Financial Institutions
Financial institutions need to prepare for the certainty of malware attacks, internal fraud, lawsuits, accounting irregularities and white collar crime. The prevalence of fraud and the existing litigation environment have prompted financial institutions to form diverse management teams including independent forensic accountants.
By participating in matters involving fraud risk assessments, fraud prevention and improving systems of internal controls, forensic accountants support effective corporate governance, the development of anti-fraud programs and oversight and management. ‘improvement of established compliance programs.
Does your financial institution have the right controls and programs in place to protect the business?
Financial institutions that work with a qualified forensic accountant can better understand the internal control environment surrounding business activities while providing observations and recommendations relevant to control, risk management and improvement. History shows that taking a proactive approach by bringing in a forensic accountant early instead of waiting for “something” to happen is a way to minimize losses from fraud and protect a reputation. Does your financial institution work with a qualified forensic accountant?