Fraud Scheme Stories and Lessons with Bernadette HarrisNov 30, 2023
In a deeply insightful episode on 'Keep What You Earn' Podcast, hosted by Shannon Weinstein, we had the privilege of hosting Bernadette Harris, a certified forensic accountant, and fraud examiner. Bernadette has been a savior for small businesses for the past 22 years, offering accounting services, theft control, and embezzlement detection. With a spellbinding analogy of considering her job as the CSI of numbers, she talked about how fraud detection in businesses can often appear like solving intriguing financial mysteries.
Bernadette and Shannon discussed several pressing issues during the episode. One pivotal point of conversation was the intense susceptibility small businesses have to fraud - often due to the unsuspected & manipulated trust between owners, managers, and staff, or through negligence towards accounting procedures and financial records. This point reminded us of the T-shirt shop owner, who fell victim to an unfortunate fraud scheme by the trusted bookkeeper. Bernadette argued that unsuspected shop owners are not to blame. She highlighted that it's crucial for businesses, irrespective of their size, to maintain checks and balances and prevent potential fraudulent opportunities.
One of the most overlooked areas, as they deliberated, was payroll fraud. Ghost employees and unpaid payroll taxes are common scams that have resulted in severe losses to businesses. The problems get compounded with the embezzlement of funds through the creation of fake vendors. With the rising number of cases, the host, Shannon, stressed the importance of the mantra "Trust but Verify."
The lessons from this podcast emphasize upon the integral role that vigilance by a business owner can play in detecting anomalies and discrepancies in financial numbers. Bernadette also threw light on the psychological aspects of fraud. She argued that fraudsters often rationalize their actions concerning their financial hardships, intending to pay the money back - something which rarely happens, thereby leading to a lifestyle of fraud escalation driven by the thrill of evasion.
Bernadette suggested that preventative measures against fraud schemes should begin in the formative stages of a small business. Establishing an ethical company culture can go a long way. Encouraging conversations around core values and setting boundaries of what's tolerated can build a preventive shield against potential fraudulent situations. She also recommended not allowing employees to check their own work as an additional control measure.
In addition to these measures, Bernadette stressed the importance of continuing education and staying informed about fraud schemes. Through her own experiences, she urged listeners to listen to shows like 'American Greed,' and podcasts discussing frauds to learn more about the subject and potential prevention methods.
Bernadette's commitment to combating fraud extends to her writing. Her book, "Did You Hire a Fraud?" focuses on providing effective strategies for preventing insider theft. Available on Kindle, Amazon, and paperback via didyouhireafraud.com, this book proves to be a valuable tool in the fight against business fraud.
Connect with Bernadette Harris:
Website links: https://trustbernadette.com
What you'll hear in this episode:
[06:42] Bernadette pursued education, certifications to combat fraud.
[12:08] Fraud brings hefty penalties, affecting trust/account. Payroll investigation uncovers employee deception, risk undetected.
[15:06] Pay attention to your business and vendors.
[16:18] Importance of noticing patterns, disruptions, and control.
[23:03] Deceptive assistant financially drains rockstar businessman.
[26:16] Comfort leads to theft; greed takes over.
[30:41] Forensic accountants uncover and resolve employee suspicions.
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The information contained in this podcast is intended for educational purposes only and is not individual tax advice. Please consult a qualified professional before implementing anything you learn.