Internal Control/Anti-Fraud Program Design for the Small Business

A how-to guide to small business anti-fraud protection and internal control Internal Control/Anti-Fraud Program Design for the Small Business is a practical guide to protection for businesses NOT subject to the Sarbanes-Oxley Act. Written by an expert with three decades of forensic investigation experience, this book is geared specifically toward private, non-public small businesses and their unique needs in the realm of fraud protection. Covering all elements of an internal control structure applicable to the small business community, this guide provides a step-by-step roadmap for designing and implementing an effective, efficient internal control structure/anti-fraud program tailored to your business's particular needs. Case studies are used throughout to illustrate internal control weaknesses and the fraud that can result, and follow-up analysis describes the controls that would have reduced the probability of fraud had they been in place. You'll learn how to analyze your company's internal control issues, and implement a robust system for fraud prevention. Guidance toward Sarbanes-Oxley compliance is readily available, but there is little information available for the many businesses not subject to the act until now. This book is the step-by-step guide for instituting an internal control program tailored to your small business. Understand the five elements of internal control Avoid gaps in protection with relevant controls Design the ultimate anti-fraud program Implement internal control tailored to your needs The majority of small business owners simply do not know the elements of or implementation process involved in internal control, and Sarbanes-Oxley guidelines don't necessarily scale down. Internal Control/Anti-Fraud Program Design for the Small Business helps you design and install the internal control/anti-fraud protection your business needs.

A how-to guide to small business anti-fraud protection and internal controlInternal Control/Anti-Fraud Program Design for the Small Business is a practical guide to protection for businesses NOT subject to the Sarbanes-Oxley Act. Written by an expert with three decades of forensic investigation experience, this book is geared specifically toward private, non-public small businesses and their unique needs in the realm of fraud protection. Covering all elements of an internal control structure applicable to the small business community, this guide provides a step-by-step roadmap for designing and implementing an effective, efficient internal control structure/anti-fraud program tailored to your business's particular needs. Case studies are used throughout to illustrate internal control weaknesses and the fraud that can result, and follow-up analysis describes the controls that would have reduced the probability of fraud had they been in place. You'll learn how to analyze your company's internal control issues, and implement a robust system for fraud prevention.Guidance toward Sarbanes-Oxley compliance is readily available, but there is little information available for the many businesses not subject to the act --until now. This book is the step-by-step guide for instituting an internal control program tailored to your small business.* Understand the five elements of internal control* Avoid gaps in protection with relevant controls* Design the ultimate anti-fraud program* Implement internal control tailored to your needsThe majority of small business owners simply do not know the elements of or implementation process involved in internal control, and Sarbanes-Oxley guidelines don't necessarily scale down. Internal Control/Anti-Fraud Program Design for the Small Business helps you design and install the internal control/anti-fraud protection your business needs.

Preface: Maybe It's Time We Get Back to the Basics xiAcknowledgments xviiPART I: THE ANTI-FRAUD ENVIRONMENT: THE BLUEPRINTS, THE FOUNDATION, THE GROUND FLOORChapter 1: The Architect's Blueprint: Establishing the Framework 3The Elements of Anti-Fraud Program Design 3Anti-Fraud Environment 4Fraud Risk Assessment 4Control Activities 5Information: Program Documentation 6Communication: The Company Fraud Training Program 6Monitoring and Routine Maintenance 7Chapter 2: Foundational Policies: The Fraud Policy 9Foundational Policies 10The Fraud Policy: The Essential Elements of an Effective Fraud Policy 10Case Presentation 17Chapter 3: Foundational Policies: The Fraud Reporting Policy 19The Essential Elements of an Effective Fraud Reporting Policy 20Chapter 4: Foundational Policies: The Expense Reimbursement Policy 29Case: "No Questions Asked" 29Case: "It Will Never Be Missed" 30Case: Larry the Chief Financial Offi cer 31The Elements of an Effective Expense Reimbursement Policy 32Appendix 4A: Expense Report Form 39Appendix 4B: Supplemental Business Meal and Entertainment Charges Form 40Chapter 5: The Ground Floor: The Fraud Risk Assessment Process 41Ground Rules for Fraud Risk Assessment 42An Example of Risk Assessment 43Procedural Steps for Performing a Fraud Risk Assessment 44Cash in Bank 48Case: The Trail Is Gone 50Case: Friends in Low Places 51Asset Misappropriation 52Corruption 53Financial Statement Fraud 53PART II: ANTI-FRAUD CONTROL ACTIVITIES: RAISING THE WALLSChapter 6: Control Activities: The Absolutes 57Critical Principles of Control Activity Design 57Foundational Control Activities 59Case: The Mail Drop in Las Vegas 64Appendix 6A: Confl ict of Interest Form 67Appendix 6B: New Vendor Establishment Form 68Chapter 7: Control Activities: The Segregation of Duties Dilemma 69But I Only Have Two Employees 69Prevention versus Detection Controls 70The Necessary Review Processes 72Chapter 8: Control Activities: General Processes 75Two Operational Questions 75Common Control Activities 81Case: The Cell Phone Reimbursement 91Chapter 9: Control Activities: Specific Control Areas 95Financial Statement Line Item Control Activities 95PART III: COMPLETING THE ANTI-FRAUD PROGRAM: THE CEILING, THE ROOF, AND ROUTINE MAINTENANCEChapter 10: The Ceiling: Documenting the Anti-Fraud Program 103Information 103Documentation--Keeping It Simple 104The Elements of High-Quality Documentation 104Chapter 11: The Ceiling: The Company Fraud Training Program 111The Elements of Effective Communication 112The Company Fraud Training Program 114Chapter 12: The Roof: Monitoring and Routine Maintenance 119Monitoring and Routine Maintenance Defi ned 120The Monitoring and Routine Maintenance Structure 120Chapter 13: The Sample Anti-Fraud Program 129Appendix 13A: Fraud Risk Assessment Framework Form 137Appendix 13B: Control Activities Form 138Appendix 13C: Documentation of Control Activities 139Appendix 13D: Compliance Audit Programs and Related Compliance Audit Working Papers 154Appendix A: The Fraud Policy 171Appendix B: The Fraud Reporting Policy 175Appendix C: The Expense Reimbursement Policy 179Appendix D: Forms 185About the Author 193Index 195