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Showing posts from September, 2018

Don’t become a victim of bankruptcy fraud

Your company has landed a lucrative new account, and the customer has already placed several small orders, paying in full, on time. Now the customer wants to place a larger order, but has requested that you first expand its credit account. Warning! There’s a chance that you could become a victim of bankruptcy fraud. Your new customer may be planning a “bust-out” — a common bankruptcy-related scam.

Bust-out scams

In a bust-out, fraudsters create a bogus company — often with a name similar to that of an established, reliable business — to order goods they have no intention of paying for. In fact, they plan to sell the products for fast cash, file for bankruptcy and leave you, the supplier, holding the empty bag.

In a variation of the scheme, bogus operators buy an existing company and use its good credit to order the goods. Either way, they sell the products they order below cost, for cash, and then file for bankruptcy, writing off the amounts of the supplier’s bill.

You can avoid be…

Expense reimbursement fraud is common, but preventable

One of the most common ways that crooked employees defraud their employers is by cheating on or padding expense reimbursement reports. Fortunately, you can stop this type of fraud with strict controls and by punishing the perpetrators.

Plenty of ways to cheat

Employees often cheat on their reimbursement reports by inventing expenses. They might, for example, stick your company with the bill for a lavish dinner with friends or expense hotel costs accrued while extending a business trip for leisure. Employees may also exaggerate the amount of legitimate expenses by, say, claiming larger service tips than they actually paid.

Other common reimbursement fraud schemes include submitting:

• Bills for trips that were never taken, such as canceled airline tickets or hotel registration refunds,
• Claims for items employees didn’t purchase, such as office supplies,
• Separate auto mileage bills from employees who actually traveled together,
• Inflated mileage totals, and
• Bills for nonreimburs…

Why employers are taking another look at life insurance as a fringe benefit

In their continuing effort to assemble the most enticing employee benefits package possible, some employers are showing renewed interest in an old favorite: group term life insurance. Although such life insurance coverage had fallen off the radar screens of some employers, it remains an affordable benefit that can pay off for employer and employees alike.

Employer upside

For you, the employer, the upside is considerable. Premiums you pay for group term life insurance are generally tax-deductible and, because claims occur so infrequently, the coverage is typically simple and inexpensive to administer compared with other fringe benefits. When covered employees do pass away, the paperwork is fairly straightforward.

But perhaps the most important reason to consider offering life insurance as a fringe benefit is that employees want it. In fact, almost half of those who responded to MetLife’s 15th Annual U.S. Employee Benefit Trends Study, published in 2017, called life insurance a “must-h…

What’s the difference between a plan document and an SPD?

Most of the health and welfare plans offered by employers today are subject to the Employee Retirement Income Security Act of 1974 (ERISA). Generally, ERISA envisions that employee benefit plans will have both a plan document and a summary plan description (SPD). But, in some cases, a single document may serve both purposes. Let’s look at the difference between the two and under what circumstances they may be combined.

Plan documents

Plans subject to ERISA must be “established and maintained pursuant to a written instrument” called the plan document. It comprehensively sets forth the rights of the plan’s participants and beneficiaries by describing:

• What benefits are available,
• Who’s eligible,
• How benefits are funded,
• Who’s the named fiduciary,
• How the plan can be amended, and
• The procedures for allocating plan responsibilities.

The plan document also guides the plan sponsor and plan administrator in making decisions and executing their responsibilities.

SPDs

ERISA also r…

Train employees to help stamp out fraud

If your company is tired of being a fraud target, it’s time to train employees how to recognize and uncover unscrupulous activities — before irreparable damage is done. Here’s how.

Enlist an expert

A forensic accountant can conduct on-site, broad-based training for employees in the form of live presentations. This expert might use role-playing to help staff understand the various forms fraud can take, and how perpetrators think and identify their victims’ vulnerabilities and weaknesses.

Specific antifraud education can be provided based on employees’ departments and positions.

For example, warehouse workers might be trained to spot shipping and receiving scams. Managers might learn how to verify expense reimbursement requests and documentation.

Hot topics

Some of the topics that might be covered in an employee fraud presentation include:

Payroll theft. This comes in many forms, including paying phantom employees; manipulating time records; making and accepting unapproved pay rate adju…

Preventing business identity theft: 5 tips

Identity theft isn’t just a consumer problem. Criminals steal the identities of businesses, too. In addition to filing fraudulent tax returns, criminals assume the identities of companies to apply for credit, impersonate authorized users and empty bank accounts. Here are five ways you can reduce the chance it will happen to your business.

1. Protect confidential documents

Secure sensitive paper documents such as financial statements, invoices, bank statements and aging schedules in locked file cabinets. Store digital files in secure, password-protected locations.

2. Shred documents you no longer need

When you no longer need sensitive paper documents, destroy them using a cross-cutting shredder. If you need to shred a significant volume of paper, hire a service to destroy documents on your premises.

3. Don’t drop your guard online

Thieves use malware to infect computers and gather sensitive data. They also create fake websites that trick employees into entering login and password i…

Even voicemail is susceptible to fraud

In a world of increasing exposure to online security threats, it’s nice to be able to rely on voicemail for risk-free communication. The problem is, you can’t. Your voicemail system can easily be hacked if you don’t take some precautions.

Passwords as passports

In the most common scheme, hackers figure out the passwords for voicemail boxes. Most frequently, they call numbers until they’re transferred to voicemail, and then try different combinations of numbers until they find the password. Once they’re in a voicemail box, they change the greeting to authorize collect or third-party calls.

In some cases, hackers use voicemail to enable lengthy, international conference calls. In others, they distribute the compromised phone numbers to friends and relatives overseas. These individuals can then call the United States, asking that the calls be billed to their “home” numbers. Because such calls are typically placed at times when voicemail is likely to pick up, such as weekends and holid…

Improving a struggling employee’s performance is a two-way street

It’s easy to get frustrated when an employee is failing to produce the volume or quality of work you’re looking for. A business owner or department manager may even give in to the temptation to play the blame game, pointing a finger at the struggling worker and only exacerbating the situation.

In truth, performance improvement must be a two-way street. There’s no doubt that the individual in question must step up and do better. But, as an employer, you’ve got to provide information, tools and support to help his or her improvement efforts.

Map the route

To get started, before saying one word to the person, fully investigate the issue. This means first defining the nature and degree of the underperformance and then determining whether you’ve done the best job possible in helping the employee to be successful.

For example, when and how well was the employee trained? Someone hired years ago may have been taught to do a job differently than it now needs to be done. Also, is the employee …