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Types of businesses prone to Cash Larceny and Billing Schemes

What types of businesses and industries are particularly prone to Cash Larceny and Billing Schemes?

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Small businesses have every reason to worry about fraud. According to the Association of Certified Fraud Examiners' (ACFE) "2002 Report to the Nation on Occupational Fraud and Abuse," the per-employee losses from fraud in the smallest businesses are 100 times the amount of their largest counterparts. (The complete report can be downloaded at Thus, this is an area in which CPAs can be valuable consultants to their clients. Most small businesses don't have a need for a CPA to do a full audit; however, CPAs can provide a number of fraud prevention services.

Employee education. CPAs can conduct on-site training for clients in the form of live presentations and/or computer-based education.

Internal control reviews. Reasonable internal controls are critical in a small business. A CPA can review the existing system and make recommendations for improvements.

Cash reviews and reconciliations. Since 9 in 10 occupational frauds involve the company's cash, CPAs can regularly review receipts and disbursements for anomalies. Although this is an excellent deterrent, it's important to realize that no CPA can guarantee that any specific procedures will uncover fraud.

Inventory observations and asset verifications. For companies with inventory or other assets that make attractive misappropriation targets, CPAs can observe inventory procedures and/or verify specific items. Both the 1996 and the 2002 ACFE study showed a similar trend: Small business is very vulnerable to fraud. There appear to be three reasons.

Inadequate employee prescreening. Small businesses ...

Solution Summary

The types of businesses prone to cash Larceny and Billing Schemes are discussed.