Fraud Detection

Larry Beebe, CPA

Everyone associated with an Employee Benefit Plan has a responsibility to search for and detect any existing or potential fraud.

The independent auditor in auditing the Plan’s financial statements “…is responsible for obtaining reasonable assurance that the financial statements, as a whole, are free from material misstatement, whether caused by fraud or by error.”
Management and the Plan trustees have the primary responsibility for the prevention and detection of fraud. If these individuals are to be responsible for preventing and detecting fraud, they have to know what to look for in fulfilling their responsibility.

Over the years, I have developed a list that I call “Larry’s Laws of Larceny.” These “laws” are one sentence blurbs that make a statement about fraud. In the blog series that follows, I will explain what I mean by each of the blurbs. I will try to tell a fraud story about each of the blurbs and I will tell how plan trustees can take action to prevent fraud being described.

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