Fraud Management & Cybercrime , Fraud Risk Management , Governance & Risk Management

Accounting Fraud: Why Can't the Industry Get It Right?

Three Experts on How to Detect Financial Fraud and Limit Corporate Culpability
Alexis Bell, founder and CEO, Fraud Doctor; Steve Hindle, founder, Achilles Shield; and Stephanie Siegmann, partner and chair, Hinckley Allen

While financial fraud has been prevalent for years, businesses still struggle to find it among large pools of data. In this second installment on accounting fraud, a panel of experts discussed the challenges including a lack of resources, skills and tools to identify fraud.

See Also: How to Build Your Cyber Recovery Playbook

"Financial statement fraud happens infrequently but has a much larger impact. Because of its infrequent nature, there is not much training," said Alexis Bell, founder and CEO of Fraud Doctor. "Even some of the largest training organizations for fraud miss entire sections of the financial statement."

Another challenge facing organizations is that traditional fraud detection tools are of little use in spotting this kind of fraud. "The industry is focused on signals that we get from behavior anomaly. But the bad guys have well and truly adapted to this. So, now they're using tools, techniques and procedures that are the same as what your IT staff is using. And it's very hard now to tell a bad guy from a good guy from the behavior that they're having in our systems," said Steve Hindle, founder of consultancy Achilles Shield.

Even the U.S. Department of Justice has made corporate crime a priority. "The DOJ has actually incentivized disclosure, self-reporting of fraud and violation of export laws. And all this comes under corporate crime and fraud," said Stephanie Siegmann, litigation partner at Hinckley Allen and a former federal prosecutor with over 20 years’ experience investigating complex national security and financial crimes.

In this video interview with Information Security Media Group, the panelists also discussed:

  • The difference between financial statement and asset misappropriation fraud;
  • Regulations related to the disclosure of fraud;
  • Why financial statement fraud is so hard to detect.

Want to learn more about accounting fraud? Read Accounting Fraud: Which Tools Should You Invest In?

Siegmann is a litigation partner at Hinckley, Allen & Snyder LLP and serves as the chair of two of Hinckley Allen’s practice groups - international trade and global security and cybersecurity, privacy and data protection. She is a former national security chief and federal prosecutor and a U.S. Navy veteran.

Hindle is an industry leader, presenter, change agent and champion for diversity and empowerment. He has a reputation for delivering a solid foundation of trust and resilience.

Bell founded Fraud Doctor to help companies better understand and manage their fraud risk.

About the Author

Suparna Goswami

Suparna Goswami

Associate Editor, ISMG

Goswami has more than 10 years of experience in the field of journalism. She has covered a variety of beats including global macro economy, fintech, startups and other business trends. Before joining ISMG, she contributed for Forbes Asia, where she wrote about the Indian startup ecosystem. She has also worked with UK-based International Finance Magazine and leading Indian newspapers, such as DNA and Times of India.

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