NEW YORK--(BUSINESS WIRE)--As the economy strengthens, economists and accountants are wary that investors and institutions will forget about the importance of fraud detection, according to Kinetic Partners, a global professional services firm to the asset management, investment banking and brokerage community.
In the aftermath of the largest Ponzi schemes ever to occur, investors and institutions alike must remain aware that fraud is still prevalent. To illustrate the magnitude of this criminal activity, the FBI reportedly opened more than 1,000 inquiries into possible Ponzi schemes during 2011.
A few red flags that may be indicative of fraudulent acts include strong revenue growth that is difficult to justify, lack of correlation with competitors, an increase in earnings in a depressed market, and the classification of expenses.
Forensic accounting can often uncover fraudulent practices before they take their toll on an organization’s or an individual’s finances. During the course of an investigation, forensic accountants use a combination of accounting, auditing and other investigative techniques to pinpoint fraud. Another major component of an accounting department is internal controls, which encompasses a broad area of oversight meant to ensure the integrity of financial information and maintain management policies throughout an organization.
Internal controls are a pivotal resource for all organizations, particularly with regard to cash management. Inadequate monitoring of the cash management system and access to the same system and accounts by various parties, provides a breeding ground for fraud to take shape.
“We live in a world where greed remains a part of the capital markets and, unfortunately, where there is greed there is fraud. It can be reassuring to know that just a few steps can be taken to help detect suspicious activity and prevent a company from losing millions or even billions of dollars,” says Joel Cohen, Director of the Forensic and Dispute practice at Kinetic Partners. “One simple comparison that can be made is to look at the financials of a company to see if an increase in revenue corresponds to an increase in the cash flow of a company. If these increases do not correspond, it may be worth taking a closer look into the components of the increase.”
About Kinetic Partners (www.kinetic-partners.com):
Kinetic Partners is an award winning global professional services firm providing regulatory consulting & compliance, corporate recovery & forensic services, remedial, risk consulting & monitoring, tax and audit & assurance services to the asset management, investment banking and broking industries. Launched in 2005, Kinetic Partners has grown rapidly, and has a team of 140 across its eight offices in London, Dublin, Cayman, New York, Geneva, Hong Kong, Luxembourg and the Channel Islands. Kinetic Partners services over 1,300 clients and has attained a reputation as the leading provider of professional services in its chosen market sectors.
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2012 highly commended for “Best regulation and compliance advisor” at the HFM European Performance Awards |
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2011 winner of Hedgeweek's "Best regulatory advisory firm" in the US |
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2010 winner of Funds Europe's "European advisory firm of the year" |
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2009 and 2010 winner of HFM Week's "Best regulatory advisory firm" in Europe and US |
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2008 winner of Fund Domiciles "Best consulting firm" in Ireland and Cayman |