Fraud Investigative Services

HHM Certified Public Accountants provides fraud investigative services for a wide range of commercial, corporate, not-for-profit, and governmental sectors. Our team of Certified Fraud Examiners (CFEs) and Certified Public Accountants (CPAs) are extensively trained in fraud examination, detection, and prevention. We specialize in dealing with numerous fraud schemes, including financial statement fraud, asset misappropriation, payroll theft, employee and vendor theft and embezzlement schemes, unreported income analysis, and management override fraud schemes.

A few simple fraud facts according to the Association of Certified Fraud Examiners:

  • A single incident of fraud costs the average company a median amount of $145,000. Nearly a quarter of these frauds cost the business at least $1,000,000.
  • A typical organization loses approximately 5% of its revenues to fraud per year.
  • The median duration – the amount of time from when reported fraud cases commenced until they were detected – was 18 months. Proactive measures catch fraud sooner and minimize losses. Frauds that are caught by reactive measures tend to last longer and cause more harm.
  • The longer frauds last, the more financial damage they cause. Passive detection methods (confession, notification by law enforcement, external audit, and by accident) tend to take longer to bring fraud to management’s attention, which allows related losses to grow. Consequently, proactive detection measures such as hotlines, management review procedures, internal audits, and employee monitoring mechanisms are vital in catching frauds early and limiting your losses.
  • Small businesses are both disproportionately victimized by fraud and notably under-protected by anti-fraud controls – a one-two punch that makes them significantly vulnerable to the threat of fraud.

The Fraud Triangle – How and Why Fraud is Committed

Dr. Donald Cressey, one of the nation’s leading experts on the sociology of white-collar crime, developed the Fraud Triangle model to display the three factors that must be present – at the same time – in a situation in order for a person to commit fraud. By understanding the triangle and how it applies to your staff, you can assess the likelihood that fraud will be committed within your organization.

  • Opportunity for fraud is generally provided through internal control weaknesses, such as poor: supervision and review; segregation of duties; management approval; and system controls.
  • Incentive/pressure to commit a fraud can be imposed by: personal financial problems; personal vices such as gambling, drugs, extensive debt, etc.; and unrealistic deadlines, budgets and performance goals. This is the initial motivator of the crime.
  • Attitude/rationalization occurs when a person creates justification for the fraudulent acts (such as an immediate need for money with the intention of repaying in the near future, the company will be more forgiving than the IRS or debt collectors, reluctance to reduce lifestyle, etcetera). They consider themselves ordinary, honest people caught up in bad circumstances.

HHM specializes in meeting the anti-fraud needs of your organization. We encourage you to contact one of our team members at (423)756-7771 to further discuss how we can help you.

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1200 Market St.
Chattanooga, TN 37402
P 423.756.7771
F 423.265.8125

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1755 Kirby Parkway, Suite 200
Memphis, TN 38120
P 901.683.4234
F 901.763.2795

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