Tag Archives: PSA

Paying It Way Forward

Bert_Mitchell

Bert N. Mitchell

Last night I attended the New York State Society of CPA’s (NYSSCPA) Moynihan Fund Gala. I was looking forward to a fun night with my colleagues, looking out on the water as the sun set and enjoying good food and drinks. What I did not expect was the incredible history lesson that I received from Lifetime Award Honoree, Bert N. Mitchell. In 1987, Mitchell became the first black president of the NYSSCPA and, during his tenure, the NYSSCPA launched the Career Opportunities in the Accounting Profession (COAP) program. I was already aware of these very impressive aspects of Bert Mitchell’s career, but, as he shared his life story, I found that these achievements were only scratching the surface.

Mitchell shared, last night, that he was the 100th black CPA in the United States. This statistic hit harder when he shared that he earned this qualification in 1965, a little more than ten years after Bernadine Coles Gines became the first black woman to become a CPA in New York and the 34th black person to become a CPA in America. Even though it was 11 years after Gines had encountered many obstacles on her journey to becoming a CPA, Mitchell did not find things to be much easier when he graduated, at the top of his accounting class, in 1963. Despite his top-notch qualifications, Mitchell spent two weeks seeking a position at one of the top accounting firms, preferably, one of the Big 8 (at the time). He travelled from lower Manhattan and worked his way to Midtown, stopping in at every major CPA firm and, over and over again, he was turned away, with the excuse that their clients’ attitudes regarding hiring a black person were why they wouldn’t give him a job. In 1968, the AICPA launched the Committee on Recruitment from Minority Groups and Mitchell was one of the five black members of the eleven member committee. A year later, in 1969, Mitchell published a study entitled “The Black Minority in the CPA Profession” and this study found that underrepresentation in the CPA profession was worse than in law, medicine and other professions. This study found that out of 100,000 CPAs in the United States, fewer than 150 were black and firms claimed, as they had to Mitchell when he was seeking employment, that the barrier to hiring African Americans was not their own bias but that of their clients.

In a follow-up to the 1969 study, Mitchell published a study in 1975 that showed that the number of black CPAs had tripled to 450. As encouraging as this information was, there was still much to and, as became apparent, Mitchell was nowhere near done. When Mitchell became president of the NYSSCPA in 1987, the stats were depressing. Black people made up almost 13% of the population, yet they made up less than one percent of CPAs. In comparison to other professions, only airline pilots had lower representation. Representation by other peoples of color was not much better – Latino representation also hovered around 1% and Asian representation was about 3%.

When I heard Bert Mitchell’s speech last night, I knew I needed to know more and when he mentioned that he was the 100th black CPA in America I, fortunately, knew exactly where to go. When I met and was moved and inspired by Bernadine Coles Gines, I went out and bought the book “A White-Collar Profession, African American Certified Public Accountants Since 1921” by Theresa A. Hammond. This book, published in 2002, tells the history of African Americans in the profession. I knew I would find him in there, not only because of the incredible work that he has done to expose people of color to the CPA profession, but also because I remembered that the book included a list of the first 100 black CPAs in the United States. I got home and there he was – “100. Bert N. Mitchell 1965 New York”.

At the Gala, as three alumni of the COAP program took to the stage and shared their stories of how the program and not only exposed them to the CPA profession but also made them believe that this was possible for them, I was deeply moved by the work and efforts of Bert N. Mitchell and others who, like him, have been dedicated to diversity and inclusion in our profession. Pick up the book, read it and learn more about Mitchell and the other first 100. This is not ancient history, it is actually amazing how recent this history is. It is hard to pass the CPA exam. It is a daily challenge to maintain the standards and knowledge that make us trusted professionals. It should never be a struggle to be hired because of your race, gender or sexual orientation. I am truly in awe, as Bert N. Mitchell, truly has dedicated his life to advocating for diversity and fairness in the profession.

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Massive Betrayal of Trust

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Photo by Mamnaimie Piotr

On September 8, the Consumer Financial Protection Bureau (CFPB) put out a press release that it was fining Wells Fargo Bank $100 million for secretly opening deposit and credit card accounts, without customer approval. In addition to the CFPB fine, Wells Fargo was fined $35 million by the Office of the Comptroller of the Currency, $50 million by the City and Country of Los Angeles and will have to pay approximately $5 million in restitution to customers. This fraudulent behavior occurred on a massive scale and, based on the CFPB’s investigation, resulted in:

  • Employees opening 1,534,280 unauthorized deposit accounts;
  • Employees submitting applications for 565,443 credit-card accounts, without the knowledge or consent of the people in whose names the applications were made;
  • Employees creating fake email addresses in order to enroll consumers in online-banking services;
  • Employees requesting debit cards for customers, without the customers’ knowledge or consent, and creating PINs to activate these cards.

All of the above has happened only since January 1, 2011. That is about five years in which these shenanigans were going on. During this time, Wells Fargo fired about 5,300 employees but it does not appear that the bank did a lot more than that to change the culture and systems in order to keep these practices from recurring, or that it took any steps to do right by the customers who were affected. To boot, the executive who oversaw the unit where this all happened left without having to pay back any of the almost $125 million that she earned with the bank. To understand why employees engaged in these dishonest practices, it is important to understand how they benefitted.

Wells Fargo is valued at over $250 billion, making it the most valuable bank in United States, by this yardstick. Wells Fargo was also considered to be the king of cross-selling. Cross-selling is a practice where banks sell more than one service to a customer. For instance, say you open a checking account with Wells Fargo. If the person that you open your account with convinces you to then open a savings account, a credit card account and a mortgage, all of that is cross-selling. At Wells Fargo, employees were paid and received bonuses based on the number of different services they were able to sell to customers. At times, employees would have to work unpaid overtime hours in order to reach these goals and would be threatened with losing their jobs if they did not do enough cross-selling. These employees were told to do “whatever it takes” in order to meet sales goals and this turned out to include engaging in the fraudulent behaviors I noted above.

With the pressure to perform in order to increase earnings, through bonuses, or merely keep a job, the retail employees, at least 5,300 of them, found many opportunities to game the system. Controls at Wells Fargo, when it came to ensuring accounts were valid and authorized by customers, appears to have been very lax. For instance:

  • Employees were able to sign up customers for banking services and would use fake email addresses that used wellsfargo.com as the domain name, such as 1234@wellsfargo.com or none@wellsfargo.com. Doesn’t that seem rather brazen? It also seems like a security shortfall on the part of the bank, that the application process wouldn’t flag an email that doesn’t exist in your own system.
  • When employees opened fake deposit accounts, they would fund these accounts by transferring a customers money from an authorized account to the fake account. Sometimes, as a result of the transfer, the authorized account would incur insufficient balance and overdraft fees. Also, the fake accounts would also incur fees and Wells Fargo would withdraw money from the authorized accounts in order to pay these fees.
  • In a similar manner, credit card accounts opened, without the approval or knowledge of customers, would incur annual and other fees. At times, these customers would find that they were in collections and their credit scores had been affected by accounts that they did not even know they had.
  • Some customers actually received credit cards for accounts that they had not authorized. When these customers contacted Wells Fargo to complain about these cards, they were told to simply destroy the cards. Destroying a credit card does not close the credit card account, nor does the shredding of a card do anything as far as the shredding that your credit profile may have taken.
  • In order to meet quarterly goals, employees would hold back applications for account openings. The manual applications, that included sensitive personal information, would be stockpiled in an unsecured manner and the accounts would only be opened in the next sales goal period, in a practice referred to as sandbagging.
  • Wells Fargo also misled customers by telling them that they could not get one service without getting a bundle of other included services. That would be like opening a checking account and being told that you cannot do so unless you open a savings account and get a credit card with the bank.

With how widespread these practices were, it seems that employees were sharing knowledge about how to best bulk up their cross-selling numbers, without actually cross-selling. Also, when customers complained about fees, it is unclear how much of a follow-up there was to discover if what had happened was a mistake or not. Then, when Wells Fargo discovered this behavior and fired an employee, the bank did not take any steps to let the impacted customers know that their information had been used to open accounts in their name and, if applicable, charge them fees. The bank did not go back and refund customers the fees they had been charged, unless the customer raised a stink about them. When I was discussing this case with my husband and explaining how customers were negatively affected, he had a tale of his own. He has a credit card (not Wells Fargo) and the company changed his credit card information, without letting him know. When he sent payment on his account, they accepted the payment, without telling him that the account was closed, and then charged him interest and fees on the balance that had been moved to a new account. He, not the credit card company, had to figure out what had happened and he, not the credit card company had to calculate the monies that needed to be refunded to him and make sure that the company was not just holding money on a nonexistent account but actually crediting it to his account.

As a result of this case, in addition to the fines that Wells Fargo has been ordered to pay, there are steps the bank has been ordered to take in order to improve the culture and strengthen the system so that this kind of behavior can be prevented, detected and corrected in the future. This includes:

  • Employee training to prevent “Improper Sales Practices” and improve integrity at the bank;
  • Creating monitoring processes and policies to effectively deal with customer complaints;
  • Creating systems to ensure that customer approval is received before accounts are opened on their behalf;
  • Revising the basis for how employees are paid and reviewing sales goals to ensure that they are not unrealistic and do not impose unreasonable pressure on employees.

Wells Fargo will continue to be monitored for five years, to make sure that they comply with the CFPB’s consent order.

On your part, with all your accounts, you can check to make sure that they accounts that you have are ones that you have authorized and that transactions made in your name are valid. Some steps that you can take are:

  • Review your credit report on a regular basis to make sure that all accounts listed are ones that you know about. Several financial institutions offer free credit reports to customers. If this is not an option for you, you can visit the Annual Credit Report website. On this website, you are entitled to credit report per year, from each of the three major credit reporting companies. A strategy to employ is to check a report with one agency every four months;
  • Check your bank statements regularly (at least monthly) for any transactions that are incorrect. Even if it is a small amount, look into a transaction. That small amount could be an indication of something bigger;
  • If you receive a card in the mail that you did not apply for it, follow-up on it and make sure that it is cancelled. Then check your credit report again.

On the Wells Fargo website, the Chairman and CEO states that “Everything we do is built on trust.” It seems that many employees have been playing lip service to that value and we know that, even with trust, it is important to verify. Take the time to check in on your finances. There may be mistakes that need fixing and there may also be pressured employees who are trying to get ahead or merely hold onto their jobs by engaging in dishonest practices.

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True Tone at the Top

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I am reading “Tragedy of Fraud – Insider Trading Edition“, a book recently released by James Ulvog. This is the story of Scott London‘s journey from KPMG partner to prison inmate. James Ulvog covered this story in depth, from the moment it broke up to when Scott London went to prison. I would not be surprised if Jim picks up the story again when London is released from prison. In the book, Jim has spoken about the possible consequences of London’s crime and a lot of these stretch well into the future, potentially affecting him both professionally and personally. It is always a big disappointment when members of the CPA profession completely disregard the ethical and professional standards that have been set by the various governing boards. It is, therefore, important when people like Jim of Attestation Update and Francine McKenna of re: The Auditors
call out the CPAs who are setting a terrible tone at the top of their profession.

It is equally important, if not more so, to recognize those who have provided a positive contribution to the CPA profession. We are trusted professionals for a reason; it’s not just empty rhetoric. A little over a week ago, I had the indescribable privilege of meeting Bernadine Coles Gines, CPA. I am pretty sure this is not a name you have heard before, but she is a woman worth learning more about. I met her at a New York State Society of CPAs (NYSSCPA) ceremony honoring the 60th anniversary of Bernadine Coles Gines’ CPA license. This is a big deal because Gines was the first black woman to receive the CPA license in New York State. It becomes even more of a big deal when you learn more about the challenges she faced, both while working towards becoming a CPA and beyond.

Bernadine Coles Gines moved to New York City from Virginia, where she is originally from, to get her master’s degree at New York University. She moved because, at the time, Virginia’s segregation laws kept her out of graduate school in that state. Once Gines had graduated and passed her CPA exams, she looked for work. She found that she could not find work with a black CPA firm in New York City because they would not hire women. She also found that she could not find work with white CPA firms because they would not hire black people. While interviewing at a white firm, one partner told her that, even though he could not hire her, perhaps Gines could help his wife, who was looking for a maid. She was finally hired by a two-partner Jewish firm, but only after she had convinced them that she was not a communist. Of course, getting work was in no way the end of her challenges but at no time did Gines give up or compromise. She persevered and continued to work toward achieving her goals, despite (or perhaps more resolved, because of) the challenges in her way.

I read a little about Bernadine Coles Gines before I met her, but when I met her, I was even more impressed. She spoke of her principles and her determination and her story is living proof of both. To come to face to face with a person who epitomizes unwavering grit and the drive to stand by what she believes in is truly motivating. To learn about people like Bernadine Gines reminds us about the types of people who have made CPA the trusted professionals that they are and they also show why we harshly judge those who give us a bad name. They are a reminder to us and to those we serve of those of us who are professional, ethical and will stand strong, despite the pressures put upon us.

You should go out and learn more about Bernadine Gines and others like her. As though her achievements were not enough, she shared during her interview, that her sister, Ruth Coles Harris, was the first Black woman to be certified as a CPA in Virginia, in 1963. Ruth Coles Harris faced challenges of her own when she decided she wanted to be a CPA. I wonder what those family reunions are like – I would hate to be the black sheep in that family (if they even have one). I am truly fortunate that I had this incredible opportunity to meet Bernadine Coles Gines and that I was reminded how important it is to uphold ethics and principles and that I should not compromise, especially when things are very challenging.

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Hear Ye, Hear Ye! It’s The Future!

 

Toward the end of June, I went into the New York State Society of CPAs offices (very lovely offices, I must say) to be part of a roundtable discussion on the future of the accounting profession. The discussion was distilled into a piece in August’s CPA Journal. Personal interest aside, it is a great read with a diversity of opinions on various issues regarding the CPA profession and the value of the designation. Along with me were three other professionals, all with different career paths within the designation of CPA. Somya Munjal is the founder of CPA for the People, which is a CPA services, business consulting and social venture firm. She is also the founder of Youthful Savings, whose mission is “empowering the next generation with financial education and entrepreneurship training”. Michael Durant is working on his master’s degree in taxation, while pursuing his CPA designation. That’s right, a master’s in taxation; that should begin to convey just how complicated taxation can be. Michael is also the cochairman of the advisory board for the Bronx School of Law and Finance, a school that he is an alumnus of. Jordan Frey is a senior account in EisnerAmper’s private business services group. As you can see on the company’s website, the group provides a wide range of services to businesses of all types and sizes. And then there is me – figuring financial forensics. So, in a room of four CPAs, you have a tax man, a social venture, financial education and entrepreneurship training guru, a private business services expert and a forensic accountant. Walking into the room, I was encouraged to find that I was in a room with people who validate my claims about the variety of professional paths that a CPA can take. It’s always a good feeling when your claims are validated.

We had a very interesting discussion about the different directions in which our CPA designation was taking us and, for all the differences in career we had, we had some real similarities. We were drawn by the high standards and ethics that are integral to being a CPA. I have written about how a CPA is considered to be a trusted professional, a characteristic that is an asset in someone you are dealing with when it comes to financial matters. I am happy to find that I am not alone. It is one thing for me to stand on my soap box and wax lyrical about the virtues of the CPA; it is completely something else, in a very good way, to be in a room with others who feel as passionately as I do about what we do.

I am sharing our conversations with you and, if you feel as though reading The CPA Journal diminishes your street cred, you can throw in a little Wu Tang Clan as your backing track, as you read a little bit about the future…

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Desperate Needs, Gouging Measures…

IMG_2231When I lived and worked in Zimbabwe, my parents and I lived in different cities, about an eight-hour drive apart. My father, however, was in town at least once a month for meetings and, when he came to town, we would meet for and evening of dinner and catching up. On one such evening, we were sitting in his hotel suite, eating dinner and watching the news. There was a piece on about an Ebola outbreak in the Democratic Republic of Congo. At the time, people were speculating that people living in the area where the outbreak had occurred had come across dead animals in the forests and had eaten them. Handling the dead animals (which had been killed by the Ebola virus) had infected them with the virus. I looked over at my father and said, “Why would they eat a random dead animal they came across in the woods? I mean, wouldn’t they ask themselves what had killed this animal and wouldn’t they be scared of being killed by the same thing?”

My father looked at me and said, “My dear, you can’t judge them. You don’t know what you would do if you were starving? Who knows what you would eat.”

Since, at that moment I was working my way through a three-course dinner, it didn’t seem like the appropriate moment to argue with my father, but I was pretty sure that no kind of hunger would lead me to eat dodgy food. I do know now that I was judging because I am fortunate enough to have many food options.

It turns out that investigators now think that fruit bats, not mysteriously dead animals are to blame for the spread of Ebola, but I thought about this conversation with my father when I read a piece in the New York Times about usury charges being brought against several payday loan companies, their owner and two of his associates. Usury is one of those not often heard words that is at home in the bible or a Shakespeare play, but it basically is illegally lending money at very high interest rates. I first heard analysis of payday loans on the NPR podcast, Planet Money, who, in 2010, discussed payday lenders. The concept of a payday loan is that people take out a small loan that is that is then paid back using the borrower’s next pay check. These loans, however, charge much higher interest rates than banks or credit cards do. The Planet Money episode referred to rates of over 500%. A more recent Planet Money piece spoke of a loan being offered at an annual interest rate of over1,300%. Many people debate payday loans and the people who take them out. Some argue that people who take out these loans are people who are irresponsible with their money and the payday loan rates are so high because the borrowers are risky. Others will talk about how payday lenders target people with low incomes and get them into a cycle where they end up spending years paying high fees and never being able to repay their initial balances.

In the state of New York, all this debate is moot because payday loans are illegal. When announcing the indictments, on 12 August, the Manhattan District Attorney, Cyril Vance, encouraged victims of payday lending schemes to call the Major Economic Crimes hotline. This is important to know, whether you received the loan at a storefront or online, the practice is illegal in New York, seventeen other states and District of Columbia. This is because, when people feel they have few options, people with few scruples like to take advantage of the situation. These are the types of people who offer to lend you $750 for a week, at a cost of $225. To make this point clearer, if you borrowed that $750 for a year and paid this interest on the loan every week, you would pay a total of $11,700 in interest. That is a lot of money to pay for $750 and I think that most people would agree that charging that kind of interest qualifies as usury.

Even if payday loans are legal where you live, the lenders still have to comply with rules that govern their industry. If you believe that you or someone you know is being taken advantage of, with regard to a payday loan, you can either call your local district attorney’s offices or get in touch with the Consumer Financial Protection Bureau (CFPB), which is the federal agency whose mission is to protect consumers of financial products. It is important to know that there are protections in the system and there may be more options than you think, when it comes to finding ways to pay debts or make ends meet and not every option involves interest rates that would make your calculator give you the side-eye. Knowledge is power and sometimes knowledge can also save you money and keep you from having your rights violated.

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A Better Mousetrap

IMG_2078Growing up, Saturday was the day that my mother ran errands and, because she tended to attack several items on her to-do list in one car trip, she tended to drag us along with her. At times errands involved going to the grocery shopping and this invariably meant my mother paid the bill by check. Now, writing out a check takes long enough but my mother never rushed the process, and I mean never. She would write out the check amount in numbers and words, pausing to direct the packer not to mix food types in the same bag. She would sign the check slowly, and beautifully and then, just when you thought she was done, she would balance her checkbook. It did not matter how long the line behind her was, she would take her time and complete her process. It did not matter how much grumbling was going on, she would ignore everyone, as she made sure that her numbers were correct.

Last week, I returned from an amazing trip to Zimbabwe, where I was the maid of honor at my sister’s wedding. I love traveling to Zimbabwe for countless reasons; one of these is seeing the changes to the financial systems that I see every time I go back. My last trip to Zimbabwe was a little over a year ago and I wrote about the process I went through in order to get a prepaid phone line. During this trip, I only had to deal with two people and I did not have to travel from one desk to another in order to get things done. I still had to hand over identification but this time, I could hand over the original and the phone company made a copy for me. The system was more computerized and I only needed to deal with one agent but I left with sufficient paperwork for my transaction. The SIM card for my phone line and airtime both had pre-printed serial numbers and I also received one receipt for my transaction, where I bought a line and airtime.

Just about everywhere I went, I was struck by the technological advancements since my last trip. More and more transactions are becoming completely computerized and the changes give me the opportunity to observe whether the advancements have weakened control systems and whether the designs of the new systems took control systems into account. One place where we saw significant changes was with the highway toll system. Last year, most of the toll stations were merely agents standing at a point in the road, with armed guards to make sure that no one tried to fly through the stations without paying. This year, there were built up with automatic booms that let drivers through, after they had paid. These stations had cameras installed in various places and these cameras transmitted images to a central office, as one of the controls to ensure that all vehicles passing through the stations were charged. Just as had happened the year before, every time we drove through a toll station, we received a receipt for our payment. The additional controls, such as the automatic boom and the cameras, added layers of controls without adding time to the process of going through the tollgates.

The challenge, when it comes to the technological advancements, is to ensure that those using them do not pave their cowpaths. This is a concept very well explained by Tom Hood. There is a big risk of using new technologies to do the same things in the same way; instead of using these technologies reimagine processes. It is very easy to dress up the same old processes in a fancy new exterior and convince yourself that you have created a new process. I shall keep taking notes during my future trips, as technological advancements continue to see whether people are paving cowpaths or creating superhighways.

Thankfully for those standing in line behind her, my mother no longer writes checks when she goes shopping. She has found new ways to keep track of her finances that ensure that her numbers are correct but that take less time than writing a check and balancing her checkbook used to. I even had a paper trail for the exhilarating lion walk that I went on at Antelope Park, a lion conservancy just outside Gweru, in Zimbabwe. I had a receipt for my payment and I also signed an indemnity form to prove that I went willingly, just in case the lions got grumpy, smelt my fear or just wanted to play with me with their massive paws!

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Here’s My Number And A Dime…

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“If you see something, say something”. Living in New York City, this is a message I come across often. I see it advertised all over the subway, I see it on buses and I have even seen it on television. Although the messages tell us to inform a police officer, MTA employee or call a toll-free number in the cases that we do see something and want to say something, I have often thought about the logistics of this. On my way home from work, I tend to end up in the last subway car. Now, say I get onto the train and I see something and I want to say something. I am in the last car and can barely see the subway conductor who is in the middle of the train. Do I try to run up the platform to get to the MTA employee before the train doors close and the train sets off? Do I perhaps hope that there is a police officer that I can alert, hanging out on the subway platform? My subway station is one of the few that now has cellphone reception, so I could call the toll-free number. However, I have never taken the time to actually take the number down so I have no idea what it is. All this said, I like to think that, on the day that I do see something and need to say something; it will be like the movies and things will fall in place and work out.

Previously, when talking about controls, I have discussed the importance of the segregation of duties and how having several people involved in a process means that there are other people who are watching what is going on and who, therefore, can report any untoward activities that they see. Annually, the Association of Certified Fraud Examiners (ACFE) publishes a Report to the Nations on Occupational Fraud and Abuse. The 2014 report stated, “Over 40% of all cases were detected by a tip – more than twice the rate of any other detection method.” That is a staggering statistic and emphasizes just how important people who see and say something are when it comes to fraud detection. The knowledge that there is an easy way for fraud to be reported may also serve as a deterrent to those contemplating committing fraud. In response to a series of huge financial scandals that led to losses in the billions of dollars and the end of companies such as Enron and WorldCom, the Sarbanes- Oxley Act was passed in 2002. Among its various provisions, it required that publicly traded companies establish a whistleblower system that makes it easy for employees and third parties to anonymously report financial misdeeds.

There is a television show called “The First 48”. The premise of the show is that the chances of solving a murder are cut in half, if investigators do not get a lead within the first 48 hours. On a few occasions, I have watched as detectives go from door to door in a neighborhood, asking people if they know anything about the homicide that occurred. Generally, the police are met with silence, shaking heads and closing doors. However once they get back to the police station, their phones start ringing and people leave anonymous tips that often lead to an arrest. Anonymity is a very important aspect of creating a whistleblower system. The fear of punishment for reporting fraud, such as being fired, demoted or even physically attacked, can keep a witness silent. It is vital that a person knows that they can safely make a report and remain unidentified, should they wish to do so.

There should be several reporting options available to the whistleblower, such as the telephone, an electronic system and U.S. mail, giving the whistleblower the opportunity to use the method that they are most comfortable with. Also, the system should be available 24 hours a day, 365 days a year. With the whistleblower hotline, a trained interviewer, who knows how and what to ask the caller should answer the phones. The last thing a nervous caller wants to deal with is voicemail.

In order to make the whistleblower system most effective, a corporate entity’s staff, vendors and other third parties need to know that there is a way that they can report wrongdoing and that action will be taken. This means that a company with a whistleblower system should distribute literature and hold training sessions on ethics, processes and how to report any financial wrongdoing. Several years ago, I caught a cab from Manhattan to Brooklyn. During my ride, the cab driver complained about having to drive to Brooklyn and tried, several times, to drop me off at a subway station. I insisted that he take me to Brooklyn, as I had requested. He then spent the rest of the ride swearing and protesting. Once we reached my destination and I stepped out of the taxi, he yelled out the window, “Bitch”, and drove off. Suffice to say, I was upset by this experience. Shaking, I walked into the building and called 311, New York City’s non-emergency information and complaint service. I told the operator about my experience and gave her the taxi driver’s medallion number. She took my report and asked whether or not I wished to remain anonymous. I chose not to, wound up facing the driver in a hearing, and winning my case. I did all this because I did not appreciate how the taxi driver had treated me and felt that I should not let him think that it was okay for him to behave in that manner. More importantly, I did this because I knew about and had access to an easy, and well-publicized service where I could lodge my complaint and have my issue investigated and resolved.

I have mentioned that publicly traded companies in the United States are mandated to set up a whistleblower system. It is in the interest of other entities to consider a system by which anyone who comes across financial crime can report the crime, knowing that something will be done about it and that no one will come after them for making the report. Sometimes something as simple as an anonymous mailbox can make a big difference – just knowing that there is a way to report crime gets people reporting crime. Then again, as an employee or a third-party, such as a vendor or a customer, there may be times when you feel as though the corporate culture is so corrupt that no one within the company will respond to your complaint. At times like this, you should look to the law for assistance. In New York City, you can call 311 for guidance and assistance. You can also visit the District Attorney’s website for information on how to report a financial crime. The power of people speaking up when they see something amiss cannot be underestimated and voicing your concerns is easier than you imagine; remember whistleblowers are the number one (by far) way in which fraud is discovered. So, really, if you see something, say something. You don’t even have to worry about the train leaving you behind.

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I Trust You, But…

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Last Saturday, my husband showed off some of his work in an open studios event at Industry City. He did the lion’s share of the work but, on Friday evening, he asked me to come over and help him a little. He assigned me the job of placing 5×7 prints of some of his work in 5×7 frames. It sounds straightforward enough and I am sure that my husband trusts me and has great confidence in my abilities. Nevertheless, after I had framed a few photos, he came over and checked my work. It turned out that some of the photos were not quite centered in their frames. He handed them to me, offered me some tips on how best to center photos in frames, and asked me to redo them.

This reminded me of when I was a kid and my parents would check my homework. I know that they felt that I could do it. I know this because they would say things like, “You can do better than this; try again.”Most of the time the issue was that my handwriting was barely legible on a good day. Knowing that my work would be reviewed, on days when I was tempted to rush through my homework, maybe because I wanted to play or watch TV, I willed myself to slow down and get it done correctly the first time around. I did not want to get into trouble and I definitely did not want to have to do my homework over again.

Recently, I have been reading stories about people in charge of a business’s finances perpetuating fraud. These people carried on their shenanigans and were not caught until the businesses they were employees of were practically going under. You know why? Because no one ever checked their work. Ever. In the cases that I read, the business owners were all charmed by the charismatic and capable people that they hired to manage their finance departments. The business owners gave these managers unfettered access to the companies’ bank and credit accounts and, boy, did those managers take full advantage of this access. They opened new credit accounts, they maxed out existing accounts and they went shopping! These business owners only found out what was going on when purchases they were trying to make were declined because their accounts were wiped out. In every case, the owners had left the finances up to the managers that they had hired so that they could focus on operations. They seemed to forget that an essential part of a business is the money needed to run it. They did not keep tabs on where the money went after it came in.

Because none of us is infallible and because too many among us are not always honest, it is vital that work is checked by someone else. Depending on the size and complexity of an entity, there are various ways in which to incorporate checks into a system to prevent and detect error and fraud.

  • There must always be a review of another party’s work. In a very small business, this may mean that the business owner is periodically reviewing bank and credit card statements. It may mean that the business owner will check incoming mail on a random basis, to make sure that unauthorized statements have not been opened in the name of the business. In larger businesses, there should be processes where the work done by one employee is reviewed by another employee for error and misstatement.
  • Someone other than the person booking cash entries in the ledger should perform reconciliations of the bank and credit accounts. Reviews and reconciliations of payable and receivable accounts should also be performed.
  • Make sure that staff take vacations and that, while they are on vacation, someone else does their work. In this way if anything is amiss, a new pair of eyes may catch mistakes or other missteps that are being made. In addition to this, having someone else do the work also means that one person does not have exclusive knowledge of a process in a business. In this way, no employee is indispensable. Also, when more people understand a process, and employee is less likely to try hide fraud in the process.
  • If possible, move work around among employees, again, so that more people in a department have a greater understanding of what is going on. The saying is familiarity breeds contempt; it can also breed careless errors. People operating in autopilot can become too comfortable with the work that they are doing and make careless mistakes because they are not paying close enough attention to the work.

Check, check and check again. If people know that there are effective checks in a system, they are likely to be discouraged from trying to steal from an entity. If people know that their work will be checked, they are more likely to pay attention to details so that they don’t have to do the work over again. Even when I was frustrated because the photographs seemed to shift all by themselves when I tried to secure them in the frames, I growled, I complained, and I started over and over again until I got it right. You know why? Well, because I like to do a job well AND I didn’t want my husband handing the work back to me and calling me out on getting it wrong.

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Always Looking…

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A while ago, I was listening to an episode of This American Life. I had to use Google to find the show because I couldn’t remember most of the show but I did remember one part of the episode. A guy comes home from a party and goes to use the bathroom. He lifts the toilet seat to find a rat looking up at him from inside the toilet bowl. A rat. Ira Glass, the show’s host goes on to inform us that finding a rodent in a toilet is not as unbelievable as one might think. It turns out that there are circumstances under which rodents can find their way into the pipes that become one’s toilet bowl. I can’t rightly remember exactly what these circumstances are because I was panicking too much to pay any real attention.

I am terrified of rodents. I can squash a cockroach without a second thought, I have been known to allow snakes to slither across my arm but the sight of a rodent has been known to reduce me to tears, while taking cover on whatever higher ground I can find. So, upon hearing this story, my deep-seated fear led to a modification of my habits.

I am a terrible sleeper; I have long been a terrible sleeper. Once I have woken up in the middle of the night, my body will use any excuse to decide that it cannot go back to sleep. Therefore, on the occasions that I need to get out of bed, on order to get water or use the bathroom, I do everything in the dark. I don’t want the stimulation of light. I even keep my eyes closed as much as possible. However, post This American Life, I have changed one thing. Now, I flash the bathroom light on for just long enough to lift the seat and inspect the toilet bowl for any intruders.

Similarly, the first time I read about ATM skimmers led to more research and various modifications in my behavior. ATM skimming is hardly new, but technology has helped criminals get better at it. ATM skimmers are basically machines that read and steal the information on the magnetic strip of your credit or debit card. This information is then used to steal your money. Thieves attach skimmers to the face of an ATM and, as a result, when you stick your card into what you believe is the ATM, you are actually passing it through a card reader that is recording all the information on your card. Older model skimmers used to be clunky and unwieldy and all but the most distracted ATM users could spot that something odd was attached to the ATM they wanted to use. Nowadays, however, the attachments are more sophisticated and harder to spot. Often, the skimmers are paired with a hidden camera that is there to record you entering your PIN, giving them all the information that they need in order to clone your bank card.

When I use an ATM, before I use it, I go through a routine that may look odd to anyone passing by. I move my hand over the card slot and try to see if I can move it or if it is firmly fixed in place. I look it over and step back to see if I can spot anything out of place. I also look around to see if I can see a camera. Once I have done the physical check of the ATM, I slide my card in and make sure that I cover up, as much as possible, the keypad as I enter my PIN. I am pretty sure that it is not a foolproof method of avoiding card skimmers, but I do know that taking these precautions has helped people spot these machines and avoid getting their money stolen. Just a few days ago, a card skimmer was discovered at a subway station in Manhattan. In addition to the precautions I take when I use the ATM (this would also apply for those of you who drive and use the Pay-At-The-Pump facility to pay for gas) I also check my bank and credit card accounts just about daily. I have already shared my story about how I learned how important it is to keep track of my finances. The risks brought about by card skimmers increase the need to check up regularly on finances.

So I continue with my little tics. I flash the light and lift the seat carefully. I shake, rattle and roll before I use my card to get money out of the cash machine. So I do a little dance before I get things done, but it is way better to be safe than to have your bottom engaged in combat with a rodent, or to find that your accounts have been cleaned out by a wily crook with a card skimmer and a tiny camera.

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‘Tis The Season

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A recent typhoon ripped through parts of the Philippines, causing unimaginable damage. People lost their homes, they lost their livelihoods and some even lost their lives. This tragedy has inspired many around the world to do what they can to help those affected by this typhoon. This tragedy has also inspired those with less noble intentions to do what they can to exploit the moment for financial gain. It is very important, therefore, when giving to give not only generously, but also smartly. As we are in the midst of the holiday season, which is also the time of the year when most charitable giving occurs, a lot of these pointers will apply to any giving that you do. I am sure that you would not want to find out that what you thought was a charitable gift was actually going to fund an ignoble stranger’s lavish lifestyle.

First, it is vital to know to whom your donation is going. At a time like this, you are very likely to be inundated with pleas from organizations. The pleas will be very good at laying out how dire things are right now; that is because things are dire. And because things are so dire, it is all the more important to know that any donation you are sending is actually going to help. Not all charities are created or managed equally. And, depending on the cause, not all charities will spend funds in the way that you would like them to. For example, some charities have funds that are dedicated to helping those affected by Typhoon Haiyan, while others may solicit funds using the typhoon as a draw, but not actually spend the money on that. Also, some charities spend a greater portion on their nonprofit work than others do. Fortunately for you, there are several resources that you can use in order to research charities so that you can make an informed decision about where you want to send your money. Examples are Charity Navigator, CharityWatch and GuideStar. Here, you can find tax return information, ratings in various categories and find out more about the leadership of the nonprofit.

Make sure your money is going where you think it is going. Recently, it came to light that many calls that appeared to be coming from a charity were actually coming from a for-profit telemarketer hired by the charity. What makes this a less than ideal manner in which to give to a cause is the fact that the telemarketing companies charge very high fees and, at times, the charity ends up handing over just about all the funds raised by the phone call campaigns and very little, if any, of the donations solicited are used for charitable causes. With this in mind, it makes more sense to cut out the middleman on the phone and donate directly to the charity, either via their website, by sending them a check directly or by calling them and making your donation. In this way, you will know that the majority of the money that you give will be used for good. And when you do give, be sure, also, that you are giving to the charity that you think you are giving to. Sometimes fraudsters will use a name that sounds similar to a legitimate charity and even so far as to create fake websites. Again researching the charity can go a long way to not getting scammed. It would be tragic to find out that you gave your money to The Rad Cross, not the Red Cross. Just be sure you know exactly who is getting your money, not kinda sorta.

When your donation is in response to a tragedy or disaster, find out what the most effective way to give is. Most of the time, with time being of the essence and the needs of those affected being so diverse, sending cash to a charity that is providing relief is the smartest option. There will be news reports of how people have lost everything and need food and clothing, among other things. If you pack a box of food and clothing, it may create logistical issues and delays. Sending clothing means that the charity will have to sort through the clothing, separating it by gender and size. They may have to clean this clothing and then determine how to get the clothing to people who it will actually fit. All this takes up a lot of time and money to do. Nothing is more mobile than money and this money can then be used to get exactly what is needed. Food has similar challenges, including navigating food safety issues. Of course, there is a time and a place where food and clothing donations are appropriate – around the holidays there are often coat and food drives. With these, it is helpful to know that a lot of clothing donation bins that you may see actually belong to for profit entities that then sell your donations for their personal gain. Be aware of this as you give and check to make sure that the bin belongs to a non-for-profit organization.

There are causes and issues that will greatly benefit from your gifts and donations this holiday. It may feel tedious that you need to research the causes that you wish to give to but that is because we live in a world where we need to be on the lookout for greedy scam artists. If you can give, give with your heart but don’t forget to consult with your head first.

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