“Nearly half of all victim organizations do not recover any losses that they suffer due to fraud” according to the 2012 Report to the Nations presented by the Association of Certified Fraud Examiners. Although, there are no statistics that report the total number of entities and the amount defrauded, regardless of size, any organization can become a victim of fraud. Kyle Anne Midkiff’s white paper, Act Now Before it’s Too Late, provides five important steps to help organizations of any size prevent fraud.

1. Act Now Before It Is Too Late
It is only a matter
of time before you
are defrauded!

2. Take Proactive Steps Before Your
Business is Defrauded
“Nearly half of all victim organizations do not recover
any losses that they suffer due to fraud” according
to the 2012 Report to the Nations presented by the
Association of Certified Fraud Examiners. Although,
there are no statistics that report the total number
of entities and the amount defrauded, regardless of
size, any organization can become a victim of fraud.
When fraud occurs in an organization, management
is often unprepared. In fact, when fraud is discov-
ered, management is frequently in a state of shock,
dealing with the emotional pain of the fraud, and
as a result is unable to focus on ongoing business
operations. Fraud can devastate an organization
through the loss of assets, time, effort and the cost
required to investigate the loss. Additional setbacks
include: low morale; decreased productivity within the
organization; negative publicity; and adverse reac-
tions from stakeholders, investors, sponsors or reg-
ulatory agencies. Taking proactive steps before your
business is defrauded is critical to minimize fraud.
The following steps will help your management team
reduce its susceptibility to fraud.
u
Perform Background Checks When Hiring Employees
Factors to consider in performing background checks include:
• Education and Employment Verification;
• Criminal, civil and credit checks;
• Drug Screening;
• Reference checks; and
• Public data searches (e.g. Facebook, LinkedIn, Google).
Also, employers should maintain the right to perform ongoing credit checks
through employee consent.
v
Obtain Insurance Coverage Before a Loss Occurs
After the discovery of a fraud is when an organization reviews the
provisions of their insurance policies. Frequently organizations find out the
coverage is not sufficient to cover the loss. It is also important to include
professional fees to assist in the investigation of the fraud in the coverage.
Often lawyers and forensic accountants are required to investigate and
assist in recovering funds. Depending on the longevity and the amount
of the fraud, these necessary expenses can be costly. Policies will often
require that you notify the appropriate law enforcement authorities in order
to recover on a claim.
w
Trust But Verify
Many basic frauds can be detected early by a review of the actual transac-
tions. Review actual invoices, credit card statements, and cancelled checks
or the bank provided image. Oftentimes, a fraud is later determined to have
been very obvious to detect if someone had only reviewed the supporting
documentation.
© 2013 Smart, Devine & Company, LLC. All rights reserved.

3. smartdevine.com 267-670-7300
Every dollar counts
“Nearly half of all victim
organizations do not recover
any losses that they suffer due
to fraud” according to the 2012
Report to the Nations - Association
of Certified Fraud Examiners.”
x
Don’t Ignore Red Flags
Often times, there are obvious signs of distress or a lifestyle change with an em-
ployee. If so, look a little closer at the employee’s behavior and what access the
employee has to entity assets. An obvious discrepancy between an employee’s
earnings and their lifestyle is a red flag. A change in behavior by an employee can
be an indication they are under severe stress due to their fraud. Once a fraud has
been detected, the amount of red flags that were obvious can be astounding.
Management needs to remain objective in its observations of employees. Often,
red flags are identified in an employee’s behavior, but management fails to heed
the signs. A Fraud Hotline, Whistleblower Policy, and a Management Open Door
Policy can help maintain management objectivity and give employees a way to
report fraud.
y
Prosecute to The Fullest Extent of The Law
Some victims choose not to prosecute a perpetrator in connection with a fraud.
This may be done because of misplaced compassion for the perpetrator and/or
avoidance of negative publicity and potential counter claims.
These entities set themselves up to be repeatedly defrauded. An effective way
to avoid your next fraud is to fully prosecute your current fraud. You must make
a strong statement and example of how your entity will treat fraud when they
become a victim of it. If you terminate an employee for fraud and follow through
on having them prosecuted subject to all the publicity that may come with it, you
may be able to avoid that next fraud from occurring.
© 2013 Smart, Devine & Company, LLC. All rights reserved.

4. smartdevine.com 267-670-7300
A c c o u n t i n g T a x A d v i s o r y
Kyle Anne Midkiff and SMART DEVINE Can Help You
Kyle Anne Midkiff, CPA, CFE, CFF, has over 25 years of experience in Forensic
Accounting. Kyle is a Managing Director in Smart Devine’s Forensic and Litigation
Services Practice. For more information, please contact Kyle at 267.670.7341 or
kmidkiff@smartdevine.com
Kyle Anne Midkiff, CPA, CFE, CFF
Managing Director
Kyle has over 25 years of
forensic accounting and litiga-
tion services. Her experience
includes evaluation of economic
losses, internal investigations,
financial investigations to pierce
the corporate veil, whistleblower
investigations, and evaluation
of compliance with professional
accounting standards. Kyle has
testified numerous times as an
expert witness in Federal and
State Courts. Additionally, she
has published various articles
on Fraud and frequently lectures
on Fraud and Fraud Prevention
and Detection.
Smart Devine provides a full range of accounting, advisory, tax, forensic and litigation services to organizations across a variety of
industries. For more information about our services call 267-670-7300 or visit our website at smartdevine.com.
In addition to the services listed above, Smart Devine offers a full line of solutions including:
Our practice areas include:
n Litigation Services
Bankruptcy
Commercial Damages/Lost Profits
Contract Disputes
Partnership/Shareholder Actions
Professional Liability
Securities Litigation
Personal Injury/Wrongful Death
n Environmental Litigation
Past Costs Investigations
Oversight Claims
Ability to Pay
Insurance Coverage Disputes
Volumetric Allocations
Cost Recovery Litigation
n Trustee & Monitoring Services
Receiverships/Master
Custodial Services
Bankruptcy Examiner
n Forensic Investigations
Fraud Investigations
Internal Investigations
Due Diligence Investigations
Corporate Veil Piercing Claims
Financial Statement Frauds
White Collar Crime
Tax Controversies
n Digital Forensics & eDiscovery
Acquisition & Preservation of Digital Evidence
Computer & Network Forensics
Internet/E-mail Investigations
Data Recovery & Analysis
Data Mining
Electronic Document Collection/Deduplication
Early Case Assessment
Document Production/Bates Stamping
Accounting & Audit
Tax
Business Advisory
• Financial Advisory
• Management Consulting Services
• Technology Consulting Services
Insurance Advisory Services
• Accounting
• Reviews
• Claims Services
• Underwriting/Premium
• Forensic Accounting
Smart Devine | 1600 Market Street | 32nd Floor | Philadelphia, PA 19103 | T 267-670-7300 | info@smartdevine.com
© 2013 Smart, Devine & Company, LLC. All rights reserved.