Pub. 2 2013 Issue 2

32 San Diego Dealer No one wants to think about it, much less talk about it, and many believe it will never happen to them or that implementing the proper controls to protect themselves is too costly. This is a dangerous trap to fall into and can wind up costing dealers significantly. In reality, there are many cost-effective ways to protect against fraud and if done properly can save a dealership a lot of resources in both the short and long term. The Association of Certified Fraud Examiner’s (ACFE) 2012 Report to the Nations on Occupational Fraud showed that businesses who implemented any of 16 common anti-fraud controls (a few of which are discussed below) experienced significantly lower losses and shorter time to detection than those businesses who did not. Dealerships should, at a minimum, dedicate resources to the following fraud protection controls: • Provide a tip line • Fraud training - know the warning signs • Job rotation and mandatory vacation policies • Set the tone – code of conduct Tip lines are one of themost effective and inexpensive ways to combat fraud.The ACFE has consistently found tips to be the number one source of fraud detection within organizations – far exceedingmanagement review and internal or external audit. The cost of providing a tip line can range anywhere from $500 to $2,000 per year; a bargain compared to potential fraud losses. The most effective tip lines should be set up to allow for tips from both within and outside of the dealership and should be included in communications to both new employees and new vendors. However, By Shelly K. Jackley, CPA a Partner with LSL CPAs Protecting Against Fraud Can Pay Off For Dealers S everal years ago, in the depths of our recent depression, dealers became extremely adept at scrutinizing where every dollar went in an effort to stay profitable or even just keep their doors open. As our industry has recovered, that “scrutiny”has slowly begun to relax and that, along with a growing influx of cash, has left dealerships particularly vulnerable to fraud.