Joanna A. van der Vant on Preventing Financial Statement Fraud

Joanna A. van der Vant is Certified Fraud Examiner, an accounting expert with an MBA. She is a longtime member of the American Institute of Professional Bookkeepers and Chicago’s CREW (Commercial Real Estate Executive Women) and Illinois CPA Society. In this brief interview, Joanna A. van der Vant explains how to prevent financial statement fraud.

Community Blog: What is the best way to deter company executives from committing financial statement fraud?

Joanna A. van der Vant: By utilizing uniform accounting procedures that are clearly established and monitored by an internal auditing department.

Community Blog: How do internal auditors deter fraud?

Joanna A. van der Vant: By acting as an oversight guide and ensuring that all appropriate quality measures are taken.

Community Blog: Who does the responsibility of internal auditing standards fall to?

Joanna A. van der Vant: Management is responsible for both establishing and overseeing internal auditing personnel.

Community Blog: What are the three leading factors that entice people to commit fraud?

Joanna A. van der Vant: People are enticed by pressures to commit fraud, having the ability to do so, and by relieving possible rationales for fraudulent behaviors.

Community Blog: What are some situational pressures employees may encounter?

Joanna A. van der Vant: Having financial expectations set too high and not enacting clear and uniform accounting principals.

Community Blog: Name some operational obstacles that may potentially inhibit effective financial performance.

Joanna A. van der Vant: Inventory and working-capital constraints along with inflated production volume are all potential triggers for financial statement fraud.

Community Blog: What are some external pressures that may lead to document tampering?

Joanna A. van der Vant: Management may feel the need to tweak financial statement numbers if sales and production goals are set based on unfairly matched competitors numbers. Another possible contributor to inflated or fraudulent financial statements are excessive bonuses based on performance.

Community Blog: Should one employee have complete control over a financial area?

Joanna A. van der Vant: No, duties related to money handing and reporting should be split between trusted staff to eliminate an opportunity to use deceptive accounting practices.

Community Blog: What business transactions should be monitored to reduce the potential opportunity to commit fraud?

Joanna A. van der Vant: Anyone that has any financial dealings with a specific company should be examined by internal auditors. This may include but is not limited to purchasing agents, suppliers, buyers and sales representatives and all transactions they are involved with.

Community Blog: How can human resources agents select employees who are least likely to commit financial crimes against the company?

Joanna A. van der Vant: The two main priorities here are conducting a thorough background check and speaking with previous employers.

Community Blog: Should punishment for fraudulent activities be considered on a case-by-case basis?

Joanna A. van der Vant: No, all crimes committed against the company should be punished consistently.

Community Blog: Do managerial acts outside of the company reflect on the manager’s trustworthiness?

Joanna A. van der Vant: Yes, and even small acts of deception can encourage fraudulent activity among susceptible employees.

Community Blog: Should physical property be secured as a fraud deterrent?

Joanna A. van der Vant: Yes, unsecured property is a liability, as the potential for theft is heightened. Merchandise improperly removed from inventory may be compensated for by inputting fraudulent data.