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  • Writer's pictureJerry Ipsen, CFE, MBA

What's Your Fraud Tolerance?

Updated: Dec 29, 2023

Real life example after example has proven that fraud is prevalent in both real estate and construction.  In fact, the ACFE reported in 2022 the medium loss for real estate was $435,000 per reported case, making real estate the industry leader with the costliest fraud related problems.  To be fair, construction was number 5 at just $203,000 (medium loss) per reported case.

Now these employee related frauds consist mostly of crimes such as embezzlement, billing theft, forgery and misappropriation.  We do know that preventative or due diligence measures to include internal controls, criminal record searches, background checks, education verification, reference checks and audits are responsible for reducing the level or threats of fraud by more than 50%.  

What can you afford to lose? In other words, What's your risk tolerance? While there’s no foolproof guarantee that you won’t become a victim of fraud, there are some in upper management who prefer to be self glorified "risk takers" living on the edge and who do nothing to reduce the opportunity for fraud to occur on their watch.  Concerns about insolvency, loss of reputation, or bankruptcy mean very little to them when compared to having to spend a few thousand dollars annually.  For those thinkers, they have trouble getting out of their own way.  A strong company on the other hand has stated internal controls, follows them to a tee and has proper safeguards in place.

The company that flies by the seat of its pants doesn’t care and often holds the belief that projects just like employees come and go. Ipsen Due Diligence combats this nonsensical belief by providing the proper internal controls, due diligence, preventive monitoring, surprise audits and the meaningful follow-up you deserve.  Like John Maxwell said, “You can play now or pay later.”  Your choices are; you can do nothing, pay a little more to reduce the opportunity for fraud to occur or possibly sit back while one or more of your employees decides they need a lot more money than you're currently paying them.

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