Two recent news items illustrate how widespread –and different — corporate fraud can be.
On the high-tech front, two doctors were ordered to pay more than $500,000 to Medicaid and private insurers after billing them for free vaccines. The culprit, according to the doctors, was outdated software used for billing.
According to the doctors, the archaic billing system was set up in 1994, three years before the overbilling started and before they owned the practice. Still, a computer glitch was not a sufficient enough excuse to avoid the double-damage penalty imposed by Medicaid for submitting false claims. The practice, the courts found, had not performed an adequate analysis of its billing system.
A low-tech scam was recently revealed at Wal-Mart, where two Tennessee couples scanned and duplicated bar codes from low-priced items and placed them over other bar codes in the store. The unaware cashiers scanned the lower price.
Then an accomplice returned the items to the store and received store gift cards for the full amount of the item. Those were then resold at a discounted rate.
The thieves nabbed $1.5 million across 19 states. The scam was possible because of a key Wal-Mart objective — keep the lines moving.
Given the diversity of fraud threats and the ease of carrying them through, here are some tips to use in your business.
* Examine your company’s objectives and ensure processes are aligned with them.
* Develop methods to proactively evaluate internal control structures and identify potential improvements.
* Be aware of ad-hoc changes or “workarounds” to any standard processing procedures that could introduce risk into the process.
* Continuously reiterate to all employees the need to be aware of potential fraudulent activities.
Source: Jon Dostal and Jim Martin, Bruner-Cox Corporate Advisors, (330) 376-0100
