Monthly Archives: October 2013

17 Principles to Safeguard Assets and Ensure Organizational Effectiveness

One of my favorite aspects of being a financial professional is knowing that others on the management team and in my organization are relying on me. I am expected to handle key functions within the business, and if I do my job well I can contribute integrally to the organization’s success. This can provide a constant sense of urgency but also a rewarding feel of satisfaction and significance.

Among the not so glamorous yet important features of an organization’s structure are internal controls. Accountants are expected to implement sound measures to safeguard assets and reasonably ensure that management’s objectives are achieved toward effective operations, reliable financial reporting, and legal and regulatory compliance.

Even if this sounds boring, take consolation in the fact that your organization’s survival and success depends on it.

The Committee of Sponsoring Organizations (COSO) first released its Internal Control-Integrated Framework in 1992. This document defined internal control and provided accompanying standards. Over twenty years later the framework is still highly relevant.

In May of 2013 changes were made that kept the core intact and added, among other things, seventeen principles to help with implementation of the framework in light of changes over the years. A recent article in The CPA Journal discusses these seventeen principles as organized under the five categories of internal control within the COSO framework.

    • Control Environment

1) Commit to integrity and ethical values – this largely entails setting an effective “tone at the top.”

2) The independent Board of Directors should oversee internal control – among other things, objectively evaluate managers and ask appropriate questions.

3) Establish appropriate authority, responsibility, and reporting structures.

4) Attract, develop, and retain the right talent to achieve objectives.

5) Hold employees individually accountable for fulfilling organizational objectives.

    • Risk Assessment

6) Be able to identify and assess risks by having first formulated objectives with sufficient clarity.

7) Identify and analyze risks throughout the organization to determine how they should be managed – choose whether to accept, avoid, reduce, or share risks.

8) Consider potential fraud risks, including misappropriation of assets and alteration of records, that could deter the organization from achieving its objectives.

9) Be ready for changes, including within the external environment, business model, or leadership, that could impact the internal control system.

    • Control Activities

10) Mitigate risks to acceptable levels by choosing and implementing appropriate control activities.

11) Technology is a special category of importance for implementing control activities that help enable the organization to achieve management’s objectives.

12) Policies establish expectations and procedures put these policies into action in order to deploy control activities.

    • Information & Communication

13) Support internal control functions with relevant and timely information – capture data, transform it into information, and protect its availability and accessibility to appropriate parties.

14) Communicate internally regarding internal control objectives and responsibilities.

15) Communicate with appropriate external parties regarding internal control, carefully considering the timing, audience, and nature of the communication.

    • Monitoring Activities

16) Have ongoing evaluations to determine whether internal controls are working effectively.

17) Communicate internal control deficiencies to senior management and the board of directors so that they can timely take corrective action.

In short, internal controls help management set a proper tone, define organizational objectives, and run the business effectively. A leadership-oriented financial professional who wants to be indispensably valuable within an organization should study and understand how to effectively choose, implement, and monitor internal controls on an ongoing basis.

Be Fully Aware of Every Detail of Your Funding Agreements

I previously wrote about the importance of getting agreements in writing. From personal experiences and observations I have seen great detriments in relying on vague verbal assurances. Among other things, reducing an agreement to writing ensures commitment and helps clarify important details between the parties to the agreement.

Written financing agreements are particularly important because the financial function is a key enabler of business strategy and operations. When the organization’s existence is riding on the line, a controller or CFO cannot rely upon flimsy verbal promises from potential lenders or investors. Senior financial leaders must take charge in clarifying the exact nature and requirements of the funding agreements.

A recent article details the importance of looking for quirks in financing agreements. Here are some takeaways:

  • Be prepared for stringent documentation requirements and financial covenants, especially if your business is a first-time borrower or has a checkered credit history.
  • Don’t assume that the math will be straightforward in calculating credit limits for asset-based borrowing. For example, lenders might discount certain categories of receivables such that the company is unable to borrow against them.
  • Banks can use their own judgment and criteria, seemingly without a tight quantitative basis, for excluding certain assets from the collateral base. This effectively reduces the amount of credit available for the borrower. Factor this in when making decisions about managing working capital and short-term cash flow.
  • Have an eagle eye for fees. Don’t base your borrowing decisions exclusively on the quoted interest rate while ignoring hidden expenses that drive the effective borrowing costs higher.
  • Be aware of initially odd requirements such as segregating inventory used as collateral from other inventory in a separate warehouse. Rather than having to worry about a padlocked warehouse and drawn-out, expensive litigation, banks want easy access to the security in case the borrower goes bankrupt. This places added complexity, requirements, and (likely) expenses on the borrower.

Communicate effectively to make sure all relevant details are negotiated and finalized in the lending agreement. Both the borrower and the lender need to be clear on making sure their economic interests are served by the agreement. Both sides have to exercise due diligence to ensure that they are getting a workable deal.

Four Ways to Be Detailed and Thorough to Tie Up Loose Ends

The best leaders can see the big picture and articulate a clear and compelling vision for their teams, along with clear strategies, goals, and action steps. To balance this, I have appreciated from personal experience the value of a leader who minds the details. I am not talking about micro-management, but rather a thorough attentiveness to the key underlying drivers of success.

Letting things “slip through the cracks” is inexcusable for a finance professional upon whom others are relying to handle many details. Every matter subject to your oversight must be managed effectively. Have a zero nag threshold so that your coworkers and superiors know they can rely upon you.

Make persistence a matter of personal policy. For example, I have frequent processes that require information from colleagues on the other side of the world. Sometimes it takes them awhile to obtain the necessary documents, so I have a policy to follow up routinely and systematically. This is always done politely and professionally; they know that if they need something from me, I will reciprocate in being approachable and providing them timely information.

Here are some tips for making sure nothing slips through the cracks:

  • Slow down. We have all heard the adage, “Slow down in order to go faster.” This is a true irony. Trying to accomplish tasks at breakneck speed can lead to costly mistakes and rework. I learned early in my accounting career that it is better to do things right the first time to avoid the frustration of errors.
  • Check everything twice. Sometimes you will have the luxury of a coworker who can provide a “second set of eyes.” Other times you will be on your own to make sure that your projects are completed accurately. Get in the habit of finding ways to reconcile and “tie out” every number you calculate as you complete your projects.
  • Survey the context of your project to determine what you are missing or what you should omit. Make sure that nothing slips through the cracks.
  • Have a system. For example, I double check my email inbox at the end of each day to make sure I did not fail to respond to a matter of importance. Occasionally I have found that I almost let something slip through the cracks, thereby demonstrating the value of taking a little time to quickly go over everything. Other times I will re-read an email to glean a tidbit of information that I had skimmed over previously. In any case, my simple system is an effective way to give myself peace of mind that I am not missing anything important with regard to my emails.

Mind the details. Be thorough. Tie up loose ends. Don’t let anything slip through the cracks. You must not wait for others to catch your errors or omissions. You must set your nag threshold at zero and earn the reputation for trustworthiness that every aspiring financial leader needs.

Four Ways to be a Principled Negotiator (Part 2 of 3)

We previously saw that principled negotiation differs from positional bargaining by separating people from issues and by focusing on interests rather than positions.

The third step in principled negotiation is to be creative and invent various options that could satisfy the interests of both sides. As a very simple example, recently I had two projects to complete — painting the walls of a room and thoroughly cleaning a floor that would later be painted. My wife asked which one I planned to complete first, and I told her the cleaning. She knew I would likely use a vacuum, which could potentially wake up the baby. When she calmly mentioned this, I knew we both had an interest in letting our baby take her nap, and I quickly invented the solution of painting while the baby slept — leaving the floor cleaning for later.

Negotiators lack creativity when they exercise premature judgment, try to find a single answer, assume that the pie is fixed (so the bigger one person’s piece is, the smaller the other’s piece), and “thinking that ‘solving their problem is their problem'” (p. 57). Instead, step back and use your imagination, try to broaden options, make the pie bigger rather than focusing on a “fixed-sum” game, and appeal to both sides’ interests.

To generate options, brainstorming is often quite effective and the authors describe potential rules and methods to use in the process, such as the no-criticism rule that encourages building upon participants’ openness and creativity.

A Key Gem to tuck away regarding creatively inventing options: “In almost every case, your satisfaction depends to a degree on making the other side sufficiently content with an agreement to want to live up to it” (p. 72).

The fourth and final step is to emphasize objective criteria in the negotiation. Basing the outcome of a negotiation on who has the stronger will is often costly in terms of time and relationship strain, and it cannot be expected to lead to a wise agreement. In contrast, objective criteria which is independent from the will of the parties involved can enhance the efficiency of the negotiation, lead to a wise agreement, and preserve the ongoing relationship between the counterparts.

Rather than yielding to pressure and threats, a principled negotiator bargains based on principle and reason. The objective standard should be legitimate and practical. One might think of the example of a dispute between young children over how to split a piece of pie. The time-tested solution is simple: One cuts, the other chooses.

In advocating objective criteria, one must avoid the subtle pitfall of using criteria solely to bolster one’s own position. Be truly flexible and open to reason and principle, even if the objective criteria differs from the standard you had initially proposed or works against the position you had originally sought to advocate. Negotiating on objective criteria provides a position of power because right makes might.

A Key Gem to tuck away regarding the difference between standards in positional and principled negotiation: “In positional bargaining, negotiators spend much of the time defending their positions and attacking the other side’s. People using objective criteria tend to use time more efficiently talking about possible standards and solutions” (p. 83).

We have seen that principled negotiation rests on four key ideas:

  • Separate people from problems
  • Focus on interests rather than positions
  • Invent options for mutual gain
  • Insist on using objective criteria

In the final installment of this review we will look at ways to deal with challenging negotiation situations.

Create Your Own Credible and Authentic Professional Image

Have you been letting others dictate your career progress, or are you taking ownership of your own development? As a subcategory of your career development, have you started thinking about your personal branding?

Instead of getting too wrapped up in day-to-day details and stress, it is helpful to step back and evaluate the big picture of career progress and personal development. Either you can take ownership over your thoughts and behavior patterns, or you can let other people determine your path. Choose wisely.

Professor Lauren Morgan Roberts shared insights from her research on managing professional image in an interview with Mallory Stark. As with effective career development, Dr. Roberts points out that developing a desirable professional image is best undertaken strategically and proactively.

Dr. Roberts defines professional image as “the set of qualities and characteristics that represent perceptions of your competence and character as judged by your key constituents (i.e., clients, superiors, subordinates, colleagues).” She points out, “Research shows that the most favorably regarded traits are trustworthiness, caring, humility, and capability.”

Closely related to trustworthiness is reliability. Be a person that people can count on to deliver time and again, especially when the stakes are high and deadlines are tight.

Dr. Roberts gives insights related to closing the gap between your desired professional image and how others perceive you. Consider what you want people to say about you when you aren’t there, and compare this to the concerns you have regarding what people might think and say about you. Tune in to direct or indirect feedback about how others perceive your “competence, character, and commitment.”

According to Dr. Roberts, three factors can undermine your perceived professional image. First, making mistakes or having gaps in your skills and knowledge can create predicaments related to your professional image. Secondly, although not necessarily through any fault of your own, your identity with certain negatively stereotyped groups can create devaluation in how others perceive your professional image. Thirdly, if others perceive that you lack legitimacy, your professional image will be harmed.

To overcome these challenges, Dr. Roberts proposes these steps: “People manage impressions through their non-verbal behavior (appearance, demeanor), verbal cues (vocal pitch, tone, and rate of speech, grammar and diction, disclosures), and demonstrative acts (citizenship, job performance).”

However, when attempting to manage impressions, there is a risk of others perceiving your efforts as “deception, delusion, preoccupation, distraction, futility, and manipulation.”

This is where one of Dr. Roberts’ key insights comes in: “When you present yourself in a manner that is both true to self and valued and believed by others, impression management can yield a host of favorable outcomes for you, your team, and your organization.”

In other words, be authentic and credible. These attributes must be balanced since some people might need to downplay particular natural tendencies in order to meet professional expectations and be credible. At the same time, this should not be overdone at the expense of authenticity.

Dr. Roberts concludes with a list of action steps and provides this insight: “Be the author of your own identity. Take a strategic, proactive approach to managing your image.”

Poetry and Art for the CFO: Twelve Elements

Are you left or right brained? Analytical or emotional? A number cruncher or a poet?

Although it might run counter to our initial assumptions, CFOs are expected to go “beyond the numbers” and manage key aspects of the business as a whole. We have seen the importance of understanding technology and operations, among other factors not directly related to number crunching.

Very critical is the CFO’s role in dealing effectively with people and relationships. A CFO needs to be approachable. To become CFO material, a finance professional needs to develop habits of ambiguity tolerance, composure, empathy, energy, humility, and confidence.

On that note, the international accounting and finance firm Deloitte has published a poetic and artistic description of the CFO’s twelve elements, which encapsulates the expansive requirements and responsibilities of the CFO’s job:

“As CFOs grow in stature and importance, they keep coming back to the same issues that form their agenda. The elements of the CFO Agenda represent a powerful framework for one of the toughest jobs on earth. Year after year, quarter after quarter, they endure.”

Here are the twelve elements and my summation of the messages:

  • Truth – Be real. Know the true story and tell it.
  • Growth – Plant and water. Make choices and commitments to move plans forward.
  • Relationships – Work together. Manage relationships up and down, inside and out.
  • Decisions – Root your insights in numbers. Don’t manage solely based on your gut.
  • Capital – Manage business investments. Determine timing, amounts, and allocations.
  • Disruption – Be discerning as technologies, industries, and markets constantly change.
  • Crisis – Manage risks. Be ready to respond to various sorts of threats.
  • Infrastructure – Be an enabler. Invest in tech, talent, systems, and solutions.
  • Transactions – Research deals with the right criteria, calmly, thoroughly, and rationally.
  • Transitions – Change is constant. Build your skills and reputation in the midst of it.
  • The Street – Have give and take on forecasts. Be vigilant to represent the company well.
  • Me – Provide solutions. Navigate through complexity to make things happen.

Don’t take my word for it. Take a look at the presentation for yourself. Reflect on the messages. Do you agree or disagree with each of the elements and how they’re presented? How can you apply these insights in your work as you develop your career?

Excuse Me, but Your Preparedness is Showing

What better way is there to build your confidence and increase your odds of success than by being prepared?

I took piano lessons when I was younger, and my teacher could usually tell how much I had practiced during the previous week simply by observing my progress (or lack thereof). My preparedness showed clearly through my performance and confidence.

Whether your task is a job interview, a negotiation, a job switch, or anything else that’s new or involves uncertainty; you can prepare by thinking through your scenario in advance.

For example, if you are preparing to negotiate, you need to be armed with the facts of the situation and demonstrate a thorough, confident, and conversant command of every relevant factor. You need to be able to immediately spot and correct errors of fact or perception before the conversation starts to be built upon faulty foundations.

Consider laying out various scenarios within the realm of reasonableness — from best case for you to best case for the other side. If you can demonstrate a command of the facts, you can be more confident and prepared for the tricks that the other side might throw at you.

Take some time beforehand and discipline yourself to think through what you might face:

  • What might the other side say?
  • What will their talking points be?
  • How will they try to divert the discussion from a focus on your legitimate interests?
  • What is their best alternative to a negotiated agreement (BATNA)?
  • What illusions might they have that you can dispel such that they view the situation more realistically?
  • How will they respond to your talking points?
  • What is your end game, and what happens if you cannot get them to play ball?

Work through a systematic process of thoroughly considering these and other related questions. You will no doubt encounter surprises in any new or uncertain situation, and you might have to scrap all your plans in the midst of the process. The point of preparation is to start off with the confidence you need to carry you through the twists and turns, ups and downs.

I have found that confidence grounded in reality helps me stay focused. It is so easy to get thrown off track when unpreparedness leads to confusion and lack of confidence. I have never been one to easily “fake it until I make it” since that often borders on unethical conduct (i.e., lying or acting confident even when incompetent) and can easily lead to loss of credibility when the “faking” is exposed.

I can convert the challenge of not being able to “fake it” very well into the advantage of disciplining myself to be better prepared. In this way I can demonstrate a more a thorough, confident, and conversant command of every relevant factor as compared to my counterparts. And I can spot and correct errors of fact and perception by having mastered the big picture and details through preparation.

This doesn’t all happen by default; it takes time, thought, and work.

As with the teacher at a piano lesson, your business colleagues and counterparts can tell how much you “practiced” or prepared by observing your confidence and performance. The better prepared you are, the better you will be perceived as ethical, competent, confident, and reliable.

To Confront or Not to Confront?

Would you rather confront or appease someone in a conflict situation? Do you prefer to fight for a cause and for what you believe is right or try your hardest to avoid a clash?

Depending on the decisions you make and the roles you choose to fill, you might be able to navigate through life with a minimum amount of conflict. However, if you plan to take on a significant level of leadership over projects and people, such as the role of Chief Financial Officer, you will quickly find that conflict is inevitable. Customer complaints will find their way into your office. You will have to negotiate over defective products from suppliers. You will spend large portions of your day handling conflict and drama among your team members and among others within and outside of your organization.

Business leadership expert and blogger Michael Hyatt says he used to prefer to stay out of conflict by keeping his opinions to himself and going along with the system: “This was a pretty good strategy for a while. But it didn’t really work once people were counting on me to lead.” Furthermore, Hyatt notes: “Courage is not the absence of fear. Courage is the willingness to act in spite of my fear.” If you fear conflict because you want to maintain your personal comfort, you still have to be willing to step outside of your comfort zone by acting for the good of your team and those who rely on your leadership.

John Maxwell advises leaders to keep two points in mind during confrontation:

  • Be honest and realistic – don’t try to deceive people into going along with your position, or you will lose credibility and damage relationships.
  • Be sincere – have the right motives, and truly try to help the other person you are confronting. The person you confront might not like what you tell them, but if they sense that you have the right heart behind your words, they are more likely to accept your confrontation.

Doug Van Dyke encourages leaders to confront problems in order to set the right tone for both the troublemakers and the team members who rely on you for leadership. As with the book on negotiation that I am reviewing, Van Dyke advises being tough on issues but soft on people. He also says to focus on controlling your own behavior while you influence others, be specific and detailed about the problems you are confronting, and build collaboration with people to solve problems.

Finally, since business relationships rapidly continue becoming more international, Erin Meyer shares tips to manage confrontation cross-culturally. For example, understand the distinct approaches toward conflict and negotiation among various cultures, and learn to work with a variety of people who are different from yourself. Prepare for your confrontations. Develop tactics for depersonalizing conflict and emphasizing the problems and solutions rather than the parties involved (again, separate the people from the problem). Set a proper tone by asking open-ended questions rather than making direct statements of disagreement.

Like it or not, confrontation is inevitable for finance professionals who wish to become key members of their organizations’ management teams. Set the right tone and have the courage to lead. Be honest and sincere when you confront others. Tackle problems rather than attacking people. Prepare for the different types of people you will confront, and be solutions-oriented the whole way through the conversation.

Four Ways to be a Principled Negotiator (Part 1 of 3)

Negotiation tactics are often thought of like secret weapons. You want to keep your counterpart guessing, never divulge your bottom line, possibly find ways to intimidate your counterpart, and use the element of surprise. Under this paradigm, the less your counterpart knows about the books you’ve read and the conditioning you’ve undergone to enter the negotiation, the better.

There is an alternative approach: “Principled negotiation is an all-purpose strategy. Unlike almost all other strategies, if the other side learns this one, it does not become more difficult to use; it becomes easier. If they read this book, all the better” (p. xix).

Does this sound intriguing?

The quote comes from Roger Fisher, William Ury, and Bruce Patton, authors of Getting to Yes: Negotiating Agreement Without Giving In (Penguin Books, 1991, 2nd ed.). They describe their approach as principled negotiation, distinguishing it from positional bargaining in which the negotiator uses either a hard or soft stance.

To understand the approach and distinctions better, consider two elements of a negotiation: the substantive issue and the process. Each assertion you bring to the table and your demeanor throughout the process reinforces rules (often unspoken) about the process you are undertaking. You can take a hard or soft stance in advocating for your position, or you can step back and propose — explicitly or even implicitly — a principled approach.

Rather than deciding beforehand what position to take in order to best serve your interests — and then advocating for this position more or less robustly or timidly — you can negotiate on the merits of the situation. The authors boil down this principled approach to four points (pp. 10-11):

  1. People: “Separate the people from the problem.”
  2. Interests: “Focus on interests, not positions.”
  3. Options: “Generate a variety of possibilities before deciding what to do.”
  4. Criteria: “Insist that the result be based on some objective standard.”

The authors describe this approach as hard on the merits and issues but soft on the people and relationships.

The first step is to be sensitive and recognize the humanity of your counterpart. We don’t negotiate with machines or animals but with other humans who have real emotions, fears, values, beliefs, and elements of unpredictable behavior. We want to come through the negotiation having reached a wise agreement, as efficiently as possible, and with an ongoing relationship still intact. Rather than throwing around your weight by making personal attacks or appeasing your counterpart with substantive concessions, fundamentally deal with each issue on its merits. There will be no need for shouting, name-calling, or any other personal attacks; the hardness will be reserved for keeping the negotiation on a principled course.

A Key Gem to tuck away regarding the people aspect of negotiations: “The ability to see the situation as the other side sees it, as difficult as it may be, is one of the most important skills a negotiator can possess” (p. 23).

The second step is to be clear on the difference between interests and positions. The analogy that came to mind is a familiar marketing distinction between benefits and features. An average salesperson can talk all day about a product’s features. The remarkable salesperson can discern what benefits I’m looking for and show me exactly how the product will give me everything I need (and more). Rather than saying, “This has a nice touch screen,” the salesperson could say, “You can utilize the touchscreen to save time and spare yourself the frustration of pressing buttons and scrolling through menus.”

A negotiator who focuses on positions is like the salesperson who focuses on features. Instead, a negotiator does well to focus on underlying interests — i.e., the objectives to be achieved, which could be accomplished through a variety of means. A principled negotiator recognizes that features (positions) can vary as long as they provide ultimate benefits (i.e., preserve legitimate interests).

A Key Gem to tuck away regarding advocating for your interests in a negotiation: “It is your job to have the other side understand exactly how important and legitimate your interests are” (p. 50).

To Be Continued . . .

Know Your Enemy: Think Like Fraudsters to Beat Them

The famous ancient military leader and war theorist Sun Tzu is noted for his clear dictum:

“Know your enemy.”

Although the concept can make many people uncomfortable, finance professionals understand that combating devious financial schemes requires not only an understanding of system vulnerabilities. A battler against fraud has to learn how to think like a fraudster:

“If I wanted to steal from this company or misstate financial results, where would I look for weaknesses that would enable my scheme to succeed undetected.”

Of course, beyond concocting potential fraud schemes as a mental exercise, the careful and diligent finance professional is quick to pursue the ultimate aim of this process: Devise countermeasures to combat vulnerabilities.

The consulting firm WorldCompliance published a white paper entitled, Fraud and Money Laundering: Can You Think Like a Bad Guy? by Dennis M. Lormel.

Expanding upon the fraud triangle concept, Lormel lists five elements that characterize frauds:

A potential fraudster who 1) lacks integrity, 2) sees an opportunity due to a poor control structure, 3) has a motive such as greed or a pressure such as a financial hardship, 4) rationalizes the scheme (perhaps by reasoning that he feels underpaid and overworked), and 5) possesses the capability due to positioning and skills; will no doubt execute the fraud.

Certainly, as previously discussed, effective internal controls can mitigate the opportunity for fraud. However, sometimes it is possible for fraudsters to circumvent controls or to collude with partners in their schemes.

Lormel notes: “The elements of fraud include a representation about a material fact; which is false; and made intentionally, knowingly, or recklessly; which is believed; and acted upon by the victim; to the victim’s detriment. The ability to be deceptive and avoid detection is one of the fraudster’s primary keys to success.”

Bad guys are proactive about manipulating the system, even as those who combat them are often reactive. Among other factors, fraudsters look for environments with unethical culture due to poor tone at the top. Fraudsters understand the importance of laundering funds through financial institutions and maintaining a reasonable appearance and a story of legitimacy.

Lormel points out: “Over time, spin and deception get much more difficult to disguise. The veneer of reasonableness tends to fade. A good fraudster usually watches intently for signs that their scheme is unraveling. At that point, they will implement their exit strategy. However, often times, fraudsters are blinded by their own greed and arrogance. They either miss or disregard the warning signs of detection. Instead of following an exit strategy, they find themselves in jail.”

A finance professional, whether an auditor, controller, CFO, banker, investment manager, or someone else entrusted with fiduciary responsibility; has to think several steps ahead of the fraudsters. Know what warning signs to look for, ask questions, don’t believe everything you hear, and be ready to act quickly when something doesn’t look right.

Lormel concludes: “There are two prominent end games. One has a private sector focus, the other, a public sector focus. On the private sector side, the end game is to prevent or minimize monetary losses and reputational risk. On the public sector side, it is to seek prosecution, recover illicit proceeds and assets through forfeiture, and/or bring enforcement actions. Both end games could carry significant consequences. In either event, understanding how the bad guys think and taking preemptive steps to stop them makes the end game easier to handle.”

Know your enemy. Combat a fraudster by knowing how a fraudster thinks and operates. This is especially important with regard to IT-related frauds due to the importance and sensitive nature of electronic records and system access points.