Due Diligence for business includes using data analytics and financial ratios to detect fraud. While everything is not fraud, business owners need to be aware of the red flags and warning signs of suspicious or fraudulent activity. In addition, Ipsen Management Services utilizes mathematical models to examine your accounting records and financial statements in order to confirm your suspicions or provide a piece of mind that all is fine.
Site Inspection is usually a one day commitment looking into existing weaknesses and is often viewed as a method of prevention. The following areas will be examined:
- Purchasing and Billing / Expense and Vendor Controls - Payroll inspection looking for accuracy of reporting / Ghost Employees - Bank Deposits and Reconciliation - Cash Register Controls - Physical / Computer Controls - Travel Expense Reporting Fraud Examination is used to pinpoint the origination of the fraud or when a terminated employee(s) are suspected. It is recommended that you first contact your attorney prior to the start of the examination should you believe the incident will progress into a civil or criminal complaint. Estimated time: 2 - 3+ days
Fraud Risk Assessment is a prevention measure that is recommended when examining all areas or departments within your organization that are susceptible to fraud. Estimated time: 4 - 6 hrs. - See below
Creating the Internal Controls (Policies & Procedures) following an audit or those necessary to reduce the opportunity for fraud, theft and embezzlement from occurring. Estimated time: 2 - 3 days Speaking Engagements Jerold Ipsen will come and speak to your bank /office / group. This educational presentation includes a discussion on fraud prevention, combating fraud using strong internal controls, financial ratios, data analytics and mathematical models used to detect areas of fraud. Estimated time: 30 minutes - 1 hour
Financial Due Diligence for Commercial Real Estate Development
Discover Missed Revenue Opportunities Unlike traditional "property due diligence," IMS conducts its due diligence on existing or redevelopment projects from a financial perspective. Our goal is two-fold:
- We look for opportunities that can potentially make more money for your project, - Second, identify problems of fraud or areas in need of attention.
Examples of such may include seller misrepresentation and fraudulent billing by vendors. IMS surveys the project and meets with both developers and borrowers looking for missed opportunities that could possibly lead to additional sources of revenue and the reduction of unwarranted expenses.
Our Due Diligence includes:
- Meeting with borrowers and developers - Surveying the project for additional sources of revenue - Examination and comparison of financial forecasts for their relevance and reliability - Reviewing the underwriting and financial Analysis - Reviewing the Property Appraisal, Estoppels, SNDAs and Closing Statements - Reviewing the Property's Books and Records "Before Sale or investment."
In addition, IMS asks "Who is the Seller?"
-IMS examines the seller to determine if the "seller" owns the property or has the legal authority to convey the property, etc. -IMS answers questions as to; who has the authority to bind the seller and is the payoff sufficient to cover all liens?
Financial Due Diligence for Lenders
Fraud Prevention Training - At the request of lenders, Ipsen Management Services will provide a two hour presentation on fraud prevention to loan applicants.
Reviewing Previous Audits - Ipsen Management Services starts by reviewing the borrower's previous audits looking for opinions and the number of times an auditing firm has been replaced in the past 5 years. In addition, IMS checks to see if the borrower has followed the recommendations of auditors?
Analysis of Internal Controls and Financial Ratios - IMS will perform an analysis of internal controls and financial ratios looking for red flags indicating the concealment of liabilities, fraudulent activity, fictitious sales or receivables, embezzlement or a sudden increase in debt to equity.
Examination of Financial Statements - IMS employing Data Analytics examines Profit & Loss statements looking for significant changes. - Further due diligence calls for the examination of other financial and tax transactions that may signal unpaid obligations or pending litigation.
- IMS will will review and compare balance sheets against mathematical models looking for possible earnings manipulations as well as determining the overall financial health of the borrowing entity. - IMS examines the borrower's income projections to determine the feasibility and correctness of the risk associated with the investment.
- IMS creates custom, not "cookie cutter" business plans tailored to meet the needs of the client and their target audience. Having written for more than $800MM in commercial real estate and other projects worldwide, IMS has the experience and ability to deliver a quality and well written business plan for you.
- IMS has teamed up with Raul Carrega, CPA and Ali Adawiya from SongCare / Audit Time LLC to conduct royalty audits for artists, actors, authors and professional athletes involved in publishing and merchandising.
Fraud Risk Assessment
The Fraud Risk Assessment was developed by the Association of Certified Fraud Examiners and is a tool used by business and nonprofit organizations consisting of a series of questions designed to zoom in on areas of risk and formulate the controls needed to minimize the opportunity of fraud from occurring.
- Identify the potential inherent fraud risks. - Evaluate whether the identified controls are operating effectively and efficiently. - Identify and evaluate residual fraud risks resulting from ineffective or nonexistent controls. - Determine what internal controls need to be added.
Topics Discussed within the Fraud Risk Assessment
- Employee Assessment / Policies - Payroll - Management / Key Employee Assessment - Expenses - Physical Controls to Deter Employee Theft and Fraud - Inventory and Equipment - Skimming - Proprietary Information - Cash Larceny - Corruption - Check Tampering - Conflicts of Interest - Cash Register Controls - Financial Reporting - Purchasing and Billing - Computing
This three to four hour assessment may reveal certain residual fraud risks within your own organization that possibly have not been adequately mitigated due to lack of, or non-compliance with appropriate preventive and detective controls.
Be aware, this assessment much like a balance sheet only provides a snapshot of a particular point in time. The dynamic nature of organizations requires routing monitoring and updating of their financial risk assessment processes in order for them to remain effective. At no time does Jerold Ipsen or Ipsen Management Services allege any wrongdoing by a specific individual.
Strong Fiscal Policies and Procedures
Ipsen Management Services assists in establishing strong internal controls for your organization by working with management to write detailed and commonsense policies and procedures with the intent to:
- Protect the assets of the organization; - Ensure the maintenance of accurate records of the organization’s financial activities; - Provide a framework for the organization’s financial decision making; - Establish operating standards and behavioral expectations; - Serve as a training resource for staff; and - Ensure compliance with federal, state, and local legal and reporting requirements.
Following an Audit (Corrective Action Plans) Ipsen Management Services can help with the correction of deficiencies noted in the auditor's report. Business and nonprofits both have fiduciary responsibilities and the need for:
- The establishment of internal controls as they relate to accounting and operational needs - The improvement of internal controls that have since become outdated.
Board members have a fiduciary responsibility towards the organization and remain accountable for protecting the organization's financial well being. With respect to internal controls and financial policies and procedures, Ipsen Management Services can assist the finance committee by taking the lead in:
- Creating needed financial policies and procedures, - Ensuring that they are appropriately documented in the policy manual, - Confirming that internal controls are being followed