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25
Connecticut CPA
g
September/October 2017
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Third, filing an insurance claim does
not guarantee that the victim organiza-
tion will receive the coverage amount.
Claims departments and adjusters use
outside forensic accountants to review
claims and have recently started ex-
panding their internal capabilities by
bringing forensic accountants into their
claims department.
Often, adjusters want to learn as much
as possible about the theft and, most
significantly, how it was allowed to oc-
cur and remain undetected. The issue of
contributory negligence has been raised
in recent claims, in an attempt to shift
the burden and blame back onto the
victim and minimize the claim payment.
Not All Insurance Is the Same
If you are working in business and
industry, review your organization's poli-
cies and coverage amounts. If you are
in public practice, counsel your clients
to regularly review their policies. Do not
blindly rely on insurance agents, as it is
the organization's responsibility to as-
sess adequacy of coverage. In addition,
avoid becoming complacent; do not
discover that your organization is under-
insured only when it comes time to file
a claim.
In addition to coverage for the loss it-
self, ensure the policy includes a cov-
erage amount for the investigation and
compilation of the claim. Often, victim
organizations have little or no means of
assembling a claim. Coverage that in-
cludes compiling a claim can help pay
professionals to conduct an investiga-
tion to support the claim.
In Summary
When it comes to employee theft and
embezzlement, be sure to implement
sound controls, detect schemes as
soon as possible, and maintain ade-
quate insurance (see the three points of
the triangle in Diagram 1 at right). When
it comes to recovering funds, consider
civil remedies, contemplate involving
law enforcement, and file an insurance
claim (see the three points of the trian-
gle in Diagram 2).
Above all, never get complacent, and
remain vigilant.
Stephen Pedneault is the found-
er/owner of Forensic Account-
ing Services, a fraud and foren-
sic firm located in Glastonbury.
He is also an adjunct professor
of forensic accounting at the
University of Connecticut in the
Masters of Science in Accounting
(MSA) program in Storrs. He is a
member of the CTCPA Valuation,
Forensic, and Litigation Support
Group and can be reached at
steve@fasman.com.
Fraud
Recovering Funds
Diagram 2
Diagram 1
Prevent
Civil
Detect
Insurance
Insure
Criminal