Overstated profits, falsified prescriptions, and audit firms taken to task: Recent fraud news
Fraud is unfortunately a constant fixture in news and media today. Here is a quick rundown of some recent stories that have drawn our attention.
Three former executives with retail giant Tesco are currently on trial for fraud by false accounting and fraud by abuse of position. The charges followed a discovery last year that Tesco had overstated its profits in 2014 to the tune of £250 million (USD $331 million). After a senior accountant exposed the fraud in a secretly prepared document that was eventually shared with Tesco’s CEO, the company’s value dropped by billions as soon as the information was made public.
United States: New Jersey
A federal investigation is currently ongoing in New Jersey, where it has come to light that almost a dozen people–including a firefighter, doctor, pharmaceutical reps–participated in a scheme that defrauded the state’s health benefits plan of more than $25 million. Court documents reveal a fraud scheme that involved recruiting public employees to get prescriptions for patients that doctors had never actually treated. The prescriptions had sizable reimbursements from the health insurance plan to the pharmacy. For their participation, the recruiters and doctors were paid by the out-of-state compounding pharmacy.
The Canadian federal government is launching a lawsuit against a company in the province of Ontario after it has been alleged that the company misappropriated and diverted millions of dollars that was meant to fund health-care in one of the country’s poorest First Nations reserves. The government has appointed the company as the third-party manager of health services for the reserve, directly providing money intended for healthcare to the consulting company to deliver the services. Following a special audit conducted by Health Canada in 2016, the treasurer of the company faces eight charges related to fraud and laundering the proceeds of crime.
United States: Washington, DC
Auditors around the world are nervously awaiting the result from an ongoing trial that will determine if PwC is responsible for losses of $2.5 billion after it failed to detect a fraud that had been running for years at Colonial Bank, which failed in 2009. Although PwC wasn’t the only organization involved in auditing the bank–two outside accounting firms were also hired to audit the bank–the Federal Deposit Insurance Corp., one of the regulators that also overlooked the fraud, is suing PwC for money it lost after the bank collapsed. The court decision could have lasting repercussions, as auditors could be forced to compensate an organization should they not uncover fraud.
Want to improve your fraud detection capabilities? Check out our SlideShare presentation below on using Benford’s Law and a data analysis tool for fraud detection and auditing.
About Anu Sood:
Anu Sood is the Director of Product and Corporate Marketing at CaseWare Analytics and is responsible for the company’s global marketing strategy. Prior to CaseWare Analytics, Anu worked in various roles in the high-tech industry and her accomplishments range from writing software for telephone switches to launching a new global satellite communication service. Anu has extensive experience in strategic marketing, corporate communications, demand generation, content marketing, product management, product marketing and technology development.