Red Flags Series - Introduction

I have struggled to pluck a story from my past that would help me introduce this series about red flags – the warning signs of fraud. I sought to find a story of warning where I failed to heed the warning and learned a valuable life lesson that warnings are important. I asked my older daughter for ideas, and she reminded me of a time when I took her and her sister hiking. I didn’t see how the story tied into my request, but after she explained, I understood.

About two years ago, we packed our lunch and went on an adventure to a local park. The park is primitive, meaning there are no restroom facilities or playgrounds. There is a parking lot, picnic table and plenty of nature trails, which was everything we needed. I planned to teach the girls a bit about nature, and we all hoped to see some wildlife. About half way through the 2 mile hike, as we walked through a giant bamboo forest, my younger daughter spotted a snake in the leaves on the ground. As I crept closer to take a picture, a magnificent copperhead snake looked up at me. At this point, my girls were beginning to get scared and were somewhat unhappy when I reminded them that we still had to get back to the car.

Since then, our hiking trips have been limited and my older daughter never wants to go. She says that spotting that copperhead “was a warning to never go hiking again unless there won’t be snakes!” My younger daughter, however, doesn’t see the snake encounter the same way. I asked her if she saw it as a warning, and she said, “What do you mean?” After some additional clarification, she said, “No. I’ll go again. I’m not scared.” I find it interesting that my two girls experienced the same event, and the warning was seen by one but not the other.

Over the next few weeks, we will cover a lot of red flags – the warning signs of fraud. In most fraud cases that I investigate, the fraud is uncovered because the number of red flags is so overwhelming they can’t be ignored. However, as the investigation progresses, it often becomes clear that the fraud should have been identified sooner based the red flags that were ignored. This five-part series will cover many different types of red flags that will help you ask more questions to find fraud faster. The following are the areas we will cover:

• Behavioral red flags will focus on the individual and the signs they exhibit that may push them to commit fraud;
• Red flags in any size company will highlight the signs that may be present in any company when someone is committing fraud;
• Red flags in a small company will cover the signs that may heighten the likelihood fraud is occurring;
• Red flags in a large company will provide some insights related to signs that fraud is a potential problem; and
• Reasons why people don’t see the red flags will wrap up the series to identify weaknesses and blindness we may possess that prevent us from identifying fraud until it may be too late.

My older daughter perceives the snake experience as a warning to stay out of the woods when snakes may be present. My younger daughter and I disagree. Oftentimes, there are similar disagreements when it comes to red flags of fraud. However, the more red flags that are observed, the more likely fraud may be present. This series will provide you with insights to help you in the future. 

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