2019 VGFOA Spring Conference Recap: From Fraud and Internal Controls to Stress Management in the Workplace
June 4, 2019
The Virginia Government Finance Officers’ Association (VFGOA) mission is to foster financial excellence in government by creating opportunities for professional development. Examples of the VGFOA carrying out this mission include providing education opportunities, updating members on the impact of actions taken by standard-setting bodies, and providing network and educational opportunities. SC&H attended the VGFOA 2019 Spring Conference along with a record turnout of nearly 400 registered attendees.
During the three-day conference, 22 sessions covered a variety of subjects. Topics ranged from updated government accounting standards and rule changes to how to find and receive unclaimed property held by the Commonwealth of Virginia. A few finance-related sessions included:
- Virginia Retirement System (VRS) Update
- Tips and tools on how to access, manage, and maximize retirement savings and financial wellness in the VRS system
- Governmental Accounting Standards Board 87 Leases
- New government requirements in which finance staff will need to gather information on all contracts that could be classified as leases
- Unclaimed Property, Cash Management and Investments
- Informative session on the use of investment options such as the Local Government Investment Pool and how to search for missing money through vamoneysearch.org
Overall, the conference provided a wealth of information related to financial and accounting-related topics, but it also included topics emphasizing other aspects important to the work performed by the Commonwealth’s finance professionals. Highlighting this diverse range of topics are a couple of standout sessions: one session that was focused on fraud and internal controls, and the keynote address that discussed methods for dealing with stress and anxiety.
Fraud and Internal Controls
A session directly related to the work that we perform for our clients throughout the Commonwealth was the discussion on fraud and internal controls, and steps to prevent and detect fraud. According to Institute of Internal Auditors, fraud is defined as “any illegal act characterized by deceit, concealment, or violation of trust”. According to the Association of Certified Fraud Examiners’ 2018 Report to the Nations, the three most common types of fraud are corruption, financial statement fraud, and asset misappropriation.
- Asset Misappropriation: Employees or third parties abusing their position to steal from the organization.
- Examples of asset misappropriation include the theft of cash receipts, payroll schemes, false voids and refunds, check tampering, and misuse or stealing of inventory.
- 89% of reported fraud cases involve asset misappropriation.
- Corruption: Those in power participating in fraudulent or dishonest activities, often to gain some level of benefit.
- Examples of corruption include purchasing schemes, sales schemes, invoice kickbacks, and bid rigging.
- 38% of reported fraud cases involve corruption.
- Financial Statement Fraud: Misrepresentation of the organization’s financial condition through intentional misstatement or omission within the financial statement to deceive the public.
- Example of financial statement fraud include reporting fictitious revenues, improper asset valuations, and overstated liabilities/expenses.
- 10% of reported fraud cases involve financial statement fraud.
The same report notes that the median loss amount for the three most common types of fraud is inversely proportionate to the frequency with which each type of fraud occurs. Financial statement fraud accounts for the greatest average loss at $800,000 per reported fraud, corruption averages $250,000 per fraud, and the average loss for reported cases of asset misappropriation is $114,000 per occurrence.
The median loss amount only represents that amount of money loss by the organization, it does not include other factors such as public perception, employee replacement, and additional process and control changes enacted based on the occurrence of fraud. The cost of fraud – both monetary and nonfinancial – is high.
The key to reducing both the likelihood and the impact of fraud is the implementation of effective internal controls. Proper organizational focus on internal controls begins with a clear and consistent “tone at the top” communicated by leadership. The importance of internal controls should be emphasized throughout the organization – not just verbally, but through documented policies and procedures that incorporate appropriate controls into business and information technology (IT) processes. Finally, ongoing reviews are an important way to ensure that internal controls remain effective at preventing and detecting negative events such as fraud.
Dealing with Stress
Lynda McNutt Fosters, CEO of Cortex Leadership Consulting led the keynote session, titled “Embracing the Pressure When the Pressure is On”, which included practices and techniques to reduce the anxiety associated with stress – something that impacts all of us.
Stress can appear in many forms and emanates from both our work and our personal lives, and in some cases may overlap the two. Work-related stress factors could include commutes to/from work, supervisor pressure, and deliverable deadlines. Non-work related stress factors includes things like taking care of our families and home maintenance.
According to the presentation, 74% of people surveyed felt so overwhelmed by stress at least once in their life, they did not know how to manage, reduce, or remove the stress. Not managing stress correctly can increase anxiety, lead to burnout, and increase bad decision making such as fraudulent behavior. While effective methods for reducing our stress levels will differ for everyone, the presentation provided some great suggestions to reduce the effects of stress at work and life including: prioritizing what’s important, planning for unexpected delays, delegating more to reduce workload, turning off cell phone notifications, and scheduling breaks throughout the day to “power down”.
Reducing stress through the use of these coping methods can help clear our minds to remain engaged and better focus on decision-making and task completion.
Once again the 2019 VGFOA Spring Conference provided attendees with information sessions that provided valuable takeaways – both technical guidance and soft skills – to help its members in their accounting and finance roles throughout the Commonwealth. SC&H is glad to have been a part of such a terrific event and we look forward to the next conference.
 The Institute of Internal Auditors, “Fraud and Internal Audit”, https://na.theiia.org/about-ia/PublicDocuments/Fraud-and-Internal-Audit.pdf
 ACFE 2018 Report to the Nations, pg. 10., https://s3-us-west-2.amazonaws.com/acfepublic/2018-report-to-the-nations.pdf