Business owners need to step up their internal controls against white-collar crime, the nation's most costly business expense, according to a national accounting firm.
"White-collar crime is running rampant in public corporations, private companies and small businesses," said Stan Ross, co-managing partner of Kenneth Leventhal & Co., based in Los Angeles.Financial losses from fraud, embezzlement, forgery, counterfeiting and other white-collar crimes far exceed the amount lost through other crimes, including robbery.
According to the Justice Department, 64 people were charged with federal white-collar crimes in 1985 (the most recent year for available statistics) involving more than $10 million each, or a total of at least $640 million. By comparison, total bank robbery losses that year were less than $19 milion, while total police-reported robbery losses were about $300 million.
"White-collar crime is of such paramount concern in the accounting arena," Ross said, "that the Auditing Standards Board of the American Institute of Certified Public Accountants has issued new rules on the auditor's responsibility to detect and report material errors and irregularities."
The rules go into effect next Jan. 1.