How to notice fraud

I read a recent report that the Tides Foundation in San Francisco had fired, then encouraged an indictment of an important foundation financial officer for embezzlement.  I want my readers to know that the Tides Foundation was one of several instances where I  have blown the whistle....and been ignored.  I have been a corporate treasurer, a banker and a foundation president.

In the late 1990's I had a non-profit that was a project of the Tides Foundation and the accounting was so incompetent that I wrote to the CEO, Drummond Pike, about the likely fraud that was benefiting from the incompetence.  No response.

I did the same, and mentioned it in my blog, about the San Francisco cable car fare system.  It was designed to make fraud easy.  I wrote to the appropriate people.  Again... I was ignored and later found to be right. To this day, a job on the cable cars is considered a great place to steal money.

So how do I detect fraud so readily?

The answer is simple.  Poor accounting controls are inherently an invitation to fraud by insiders. I know what good accounting controls are, and so do many people.  Poor ones are particularly evident in dealings with cash.  No one counts or collects cash alone...ever and it is never in the hands of one person.

Anytime you encounter a financial system, that doesn't make sense to you, where no one can correct an obvious error, where no one can answer your reasonable question, you have every reason to suspect and report fraud.  Fraud is almost certain to occur anywhere that it is easy to carry out.

PS: Check out the Tides response and my counter response below.