Construction Executive - September 2016 - 45

SPECIAL SECTION: * know the dollar thresholds for authorizing a wire transfer; and * have accessed email, calendars and voicemail systems. Here's the scary new twist: One construction CFO received an email from the CEO that was a fake, requesting a wire transfer. Having the proper procedures in place, the CFO walked down to the CEO's office to verbally confirm that the request was legitimate. The CEO was in a meeting, so the CFO went back to his office only to find a second fake message indicating the CEO was in a meeting and please go ahead and send funds. The cyber-phisherman had gotten into the company's internal messaging system and was able to tell when the CEO would be absent from his desk. Fortunately, the CFO and the company had controls that prevented such a transfer without written approval. Following are a few warning signs to look for. * The email domain is similar to the actual company domain. * The email contains a sense of urgency. * The email may contain improper grammar. * The request is for first-time vendors or a change of existing vendor account information. * The request is made to employees who are relatively new to the role or new to the organization. * The dollar amount requested to be transferred is just below approval authorities. * The business does not have operations or vendors overseas where the funds are requested to be transferred. * The email directs the recipient to code the payment to miscellaneous expense or professional services. A contractor might think its organization would never be lured to fall for such a phishing scam given the warning signs above. But beware, corporations, law firms and agencies, including the FBI, are reporting this same scam from all types of companies and across all industries with a high success rate. What to Do When Hooked If the wire transfer has been initiated by an approved company employee, there is not much chance of recovering the funds. The bank is not held liable as long as it follows the proper protocols. Once the fraud is discovered, contact the bank's fraud department immediately and direct it to stop the payment and freeze the recipient account. Typically, the funds are cleared out within hours of the transfer, so acting fast is imperative. It's possible to recover all or a portion of the loss through insurance. Review the firm's insurance policies and contact the carrier to determine if the appropriate coverages exist. It may be necessary to file a report with federal and local authorities in order to submit a claim. How to Prevent Getting Caught Because the funds are so difficult to recover, prevention is the key to not falling victim to this scam. * Require vendor approvals. Have strong vendor acceptance procedures that include verifying the vendor and any changes to the vendor master file, including wiring instructions. Require validation of new banking information. * Require payment approvals. Make sure all supporting documentation is in place prior to initiating a wire transfer of funds, including invoices, purchase orders and a substantiation of a valid business purpose. Consider having positive confirmation or second-level approvals for amounts exceeding specified thresholds. * Frequently train and communicate with accounting and finance staff. Raise awareness of this scam by discussing it with staff and sharing the associated red flags with the accounting department. Train personnel on the controls in place to ensure proper authorization and payment. * Update IT controls. Be sure firewalls, anti-virus and spam filters are up to date. Keep in mind that phishermen are out there looking for an unsuspecting catch. Their new lures are so life-like and tempting, but don't take the bait. Justin Snell is a director in Bennett Thrasher LLP's disputes, valuation and forensics practice, and Scott Hazy is a partner in the firm's financial reporting and assurance department. For more information, visit btcpa.net. CONSTRUCTIONEXEC.COM CONSTRUCTION TECHNOLOGY 45 http://www.CONSTRUCTIONEXEC.COM http://www.btcpa.net

Table of Contents for the Digital Edition of Construction Executive - September 2016

Industry Insider
In Brief
Washington Update
Construction Markets
Risk
Safety
Workforce
No Bounds to Success
Special Section: Construction Technology
Business Development
Community Outreach
Viewpoints
Construction Executive - September 2016 - Cover1
Construction Executive - September 2016 - Cover2
Construction Executive - September 2016 - 1
Construction Executive - September 2016 - 2
Construction Executive - September 2016 - 3
Construction Executive - September 2016 - 4
Construction Executive - September 2016 - 5
Construction Executive - September 2016 - Industry Insider
Construction Executive - September 2016 - 7
Construction Executive - September 2016 - In Brief
Construction Executive - September 2016 - 9
Construction Executive - September 2016 - Washington Update
Construction Executive - September 2016 - 11
Construction Executive - September 2016 - Construction Markets
Construction Executive - September 2016 - 13
Construction Executive - September 2016 - 14
Construction Executive - September 2016 - 15
Construction Executive - September 2016 - Risk
Construction Executive - September 2016 - 17
Construction Executive - September 2016 - 18
Construction Executive - September 2016 - 19
Construction Executive - September 2016 - Safety
Construction Executive - September 2016 - 21
Construction Executive - September 2016 - Workforce
Construction Executive - September 2016 - 23
Construction Executive - September 2016 - 24
Construction Executive - September 2016 - 25
Construction Executive - September 2016 - No Bounds to Success
Construction Executive - September 2016 - 27
Construction Executive - September 2016 - 28
Construction Executive - September 2016 - 29
Construction Executive - September 2016 - 30
Construction Executive - September 2016 - 31
Construction Executive - September 2016 - 32
Construction Executive - September 2016 - 33
Construction Executive - September 2016 - 34
Construction Executive - September 2016 - 35
Construction Executive - September 2016 - 36
Construction Executive - September 2016 - 37
Construction Executive - September 2016 - 38
Construction Executive - September 2016 - Special Section: Construction Technology
Construction Executive - September 2016 - 40
Construction Executive - September 2016 - 41
Construction Executive - September 2016 - 42
Construction Executive - September 2016 - 43
Construction Executive - September 2016 - 44
Construction Executive - September 2016 - 45
Construction Executive - September 2016 - 46
Construction Executive - September 2016 - 47
Construction Executive - September 2016 - 48
Construction Executive - September 2016 - 49
Construction Executive - September 2016 - 50
Construction Executive - September 2016 - 51
Construction Executive - September 2016 - 52
Construction Executive - September 2016 - 53
Construction Executive - September 2016 - 54
Construction Executive - September 2016 - 55
Construction Executive - September 2016 - 56
Construction Executive - September 2016 - 57
Construction Executive - September 2016 - 58
Construction Executive - September 2016 - 59
Construction Executive - September 2016 - 60
Construction Executive - September 2016 - 61
Construction Executive - September 2016 - 62
Construction Executive - September 2016 - 63
Construction Executive - September 2016 - 64
Construction Executive - September 2016 - 65
Construction Executive - September 2016 - 66
Construction Executive - September 2016 - 67
Construction Executive - September 2016 - Business Development
Construction Executive - September 2016 - 69
Construction Executive - September 2016 - 70
Construction Executive - September 2016 - 71
Construction Executive - September 2016 - Community Outreach
Construction Executive - September 2016 - 73
Construction Executive - September 2016 - Viewpoints
Construction Executive - September 2016 - 75
Construction Executive - September 2016 - 76
Construction Executive - September 2016 - Cover3
Construction Executive - September 2016 - Cover4
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