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Today’s Topics

Today’s Topics. Preventing Fraud-Part II Eliminating opportunities for fraud Comprehensive Fraud Fighting Model Not the simplified “Club” diagram Symptoms of Fraud Elements of Fraud. 7 Methods of Risk Reduction. Install good internal controls Discourage collusion

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Today’s Topics

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  1. Today’s Topics • Preventing Fraud-Part II • Eliminating opportunities for fraud • Comprehensive Fraud Fighting Model • Not the simplified “Club” diagram • Symptoms of Fraud • Elements of Fraud FORENSIC ACCOUNTING - BA124 – Spring 2015

  2. 7 Methods of Risk Reduction Install good internal controls Discourage collusion Alert vendors and contractors Monitor employees Provide tip hotlines Create expectation of punishment Audit proactively FORENSIC ACCOUNTING - BA124 – Spring 2015

  3. Install Good Internal Controls Systems Segregation of duties Policies and procedures Minimize undermining events FORENSIC ACCOUNTING - BA124 – Spring 2015

  4. Discourage Collusion • 29% of all fraud is due to collusion • More than one person involvement • Trend is increasing • Complex nature of businesses • Rising supplier alliances • Unmerited or complacent trust factors FORENSIC ACCOUNTING - BA124 – Spring 2015

  5. Alert Vendors and Contractors Communications that set policy Right to audit clauses FORENSIC ACCOUNTING - BA124 – Spring 2015

  6. Monitor Employees Lifestyle awareness Detection and deterrent FORENSIC ACCOUNTING - BA124 – Spring 2015

  7. Provide Tip Hotlines • 33% of frauds detected through tips • Only 52% of Fortune 500 companies have whistle-blowing programs • Concern for mixed employee messages • i.e. “Do we have a fraud right now?” • Whistle-blower protection policies FORENSIC ACCOUNTING - BA124 – Spring 2015

  8. Create Expectation of Punishment Causes employees to stop and think Don’t fall victim to fear of time or bureaucracy associated with prosecution FORENSIC ACCOUNTING - BA124 – Spring 2015

  9. “Audit” Proactively Identify risk exposure Identify symptoms Implementing proactive audit initiatives Investigate symptoms FORENSIC ACCOUNTING - BA124 – Spring 2015

  10. Dealing with Fraud Traditional or Default Model Comprehensive Fraud Fighting Model FORENSIC ACCOUNTING - BA124 – Spring 2015

  11. Default Model Fraud takes place Investigation of the event Decision regarding action The file is closed and no further action takes….. This approach guarantees that fraud will not go away!!! FORENSIC ACCOUNTING - BA124 – Spring 2015

  12. Comprehensive Fraud Fighting Model(Don’t Confuse with Fraud Savvy Model) Tone is set at the top Training takes place Risk assessment and internal controls are set Reporting and monitoring systems installed Proactive auditing initiated Commitment to action & follow-up FORENSIC ACCOUNTING - BA124 – Spring 2015

  13. The Symptoms of Fraud Accounting Anomalies Internal Control Weaknesses Analytical Anomalies Extravagant Lifestyles Unusual Behavior Tips and Complaints FORENSIC ACCOUNTING - BA124 – Spring 2015

  14. Elements of Fraud Theft Concealment Conversion FORENSIC ACCOUNTING - BA124 – Spring 2015

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