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Fraud and Investigations

Fraud and Investigations. President, DJR Consulting. January 2019. Presented by Deron Rossi, CFS. Agenda. Introduction Wake Up Case / Fraud Introduction ACFE “2018 Report to the Nations” Fraud at All Levels - Current Stories Investigation Tips. Deron Rossi Background.

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Fraud and Investigations

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  1. Fraud and Investigations President, DJR Consulting January 2019 Presented by Deron Rossi, CFS

  2. Agenda • Introduction • Wake Up Case / Fraud Introduction • ACFE “2018 Report to the Nations” • Fraud at All Levels - Current Stories • Investigation Tips

  3. Deron Rossi Background • Certified Fraud Specialist (CFS) • Retired from Dow 30 Company June 2018 • 35+ years experience in Corporate Accounting, Management, ERP/Accounting Systems Installations, Internal Audit and Business Controls • Last 11 years as Fraud and Business Conduct Investigator • Involved in hundreds of cases, including experience in North America and Europe • Vice-Chair - Coastal Credit Union Board of Directors • IIA Raleigh-Durham Chapter Board of Directors • Founded DJR Consulting in December 2018

  4. Wake upexample…

  5. Changing Audit Landscape Robotic Process Automation AI Blockchain

  6. FRAUD One Constant…

  7. Dr. Cressey’s Fraud Triangle

  8. Dr. Cressey’s Fraud Triangle • Three Core Concepts that taken together, create a situation ripe for fraud • Pressure – This is the motive of the fraud triangle. Most times it is financial pressure, could be caused by personal vices or other pressures. (68%) • Rationalization – Important component of most frauds, people need to reconcile their behavior. (ex. - I am underpaid, I deserve this.) (14%) • Opportunity – Open door for solving a non-shareable problem in secret by violating a trust relationship. Accomplished by generally weak or no controls. (18%) • Each element must co-exist with the other

  9. Recent update: Fraud Diamond

  10. Introduction Fraud in general poses a tremendous threat to organizations of all types and sizes, in all parts of the world.

  11. Key Findings

  12. HOW OCCUPATIONAL FRAUD IS COMMITTED

  13. How does the perpetrator’s level of authority relate to occupational fraud in the United States? What anti-fraud controls are the most common in the United States?

  14. Fraud Can Happen at ALL Levels

  15. 'Mastermind' of opioid scheme bought island, stashed millions overseas Fraud Can Happen at ALL Levels https://www.detroitnews.com/story/news/local/detroit-city/2018/12/07/dr-raj-bothra-bought-island-amassed-millions-amid-opioid-scheme/2239091002/

  16. Fraud Investigation Tips • ALLEGATIONS • Common Process for Reviewing/Vetting • CONDUCTING INVESTIGATIONS • Ideally an Independent/Trained Investigator Assigned to Lead/Conduct Using a Defined Process • Involve Legal Upfront • Secure Storage of All Investigation Materials • Maintain Strict “Need to Know” • Skilled in Interviewing Process (Interview is Key, More to Come on This!!!) • Were any Laws Broken? • How and to Whom Will the Investigation Results be Documented? • Consider a Standardized Process to Deal with any Investigation Discipline

  17. Fraud Investigation Tips - Interviewing • INTERVIEWS ARE KEY • MUST HAVE OPEN MIND, TWO SIDES TO EVERY STORY • Chance to learn more, maybe only shot with interviewee • Independence • Confirm facts/evidence, thus interview peripheral players BEFORE you interview the accused • Two investigators at all key interviews, second person takes notes so investigation lead can focus on Interviewee’s behavior and reactions to questions/evidence • Have list of key questions documented BEFORE the interview, share in advance with secondary investigator so that they are prepared and may have some additional input to consider • Quiet, small interview space outside of the interviewee’s normal work area if possible, 4 walls with NO cell phones • Taping allowed? • Quick post-interview meeting between investigators immediately after interview to summarize • Document interview notes timely

  18. Deron Rossi DJR Consulting deronrossi@gmail.com Questions?

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