The Hunt for Fraud: The Devil’s in the Data

2008Financial Management Institute of Canada – Manitoba Chapter Professional Development Day The Hunt for Fraud: The Devil’s in the Data Presented by: David R. Hancox, CGFM, CIA Co-Author: Government Performance Audit in Action Faculty: Siena College and USDA Graduate School, Washington DC Director – State Government Accountability: NYS Comptroller’s Office

Audit Requirements • GAGAS – Financial Audits • Auditors should design the audit to provide reasonable assurance of detecting material misstatements resulting from violations of provisions of contracts or grant agreements that have a direct and material effect on the determination of financial statement amounts or other financial data significant to the audit objectives. Copyright 2008 David R. Hancox, CGFM, CIA

Audit Requirements • GAGAS – Attestation Engagements • In planning examination-level attestation engagements, auditors should design the engagement to provide reasonable assurance of detecting fraud, illegal acts, or violations of provisions of contracts or grant agreements… Copyright 2008 David R. Hancox, CGFM, CIA

Audit Requirements • GAGAS – Performance Audits • When laws, regulations, or provisions of contracts or grant agreements are significant to the audit objectives, auditors should design the audit methodology and procedures to provide reasonable assurance of detecting violations that could have a significant effect on the audit results. Copyright 2008 David R. Hancox, CGFM, CIA

Audit Tools for Detecting Fraud • A true understanding of internal controls • Real knowledge about the program, function or activity being audited • Sophisticated data analysis – looking for trends, patterns or outliers • True professional skepticism Copyright 2008 David R. Hancox, CGFM, CIA

Understanding Internal Controls • Strong controls, but the wrong controls • Understanding the control environment • Art Hayes • Internal controls activities are subject to impairment from at least five directions: • The extent to which the controls are not updated to cover actual business operations • The extent to which the controls are routinely ignored • The extent to which the controls are overtly overridden. • The extent to which the controls are covertly overridden • The extent to which the controls have express exceptions Copyright 2008 David R. Hancox, CGFM, CIA

Frauds • NYC Public Administrators • Need for investigators to confirm • Misappropriating cash – Utica Psychiatric Center • Gas Credit Cards • Inventory Fraud – Supply Support • Program Fraud – TAP • Procurement Card Fraud • Payroll Fraud – No Show Employee • Revenue Fraud – Ski Centers Copyright 2008 David R. Hancox, CGFM, CIA

The Hunt for Fraud: The Devil’s in the Data

The Hunt for Fraud: The Devil’s in the Data

Presentation Transcript

Journalism Scavenger Hunt of online newspapers

Blood Cells

QUEST Geometry Scavenger Hunt

WM Bargain Hunt – Energy

Fraud Detection and Deterrence in Workers’ Compensation

Chapter 3

Chapter 7

Insurance Fraud at AIG

Creative Accounting, Fraud and Accounting Scandals

HAPTER 5

WE’RE GOING ON A BEAR HUNT!

Fraud Management and Operations Training

Detectlets for Better Fraud Detection

Fraud Red Flags Linda Giovannone Amy Klos

We’re Going on a Bear Hunt

Fraud Red Flags Linda Giovannone Amy Klos

Special Education Training for the Paraprofessional Dr. Doris H. Hunt

Healthcare Fraud: An Overview HHS OIG / HIPAA / Healthcare Fraud

About the ACFE

Ethics in Business and Society

Fraud Red Flags Linda Giovannone Amy Klos

CDS 238 “Ethical Situations and the Law”