Achieving the Certified Fraud Examiner Certification

1. Achieving the Certified Fraud Examiner Certification Jerry W. Rainwaters, CIA, CFE, CISA, CISSP ASMC Mini-PDC March 29, 2005

2. What is the ACFE? • Global professional association providing anti-fraud information & education to help members fight fraud effectively • 32,000 members in over 110 countries dedicated to fighting fraud • 103 local chapters providing education, outreach and networking opportunities • 50% of members are Certified Fraud Examiners, others are associate members

3. What is the CFE? • The Certified Fraud Examiner – • A Certified Fraud Examiner (CFE) is a leader in the anti-fraud community, noted as a specialist in the prevention and detection of fraud.

4. Becoming a CFE? • At the time you are certified, you must have at least two years of professional experience in a field either directly or indirectly related to the detection or deterrence of fraud. • Becoming a CFE requires specific qualifications. • A simple 4 Step Process 1. Be an Associate member of the ACFE in good standing. • If you are not already an Associate member of the ACFE, you must first become one in order to pursue the CFE designation.

5. Becoming a CFE (cont’d)? • 2. Submit the certification application with proof of education and professional recommendations. • 3. Pass the CFE Examination. • The CFE Examination is a self-administered, Windows-based program that tests your knowledge and expertise in the four primary areas of fraud investigation: Fraudulent Financial Transactions, Legal Elements of Fraud, Fraud Investigation, and Criminology and Ethics. • 4. Gain final approval from the certification committee and become a CFE. • You will officially become a CFE once your exam and credentials are approved by the certification committee. Those who have attained the CFE designation will be invoiced at the CFE dues rate upon annual membership renewal. CFE membership dues are US $150.00 annually.

6. Becoming a CFE (cont’d)? • Provide proof of your education in one of the following ways: • A photocopy of transcripts or diploma certificates for any degrees earned and professional certifications acquired • A letter from the registrar of your academic institution verifying your completion of degree. • A combination of documents that forms a complete record of your education. These documents may include: • Marksheets • Syllabi • Length of the academic year • Number of hours spent in class for each course taken. • Grading scale (minimum and maximum grades possible). • Courses taken and grades earned for each course OR • Lists of examinations taken plus marks earned in each examination. • Indications of the receipt of a degree.

7. Becoming a CFE (cont’d)? • Three letters of professional recommendation are required to be submitted along with your application. All professional recommendation letters must be written in English or translated to English. The letters must be individually written by someone who has worked with you in a professional manner and should include the following: • An anecdotal description of your working relationship • Details of your professional background • Comments on your character, integrity, and professional skills • A recommendation for you to become a CFE

8. CFE Exam • The CFE Exam covers the following four topics/areas: • Criminology & Ethics - The purpose of this section is to test your knowledge of criminological concepts and to evaluate your understanding of the underlying ethics of the fraud examination profession. This part includes administration of criminal justice, theories of crime causation, theories of fraud prevention, crime information sources, and ethical situations. • Financial Transactions - This section tests your knowledge of the types of fraudulent financial transactions incurred in accounting records. To pass this section, you will be required to demonstrate knowledge of these concepts: basic accounting and auditing theory, fraud schemes, internal controls to deter fraud and other auditing and accounting matters. Details of your professional background

9. CFE Exam (cont’d) • Fraud Investigation - This section includes questions in the following areas: interviewing, taking statements, obtaining information from public records, tracing illicit transactions, evaluating deception and report writing. • Legal Elements of Fraud - This section ensures that you are familiar with the many legal ramifications of conducting fraud examinations, including criminal and civil law, rules of evidence, rights of the accused and accuser and expert witness matters.

10. CFE Exam (cont’d) • Taking the CFE exam: • You may take the CFE Exam any time during the year. • When you are prepared to take the CFE Exam, simply request the exam via email at exam@CFEnet.com. If you have studied with the CFE Exam Prep Course, you already have the exam that corresponds to your Prep Course installed on your computer, and we will send you the code to open it on your computer. If you have studied on your own with the Fraud Examiners Manual , we will send you a disk containing the exam. • How much time will I need to take the CFE Exam? • It will take a total of 10 hours to complete the exam. Each section is allocated a maximum of 2.6 hours to complete. Each of the four exam sections has 125 questions and you will have a maximum of 75 seconds to answer each question. • You have 30 days to complete all four sections of the CFE Exam and return it to the ACFE for grading. You must complete each section in one sitting, but you do not have to complete all four sections at once.

11. CFE CPE • Continuing Professional Education (CPE) • The Association of Certified Fraud Examiners, in compliance with its bylaws, requires all Certified Fraud Examiners to maintain competence through Continuing Professional Education (CPE). • The minimum required is 20 hours per calendar year of which at least 10 hours must relate directly to the detection and deterrence of fraud. • CPE hours in excess of the minimum requirements may not be carried forward to meet the requirements of future years. It is important that CFEs obtain CPE of at least the minimum required amount every year to stay current in their profession. • CFEs have the option to fulfill their CPE requirements for their three-year reporting period pending as of August 3, 2003 under the rules applicable immediately prior to that date, in which case the new requirement for 20 hours CPE per calendar year would take effect on the January 1st following the expiration of that three-year reporting period.

12. CFE CPE (cont’d) • Sources of CPEs • One hour of credit is equal to at least 50 minutes of classroom time. • College courses may be claimed and computed at the rate of 15 hours CPE for each semester hour completed. Transcripts must be obtained to support the claim for CPE hours. In-house training is acceptable, provided that it is offered in a formalized setting and meets the above criteria. Informal, on-the-job training may not be claimed. • Correspondence and self-study courses are acceptable for recommended CPE credit provided they (1) require a final examination and (2) issue certificates of completion. • In some publications, the acronym CEU is used, which means Certified Education Unit. Normally one CEU is equal to (1) 15 classroom hours, (2) one college semester hour, or (3) 15 hours of Continuing Professional Education.

13. CFE CPE (cont’d) • Sources of CPEs • Instructor Credit (Maximum 10 CPE Hours/Year) • Instructors may claim CPE credit for the number of hours actually presented plus a maximum of 2 hours preparation for each hour of presentation for the first time the material is presented. Subsequent credit for preparation of the same presentation is not allowed. Full teaching credit may be claimed in every instance the subject is taught. • Author Credit (Maximum 10 CPE Hours/Year) • Time spent preparing articles and books related to the above-mentioned fields will be accepted for a maximum of 10 CPE hours per year. A detailed description of the book or article should be attached to the reporting form. • Meeting Credit (Maximum 10 CPE Hours/Year) • Credit for attending certain meetings may be claimed for a maximum of 10 hours per year. Meetings must either (1) have a formal speaker or (2) relate directly to the competence of the Certified Fraud Examiner. Meetings must be at least 50 minutes in length for each hour claimed. Time for lunches, breaks, social gatherings, planning sessions, business meetings, and similar activities must be excluded.

14. FAQs • What is a Certified Fraud Examiner (CFE)? • A Certified Fraud Examiner (CFE) is a leader in the anti-fraud community, noted as a specialist in the prevention and deterrence of fraud. They represent the highest standards held by the ACFE and possess expertise in all aspects of the anti-fraud profession. • Who sets the standards for CFE certification? • The standards are set by the ACFE's Board of Regents, who are elected by CFE members and drawn from our most experienced members. • Is the CFE credential acknowledged globally? • Yes. The CFE designation is acknowledged globally and preferred by employers. Becoming a CFE immediately sets you apart from the competition and launches you to the top of your profession.

15. FAQs • Do other entities offer CFE certification? • No. CFE certification is a unique aspect of the ACFE. • I already hold other certifications. Does this qualify me as a CFE as well? • No. The Certified Fraud Examiner (CFE) is a unique designation with its own requirements and standards. Your other certifications will be counted as part of the qualifying points system but will not automatically make you a CFE. • How do I know if I am eligible to become a CFE? • Qualifications for becoming a CFE include having high moral character and meeting minimum professional and academic requirements.

16. FAQs • I want to attain the CFE certification but I don't have two years experience. Can I still take the exam? • Yes. You can study for and take the CFE Exam even if you do not have two years of practical experience, as long as you reach the 40 point minimum on Section 2 of the exam application. However, please note that you will not become officially certified until you do have at least two years of practical experience either directly or indirectly related to fraud. • Why do you need letters of recommendation along with your application? What should they include? • In order to maintain the high standards held by the ACFE and ensure the integrity of the CFE designation, it is important to ensure all candidates are of good moral character who will be a strong addition to the CFE profession. Pick three individuals who will write original letters on your behalf. The letters should include an anecdotal description of your working relationship, details of your professional background, comments on your character, integrity, and professional skills, and a recommendation for you to become a CFE. Form letters or those nearly identical in content and wording are not accepted.

17. FAQs • When should I turn in my CFE application? Do I need to turn in all my documents at once or can I send them separately? • Your exam application and fee must be submitted to the ACFE before you can take your exam, but you can mail your supporting documentation in separately if you wish. We do recommend that you mail in all your documents together at least one month prior to taking the CFE Exam to allow for processing. You will not receive your official certification until the Certification Committee has evaluated all of your documents and exam scores. • What do you mean when you ask about “fraud-related experience”? • Fraud-related experience means that you have worked full-time in a position that contributes to the prevention, detection or deterrence of fraud. Fields related to fraud include: Accounting and Auditing, Criminology or Sociology, Fraud Investigation, Loss Prevention and Law. If you are unsure if your experience qualifies, please submit a brief summary with your application for review or click here for a more detailed explanation.

18. Research Hypothesis vs. Results – Compensation • Hypothesis: CFEs earn a compensation premium of 5%-15% compared with non-CFEs in comparable positions, due to the value of their anti-fraud skills • Results: CFEs earn an average of 28% more!

19. Industry of Participants

20. Results by Industry

21. Results by Industry (continued)

22. Compensation Variances by Type of Government

23. ACFE Developments • Grown from 25,000 to 32,000 members in two years • Admitted 1,680 new CFEs in 2004 • Expanding globally • Partnering with chapters, state societies of CPAs and other organizations to provide high quality anti-fraud training worldwide

24. Learn More at the World’s Premier Fraud Conference • Washington DC July 10-15, 2005. • 1,500+ participants • 50 sessions, 10 tracks, expert speakers, practical ideas, exhibits and fun! • PCAOB chairman William J. McDonough • A major crook! • An anti-fraud hero

25. More Information • ACFE World Headquarters • www.CFEnet.com • (800) 245-3321/+1 (512) 478-9000 • Info@CFEnet.com • Main Phone: (877) 235-5286Email: chapter@cfedc.orgWebsite: www.cfedc.org • DC – Washington Metropolitan Chapter • Jerry W. Rainwaters, President • 202 565-5826

26. More Information DC - Washington Metropolitan Area Chapter P.O. Box 44640 Washington, DC 20026 USAPresident: Jerry Rainwaters, CFE, CIA, CISA, CISSPPhone: (202) 565-5826Vice-President: Richard Williams, CFEPhone: (703) 960-6250Secretary: May C. Lee, CFE, CPAPhone: (301) 951-2140Treasurer: Keith Neus, CFE, CPA Phone: (301) 657-4111