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A Global Reach with a Local Perspective
www.decosimo.com
UNIVERSITY OF NORTH ALABAMA
2013 ACCOUNTING SEMINAR
FRAUD – REAL ...
Employee develops a trusting relationship with
employer
Over time, employer discontinues monitoring the
daily activities o...
Mischaracterization of expenses
Altering financial information and records
Theft of cash
Unknown P. O. Box number
CASE 1- ...
The
“Infamous”
Payroll Taxes
Dilemma
• Payroll tax
payments
• Payroll quarterly
payments
Expect the
unexpected!
THE DISCOV...
Employee terminated
Company refused to prosecute
No arrest record on file for individual
Allows employee to continue pract...
Mischaracterization of expenses
Altering financial information and records
Theft of cash
Use of unknown 2nd signature stam...
GL Posting
• Picked wrong
account to post
fraudulent
invoice
• Discovery by
CFO
Expect the
unexpected!
THE DISCOVERY
Arrest record for employee now on file
Civil complaint filed
Convicted of embezzlement and sentenced to
10 years, but allo...
Mischaracterization of expenses
Altering financial information and records
Theft of cash
Use of dormant bank accounts
Unkn...
The
“Infamous”
Payroll Taxes
Dilemma
• Payroll tax
payments
• Payroll quarterly
payments
Expect the
unexpected!
THE DISCOV...
Civil complaint filed
Federal indictments filed
Convicted and sentenced to 18 months for tax
evasion and pay IRS
Convicted...
Mischaracterization of expenses
Altering financial information and records
Theft of cash
Use of dormant bank accounts
Unkn...
Civil complaint filed
Federal indictments filed
Convicted and sentenced to 18 months for tax
evasion and pay IRS
Convicted...
Lack of fraud awareness training for employees
By-passing internal control procedures in
order to perform quality service ...
What a
company
does not
want to
happen !
• Contacted by
3rd party victim
Expect the
unexpected!
THE DISCOVERY
Company filed insurance claim
Insurance company required forensic
investigation
Forensic investigation concluded no employ...
Pam Mantone, CPA, CFE, CFF, FCPA,
CITP, CGMA
Senior Assurance Manager | pammantone@decosimo.com
Pam practices in the areas...
Using Analytics to Detect Possible
Fraud: Tools and Techniques
$95 | Pre-order and save on Amazon.com
Using Analytics to D...
Questions
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Fraud - Real Life Horror Stories

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Fraud specialist and published author Pamela Mantone presented "Fraud - Real Life Horror Stories" at the 2013 Decosimo Accounting Forum hosted by the University of North Alabama on July 19.

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Transcript of "Fraud - Real Life Horror Stories "

  1. 1. A Global Reach with a Local Perspective www.decosimo.com UNIVERSITY OF NORTH ALABAMA 2013 ACCOUNTING SEMINAR FRAUD – REAL LIFE HORROR STORIES PAM MANTONE | July 19, 2013
  2. 2. Employee develops a trusting relationship with employer Over time, employer discontinues monitoring the daily activities of the employee Employee takes money and/or other assets over an extended period of time Cash flow crunch Attempted concealment Inherent limitations in internal control systems THE BIG PICTURE
  3. 3. Mischaracterization of expenses Altering financial information and records Theft of cash Unknown P. O. Box number CASE 1- HOW?
  4. 4. The “Infamous” Payroll Taxes Dilemma • Payroll tax payments • Payroll quarterly payments Expect the unexpected! THE DISCOVERY
  5. 5. Employee terminated Company refused to prosecute No arrest record on file for individual Allows employee to continue practice elsewhere Total embezzlement amounts in excess of $250,000 WAS IT WORTH IT - PROBABLY
  6. 6. Mischaracterization of expenses Altering financial information and records Theft of cash Use of unknown 2nd signature stamp CASE 2- HOW?
  7. 7. GL Posting • Picked wrong account to post fraudulent invoice • Discovery by CFO Expect the unexpected! THE DISCOVERY
  8. 8. Arrest record for employee now on file Civil complaint filed Convicted of embezzlement and sentenced to 10 years, but allowed probation and must pay restitution to company Total embezzlement amounts in excess of $433,000 WAS IT WORTH IT - NO
  9. 9. Mischaracterization of expenses Altering financial information and records Theft of cash Use of dormant bank accounts Unknown P. O. Box number CASE 3- HOW?
  10. 10. The “Infamous” Payroll Taxes Dilemma • Payroll tax payments • Payroll quarterly payments Expect the unexpected! THE DISCOVERY
  11. 11. Civil complaint filed Federal indictments filed Convicted and sentenced to 18 months for tax evasion and pay IRS Convicted and sentenced to 8 years for felony theft charges and pay restitution to company No probation allowed Total embezzlement amounts in excess of $448,000 WAS IT WORTH IT - NO
  12. 12. Mischaracterization of expenses Altering financial information and records Theft of cash Use of dormant bank accounts Unknown P. O. Box number CASE 3- HOW?
  13. 13. Civil complaint filed Federal indictments filed Convicted and sentenced to 18 months for tax evasion and pay IRS Convicted and sentenced to 8 years for felony theft charges and pay restitution to company No probation allowed Total embezzlement amounts in excess of $448,000 WAS IT WORTH IT - NO
  14. 14. Lack of fraud awareness training for employees By-passing internal control procedures in order to perform quality service to customer Social-engineered emails CASE 4- HOW?
  15. 15. What a company does not want to happen ! • Contacted by 3rd party victim Expect the unexpected! THE DISCOVERY
  16. 16. Company filed insurance claim Insurance company required forensic investigation Forensic investigation concluded no employee collusion in wire fraud scheme Company incurred unrecoverable costs related to forensic investigation Received restitution of $250,000 from insurance company and now conducts fraud awareness training annually WAS IT WORTH IT - NO
  17. 17. Pam Mantone, CPA, CFE, CFF, FCPA, CITP, CGMA Senior Assurance Manager | pammantone@decosimo.com Pam practices in the areas of audit and attestation with emphasis on forensic accounting, fraud examinations, financial institutions, not-for-profit organizations and governments. Pam has performed forensic and fraud auditing services for organizations, including the gathering of forensic evidence and testifying to findings. She also provides consulting services regarding implementation of fraud prevention and fraud detection internal control systems. She presents to various organizations on a variety of topics including fraud and forensic techniques, internal control design and weaknesses and auditing techniques.
  18. 18. Using Analytics to Detect Possible Fraud: Tools and Techniques $95 | Pre-order and save on Amazon.com Using Analytics to Detect Possible Fraud: Tools and Techniques is a practical overview of the first stage of forensic accounting, providing a common source of analytical techniques used for both efficiency and effectiveness in forensic accounting investigations. The book is written clearly so that those who do not have advanced mathematical skills will be able to understand the analytical tests and use the tests in a forensic accounting setting. It also includes case studies and visual techniques providing practical application of the analytical tests discussed. Learn more: www.decosimo.com/mantone
  19. 19. Questions
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