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McKonly & Asbury Webinar - Fraud Prevention and Detection: Surprise Fraudsters Before They Surprise You
 

McKonly & Asbury Webinar - Fraud Prevention and Detection: Surprise Fraudsters Before They Surprise You

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We continued our Celebrating 40 Years of Excellence! Fall Webinar Series with a webinar titled Fraud Prevention and Detection: Surprise Fraudsters Before They Surprise You. This webinar was hosted by ...

We continued our Celebrating 40 Years of Excellence! Fall Webinar Series with a webinar titled Fraud Prevention and Detection: Surprise Fraudsters Before They Surprise You. This webinar was hosted by Sam BowerCraft, Senior Manager and Dave Hammarberg , IT Director with McKonly & Asbury.

Check out our Upcoming Events page for news and updates on our future seminars and webinars at http://www.macpas.com/events/.

View a full recap of this webinar at http://www.macpas.com/fraud-prevention-and-detection-webinar/.

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    McKonly & Asbury Webinar - Fraud Prevention and Detection: Surprise Fraudsters Before They Surprise You McKonly & Asbury Webinar - Fraud Prevention and Detection: Surprise Fraudsters Before They Surprise You Presentation Transcript

    • FRAUD PREVENTION AND DETECTION SURPRISE FRAUDSTERS BEFORE THEY SURPRISE YOU SAM BOWERCRAFT DAV I D H A M M A R B E R G
    • FRAUD ENGAGEMENT FROM A TO Z S A M U E L B O W E R C R A F T , M S I S , C I S A & D A V I D C P A , H A M M A R B E R G , C F E , C I S S P , M C S E , W X Y Z
    • FRAUD PREVENTION AND DETECTION SURPRISE FRAUDSTERS BEFORE THEY SURPRISE YOU SAM BOWERCRAFT DAV I D H A M M A R B E R G
    • INTRODUCTIONS Samuel BowerCraft • • • • Senior Manager, Advisor Risk Management and Controls Knowledge Strategic Planning and Approach Focus Information Systems and Technology
    • INTRODUCTIONS David Hammarberg • Senior Manager, Director of IT • CPA, MCSE, CISSP and CFE - Certified Fraud Examiner • Information Systems and Technology
    • ABOUT MCKONLY & ASBURY, LLP • Audit, Tax and Risk Management Firm • Regional presence in Pennsylvania • Variety of clients ranging from construction to manufacturing and other clients • Special capabilities in the risk management area • Best Places to Work and Best Accounting Firm
    • AGENDA Fraud 101 Auditing 411 Surprise Audits • The Facts • Planning • Considerations
    • WHAT IS FRAUD? Financial Statement Fraud Misallocation of Assets Information Technology
    • FRAUD TRIANGLE • • All three are present in fraud Opportunity must be minimized
    • FRAUDSTER ACTIVITY Bad actors are always looking for opportunity Opportunity occurs when there is: • No control or oversight (trust without verification). • Oversight without diligence (inadequate verification). • Culture issues: • Excessive trust, or • Disinterest in supporting a controlled environment.
    • AUDITING 411 Process Auditing Purpose: • Evaluate and improve the effectiveness of risk management, control, and governance processes. • Auditing seeks to determine why activities are performed, and how they have been performed to meet business objectives.
    • AUDITING 411 Process Auditing Purpose: • To verify that the right things are being done. • To evaluate processes for effectiveness and efficiency. • To provide independent assessment of processes and make recommendations for improvement. • To work with management to make things better. • This is a detection strategy.
    • AUDITING 411 NOT the Process Auditing Purpose: • To punish the guilty or innocent with a rain of fire, brimstone, and guilt. • To strike fear into the hearts of men and women. • To demonstrate a lack of trust in the employees within the company.
    • WHY ARTICULATE THE PURPOSE? Understanding the purpose of the audit process helps us to understand how to wield / use the process effectively.
    • SURPRISE tr. v. • To encounter suddenly or unexpectedly; take or catch unawares. (www.thefreedictionary.com) • Surprise occurs when what happens does not match our expectations. • Surprise can be used to shake people out of a complacent state. (www.changingminds.com)
    • SURPRISE AUDITS Purpose: • To evaluate without providing notice of the review/audit so that preparation cannot be performed by the auditee. • To confirm the true operational readiness of a process area. • The audit is a detection strategy… • The possibility of the audit is a prevention strategy.
    • SURPRISE AUDIT BASICS • Purpose • Scope • Standards and procedures for the audit • Audit team members • Schedule • Final report expectations
    • DIFFERENCES The Difference Between Standard Audits and Surprise Audits The amount of time the auditee is notified prior to the audit.
    • SURPRISE AUDIT BENEFITS • No one expects a surprise audit. • It forces a state of readiness at all times. • Fraud is more frequently caught via this type of audit.
    • AREAS TO FOCUS ON High Risk Areas for Fraud • • • • Payroll Accounts Payable Inventory Key Internal Control Areas
    • THE MORE THINGS CHANGE… • Surprise Audits work just like regular audits. • Risk assessment is still required by management to identify key areas of risk. • Randomization of surprise audits is a must to keep readiness high in all areas.
    • SURPRISE AUDIT CONSIDERATIONS Culture: • Set the expectation in the company that surprise audits may occur. • Normally audits are planned and time is scheduled. • By their nature, surprise audits create a “we” versus “them” mentality. • Communicate this approach early and often to minimize the cultural impact later.
    • SURPRISE AUDIT CONSIDERATIONS Culture: • Setting expectation at all levels to do the right things at the right times. • Not just to do things prior to an audit. • If you do your job, a review at any time should reveal few issues. • Live and Die by the Sword • If surprise audits are good for one area in the company, they are good for any area in the company. • Be wary of creating a culture where only one group is susceptible to this type of audit; it may create resentment.
    • SURPRISE AUDIT CONSIDERATIONS Presentation: • Present and explain the reason and purpose of the surprise audit to the auditees. • Clarify that the purpose is not to punish but to check on and improve (if needed) the processes. • Represent the importance of checking the process given the risk assessment.
    • SURPRISE AUDIT CONSIDERATIONS Consistency: • Use the same approach for both standard and surprise audits, except for: • Surprise, and • Information collection: gather data, request items, and perform inventories immediately if there is a high level of risk or concern. • Be factual about the approach and the process.
    • NEXT STEPS 1. Assess risk in your environment: • General risks • Fraud risks 2. Consider areas for surprise audits. 3. Communicate to all that surprise audits are a possibility. 4. Communicate the importance of: • Doing things right at the right time. • Verification of activities to provide comfort to management. 5. Maintain a consistent approach for all audits.
    • THANK YOU. Questions? Please contact us: • Samuel BowerCraft • sbower@macpas.com • David Hammarberg • dhammarberg@macpas.com
    • FRAUD ENGAGEMENT FROM A TO Z S A M U E L B O W E R C R A F T , M S I S , C I S A & D A V I D C P A , H A M M A R B E R G , C F E , C I S S P , M C S E , W X Y Z