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Tips for Recognizing Fraud
 

Tips for Recognizing Fraud

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General overview of Fraud

General overview of Fraud

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    Tips for Recognizing Fraud Tips for Recognizing Fraud Presentation Transcript

    • The Detection and Prevention of Fraud ( Or The Company You Save May Be Your Own) Dennis L. Thompson, CPA, CFE
    • Today’s Agenda
      • Occupation Fraud – Three Major Categories
        • Case Studies
      • Elements of Internal Control
      • Use of Accounting Software
      • Other Considerations to Deter Fraud
      • I Think I am a Victim of Fraud – Now What?
    • Occupation Fraud Defined
      • The Use of One’s Occupation
      • For Personal Enrichment
      • Through the Deliberate Misuse or Misapplication
      • Of the Employing Organization’s
      • Resources or Assets
    • Characteristics of Fraud
      • Material False Statement
      • Person who uttered it knows it is False
      • Reliance on False Statement by Others
      • Other Person is Damaged Financially
    • Three Fraud Categories
      • Asset Misappropriations
      • Corruption
      • Fraudulent Financial Statements
    • How Occupational Fraud is Committed
      • Occupational Frauds by Category — Frequency
    • How Occupational Fraud is Committed
      • Occupational Frauds by Category — Median Loss
    • Fraud Triangle – Donald Cressey
      • Opportunity
      • Pressure
      • Rationalization
    • Opportunity
      • Trusted Employee
      • Necessary Skills
      • Weak Internal Controls
    • Pressure – Non-sharable Problems
      • Living beyond Means
      • Gambling Losses
      • Medical Expenses
    • Rationalizations
      • Just Borrowing
      • Employer is Unfair
      • Unique Circumstances
    • Asset Misappropriations – Most Common
      • Cash
      • Inventory/Other Assets
    • Cash Receipts
      • On Book
        • Larceny
      • Off Book
        • Skimming
    • Fraudulent Cash Disbursements
      • Billing Schemes
      • Payroll Schemes
      • Expense Reimbursements
      • Check Tampering
      • Register Disbursements
    • Inventory/Other Assets
      • Misuse
      • Larceny
    • Case Study – Fraudulent Disbursements
      • Combination of Expense Reimbursement and Billing By Shell Company
      • Poor Internal Controls
        • Not enforcing Reimbursement Policy
        • Not monitoring Vendor Lists
        • Employees Picking Up “Vendor Checks”
    • Corruption
      • Conflicts of Interest
      • Bribery
      • Illegal Gratuties
      • Economic Extortion
    • Case Study – Conflict of Interest
      • Purchasing Agent Working As Travel Agent
      • Company Overbilled 10% - 30% on Travel
    • Fraudulent Financial Statements
      • Asset/Revenue Overstatements/Understatments
        • Timing Differences
        • Fictitious Revenue
        • Concealed Liabilities & Expenses
        • Improper Disclosures
        • Improper Asset Valuations
    • Case Study –Fraudulent Financial Statements
      • Crazy Eddie’s
        • Skimming
        • Fictitious Revenues
        • Inventory Overstatement
    • Detection of Fraud Schemes
      • Initial Detection of Occupational Frauds
    • Prevention & Detection of Fraud
      • Internal Control
      • Reconcile All GL Accounts
      • Accounting Software Controls
      • Ratio Analysis
      • Digital Analysis
      • Tip Lines
      • Other Considerations
    • Internal Control
      • Segregation of Duties
        • Do Not Allow One Person To Have Recorded Keeping Responsibility And Physical Custody of Asset
      • Have Procedures Documented
        • Reveals Potential Weakness
    • Account Reconciliation
      • Bank
        • Segregation of Duties
        • Timely
        • Bank Statement Mailed to Owner
        • Review Canceled Checks for Signatures, Payees & Endorsements
      • Credit Card
        • Review for Charges
        • Statement to Owner
    • Accounting (QB) Software Controls
      • Roles and Passwords to Limit Access
        • Only Enough Access to do Job
      • Review Audit Log
        • Look for Deletions
    • Accounting (QB) Software Controls
      • Lock Prior Periods
        • Change Closing Date to Match Bank Reconcilation
        • Password Protect Closing Date
        • Only Admin Can Change Date
      • Budgets
        • Facilitates Analytical Procedures
    • Accounting (QB) Software Controls
      • Review Reports
        • Voided/Deleted Transactions
        • Closing Date Exception Report
        • A/R and A/P Aging Analysis
        • Bank Reconciliation Discrepancy
        • Budget Vs Actual
        • Missing Checks
    • Ratio Analysis
      • Look For Unreasonable Relationships
      • Compare to Industry Standards
      • Compare to Previous Periods
    • Digital Analysis
      • Benford’s Law
      • Highest, Next Highest
      • Same, Same, Different
    • Benford’s Law
    • Benford’s Law
    • Tip Lines
      • Most Effective
      • Confidential
      • No Penalty For Good Faith Reporting
    • Other Considerations
      • Be Suspicious of Employees
        • First to Arrive, Last to Leave
        • Never Want to Take a Vacation
        • Changes in Lifestyle Not Supported by Salary
    • Other Considerations
      • Expense Reimbursement Policy
        • No Company Credit Cards
        • Employees Use Their Cards & Get Reimbursed
      • Background Checks on New Hires
      • Backup Data
    • I Think Someone is Stealing – Now What?
      • Don’t React Emotionally
        • Need to Find out if any Accomplices
      • Call Your Attorney
        • Possible Legal Problems
          • Invasion of Privacy
          • Slander & Libel
          • False Imprisonment
    • I Think Someone is Stealing- Now What?
      • Do You Have Fraud Policies & Procedures?
        • If Yes, Make Sure You Follow Them
        • If No, Create Them for Future Fraud
      • Contact Certified Fraud Examiner
    • Summary
      • Fraud Increasing, Especially In This Economy
      • Adversely Impacts Company’s Survival & Employee Jobs
      • No Stereotypical Fraudster – Sometimes Someone You Would Never Suspect
    •