The document discusses popular fraud schemes involving fixed assets and how to prevent them. It describes frauds such as misappropriation of assets, recognition of fictitious assets, and misrepresentation of asset values. To prevent fixed asset fraud, the document recommends conducting regular physical counts of assets, approving additions and disposals with documentation, and reconciling asset records with the general ledger. Preventive measures also include asset tagging, maintaining an up-to-date fixed asset register, and implementing physical controls over assets.

1. Smart Fraud Risk Management
presents
The
Fraud Schemes
Series

2. Fixed Assets:
Popular Frauds and
How to Prevent them

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Value might be significant
Different locations of the assets
Lack of time
Risk of fraud is underestimated
Fixed Assets Criticalities

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Popular fraud schemes
Fixed Asset Fraud
Schemes

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Popular fraud schemes
Misappropriation
of
Assets

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Popular fraud schemes
Theft of assets
19% of all fraud cases
Average loss $70,000

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Popular fraud schemes
Recognition of
Fictitious
Assets

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Popular fraud schemes
Fake documents to justify fraudulent
accounting entries
To show stronger company’s
performance
Perpetrated by middle and high level
management

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Popular fraud schemes
Misrepresentation
of
Assets Value

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Popular fraud schemes
Types:
 Overstatement
 Understatement
 Misclassification
To show stronger or weaker financial
position

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Popular fraud schemes
Capitalisation of
Non-Asset
Expenses

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Popular fraud schemes
Costs without requirements for
capitalisation
To show stronger company’s
performance

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How to prevent fraud
How to prevent
fixed asset frauds

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How to prevent fraud
Physical count

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How to prevent fraud
Analysis of unusual patterns

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How to prevent fraud
Fixed asset procedures

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How to prevent fraud
Approval of additions and disposals
& related documentation

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How to prevent fraud
Reviews & random spot-checks

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How to prevent fraud
Asset tags

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How to prevent fraud
Up-to-date fixed assets register

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How to prevent fraud
Reconciliations with General Ledger
General
Ledger
Assets
Register

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How to prevent fraud
Evaluation of assets condition

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How to prevent fraud
Physical controls

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