Dr Dinev's3d modelinkrakow sept2011

646 views

Published on

This are the slides of The 3D Fraud Risk Assessment Model presented by Dr. DImiter Dinev, CFE at the 10th Congress of PIKW in September 201 in Krakow, Poland

Published in: Business, Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
646
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
22
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Dr Dinev's3d modelinkrakow sept2011

  1. 1. 10th INTERNATIONAL CONGRESSON INTERNAL CONTROL, AUDIT AND ANTI-FRAUD, ANTI-CORRUPTION ISSUES MODELING THE PROCESS OF FRAUD RISK ASSESSMENT Dr. Dimiter Dinev, CFE Founder & Chairman of Association forCounteraction to Economic Fraud (ACEF) 1 1
  2. 2. X PIKW CONGRESS IN KRAKOW 2 2
  3. 3. KRAKOW IX -X PIKW CONGRESSES 3 3
  4. 4. KRAKOW X PIKW CONGRESS 4 4
  5. 5. KRAKOW X PIKW CONGRESSES 5 5
  6. 6. KRAKOW IX -X PIKW CONGRESSES 6 6
  7. 7. KRAKOW IX -X PIKW CONGRESSES 7 7
  8. 8. KRAKOW IX -X PIKW CONGRESSES 8 8
  9. 9. KRAKOW X PIKW CONGRESSES 9 9
  10. 10. KRAKOW X PIKW CONGRESSES 10 10
  11. 11. KRAKOW IX -X PIKW CONGRESSES 11 11
  12. 12. KRAKOW IX -X PIKW CONGRESSES 12 12
  13. 13. 13 13
  14. 14. IX PIKW CONGRESS KRAKOW 2010 14 14
  15. 15. 2009-2011 ACEF MODELS• Dinev’s Compass for Fraud Detection - Fraud Magazine, ACFE, 1/2009, Seattle University• Dinev’s Puzzle for Fraud Investigation-2010, Krakow• 3D Fraud Risk Assessment Model-today 15 15
  16. 16. 3D MODEL FOR FRAUD RISK ASSESSMENT• FUNCTIONALDIMENSION• METHODOLOGICALDIMENSION• TIMING DIMENSION 16 16
  17. 17. 3D MODEL FOR FRAUD RISK ASSESSMENT - 2011• A STAND-ALONE SERVICE• A PART OF THE ERM (THE ENTERPRISE RISK MANAGEMENT)• AN AUDIT RESPONSIBILITY UNDER ISA 240 or SAS 99 17 17
  18. 18. WHO WILL BE THE ACTORS?• Internal Auditors• Financial Controllers• Compliance Officers• Fraud Examiners• Certified Internal Control Auditors/ Specialists (CICA/CICS)• External Auditors as a stand-alone engagement 18 18
  19. 19. 3D MODEL FOR FRAUD RISK ASSESSMENT GOALS• A NEW BUSINESSOPPORTUNITY• SIMPLE ANDUNDERSTANDABLE• WORLD WIDE APPLICABLE• COST EFFECTIVE• USABLE, OF COURSE 19 19
  20. 20. RISK AND FRAUD RISK ASSESSMENT• RISK - a likelihood something not good to be happened• CHANCE - a likelihood something good to be happened• FRAUD - common and specific• FRAUD RISK ASSESSMENT - to increase the chance for fraud deterrence 20 20
  21. 21. FRAUD RISK ASSESSMENT PROCESS Systematic process of obtaining,receiving and analyzing data as to determine the likelihood of fraud occurrence in the organization and an adequate response and timely decisions to be taken by the stakeholders as to increasethe chance of the fraud deterrence 21 21
  22. 22. FRAUD RISK ASSESSMENT PROCESS - ELEMENTS• Systematic process for • An adequate response and timely decisions to• Obtaining, receiving be taken and analyzing data • By the stakeholders• To determine the likelihood of fraud • To increase the chance occurrence of fraud deterrence 22 22
  23. 23. 3D MODEL FOR FRAUD RISK ASSESSMENT• FUNCTIONALDIMENSION• METHODOLOGICALDIMENSION• TIMING DIMENSION 23 23
  24. 24. FUNCTIONAL DIMENSION - WHAT TO DO?• Interviews with the client as to provide him/her with awareness about the nature, scope and goals of the fraud risk assessment engagement - this is not an audit, the types of fraud are…, there would be fraud risk there, because…, fraud terminology!• Collecting, receiving and analyzing data about the organization - about bylaws, business cycle, activities, processes, transactions• Collecting, receiving and analyzing data about the existing internal controls and those applied for fraud deterrence (if any?!)• Determination of the opportunities for fraud occurrence - ineffective controls, controls override, no anti-fraud controls• Description of the possible fraud scenarios, types of fraud and schemes, specific for the different levels, processes and activities of the organization• Ranging the fraud risk occurrence based on quantitative and qualitative measures and criteria - 2 RANGES• Development of proposal for adequate response and timely measures, if necessary! 24 24
  25. 25. KNOWLEDGE ABOUT FRAUD THEORY AND PRACTICE• TAXONOMY OF FRAUD AND FRAUD TERMINOLOGY• ACFE FRAUD TREE - corruption, misappropriation of assets, financial statements and other statements fraud• TYPES OF FRAUD - by activities, by direction, by countries, specific for EU, USA etc.• FRAUD INDICATORS - red flags, irregularities, errors, abnormals etc. 25 25
  26. 26. FRAUD SCENARIO• WHAT • HOW MUCH• WHERE • HOW TO CONCEAL• WHO • HOW TO CONVERT• WHEN • WHAT’S THE LAW/ RULE• WHO ELSE • WHAT CONTROLS ARE• INTENT OVERRIDDEN • TIME LAG FOR DETECTION 26
  27. 27. METHODOLOGICAL DIMENSION - HOW?• Methods for Collecting Data• Techniques for Collecting Data• Analysis Methodology 27 27
  28. 28. METHODS FOR COLLECTING DATA• DATA MINING• DISCOVERY SAMPLING• DOCUMENT INSPECTION• BE ON THE PLACE 28 28
  29. 29. TECHNIQUES FOR COLLECTING DATA• Internet Search - Google, Lexus-Nexus, national search engines• Checking formats and content for an authenticity• Using specialized software - Picalo• Walking, Talking, Listening, Watching 29 29
  30. 30. ANALYSIS METHODOLOGY• Comparing data and trends• Ratios analysis• What-if Analysis• Cost Benefit Analysis 30 30
  31. 31. TIMING DIMENSION - HOW MUCH TIME (MONEY)?• PREPARATION• PERFORMANCE• CONCLUSION AND• REPORT PRESENTATION 31 31
  32. 32. TIMING DIMENSION - PREPARATION• CREATING AND TRAINING A TEAM• PLANNING• ORGANIZING• PREPARING A FRAUD TERMINOLOGY FOR THE CASE 32 32
  33. 33. TIMING DIMENSION - PERFORMANCE• FOLLOWING TIME SHEETS SCHEDULE• BEING ON THE PLACE• VISITS ON THE SIDES• DISCUSSIONS WITH THE CLIENT AND TEAM MEMBERS• RANKING THE FRAUD RISK - CRITERIA, 2 RANGES ONLY • THERE IS NOT A FRAUD RISK • THERE IS A FRAUD RISK • quantitative measures • qualitative measures 33 33
  34. 34. TIMING DIMENSION - CONCLUSION• MAKING CONCLUSIONS• PREPARING RECOMMENDATIONS - “O” TOLERANCE• REPORT PREPARATION AND PRESENTATION 34 34
  35. 35. 3D MODEL FOR FRAUD RISK ASSESSMENT - OUTCOMES• A NEW BUSINESSOPPORTUNITY• SIMPLE ANDUNDERSTANDABLE• WORLD WIDE APPLICABLE• COST EFFECTIVE• USABLE, OF COURSE 35 35
  36. 36. WHO WILL BE THE ACTORS TOMORROW?• Internal Auditors• Financial Controllers• Compliance Officers• Fraud Examiners• Certified Internal Control Auditors/ Specialists (CICA/CICS)• External Auditors as a stand-alone engagement 36 36
  37. 37. YOUR QUESTIONS AND MY ANSWERS, PLEASE!I WOULD BE GLAD TO ANSWER YOUR QUESTIONS AND TO ACCEPT ALL OF YOUR REASONABLE RECOMMENDATIONS! 37 37
  38. 38. THANK YOU FOR YOUR KIND ATTENTION!Dr. Dimiter Dinev, CFE Chairman of ACEF dinev@acefraud.org www.acefraud.org www.iepinet.eu 38 38

×