In Part I of our Three-Part Nonprofit Fraud Seminar, you will learn about: Why you need to be educated about fraud in your organization. A few statistics and facts about fraud and nonprofits. Who commits fraud and why. Common types of fraud in nonprofits. Three case studies involving common nonprofits fraud schemes and Important takeaways!
Part II of our Three-Part Nonprofit Fraud Seminar offered by Senior Partner, Larry Hoffman from the Raffa Audit Group. In this seesion, you will learn about:
- How to detect fraud perpetrators - is it possible?
- What are the red flags of fraud?
- Fraud detection techniques and how to employ them in your organization.
- What to do when you uncover a fraud, and;
- Important takeaways.
The slides provides fundamental understanding of concepts, principles and issues in fraud risk management. It is a comprehensive summary of general knowledge and understanding about the fraud risk management.
Part II of our Three-Part Nonprofit Fraud Seminar offered by Senior Partner, Larry Hoffman from the Raffa Audit Group. In this seesion, you will learn about:
- How to detect fraud perpetrators - is it possible?
- What are the red flags of fraud?
- Fraud detection techniques and how to employ them in your organization.
- What to do when you uncover a fraud, and;
- Important takeaways.
The slides provides fundamental understanding of concepts, principles and issues in fraud risk management. It is a comprehensive summary of general knowledge and understanding about the fraud risk management.
company names mentioned herein are for identification and educational purposes only and are the property of, and may be trademarks of, their respective owners.
Fraud awareness for companies and their employees covering legal aspects of securing confidential information, social engineering techiniques and what to look for in suspect emails.
The presentation provides overall insight of operational fraud risk management. It explains the operational fraud risk and mitigation strategies. The role of Internal audit and audit committee is further exemplified
It is all about social and professional issues in computing.In today's era its really important to understand how a fraud happens.The presentations also helps to differentiate between fraud and embezzlement.Categories of frauds are also available in this section.
If you would like to have a training session at your business to educate your employees how to identify & prevent occupational fraud please contact me at ann@yeagerboyd.com
company names mentioned herein are for identification and educational purposes only and are the property of, and may be trademarks of, their respective owners.
Fraud awareness for companies and their employees covering legal aspects of securing confidential information, social engineering techiniques and what to look for in suspect emails.
The presentation provides overall insight of operational fraud risk management. It explains the operational fraud risk and mitigation strategies. The role of Internal audit and audit committee is further exemplified
It is all about social and professional issues in computing.In today's era its really important to understand how a fraud happens.The presentations also helps to differentiate between fraud and embezzlement.Categories of frauds are also available in this section.
If you would like to have a training session at your business to educate your employees how to identify & prevent occupational fraud please contact me at ann@yeagerboyd.com
Findings from India Fraud Survey 2012: Fraud and Corporate Governance - Chang...EY
A report based on a survey conducted to understand the fraud scenario in India. This study aims to understand how businesses have coped with increasing fraud and corruption risk last year, what the emerging fraud risks in the industry are and the measures taken by various organizations to mitigate these risks.
For further information on EY's fraud investigation and dispute services, please visit: http://www.ey.com/IN/en/Services/Assurance/Fraud-Investigation---Dispute-Services
Role of Internal Audit in fraud prevention and detectionZeeshan Shahid
The Institute of Chartered Accountants of Pakistan is running an Internal Audit Masterclass where I was privileged to be invited to share insights on role of Internal Audit in fraud prevention and detection. I put together this slide deck to touch upon key areas of fraud risk management and role of internal audit.
Although internal auditors are not expected to be fraud investigators but as most internal auditors at some point in their career have to handle a complex investigation, I've added slides from the fraud investigation training right in this file for a single source for internal auditors. Hope people find it useful.
Ran a Fraud Investigation session online for The Institute of Chartered Accountants of Pakistan. These are slides for day 1. They cover introduction and context of fraud, profile of fraudsters, fraud investigations broad appraoch etc.
This presentation is an overview of Fraud Risk Management in Indian companies and the role of the Board of Directors in the context of the newly enacted Companies Act, 2013.
Most companies have ethics and compliance policies in place and those policies usually include training for employees. That training typically includes material about policies prohibiting discrimination and harassment, bribery and excessive gift-giving. But it usually does not teach employees how to recognize signs of fraud and how to report them.
Employee fraud awareness training is one of the most important ways your company can protect itself from fraud which, according to the Association of Certified Fraud Examiners, costs the average company five per cent of its revenues every year.
Simple Training for Information Security and Payment FraudEvan Francen
The frequency of financial scams and payment fraud have been increasing substantially. We put these simple training slides together as a way to help our clients and friends.
2018-07 Systems Integration Best Practices for Integrating Your Business Appl...Raffa Learning Community
How much time does your organizations spend getting data to and from critical business systems such as your donor management, association management, membership and accounting applications? What about time sheets, expense reports and payroll data? Have you made customizations to your systems that make packaged integrations difficult to work with? In this session we will share considerations, best practices and use cases from actual customer integrations that may help you tackle your next integration project.
Join Raffa Technology & BI360 for an informative session on best practice approaches to managing your budget process beyond Microsoft Excel. Come learn how you can help your organization increase productivity, insight and decision making while decreasing the manual keying and inaccuracies inherent with Microsoft Excel. This seminar includes a presentation of the BI360 budgeting and reporting software.
In today’s accounting environment, there is mounting pressure to run leaner while becoming more effective than ever. Meeting deadlines, reviewing or preparing reconciliations and providing support requires new approaches to mitigating errors and compromising the integrity of your SOFP and SOA. It doesn’t have to be that way.
Join nonprofit industry leader Raffa, PC and BlackLine to discover a simpler way to perform your reconciliation process that allows you to focus on analysis, risk mitigation, and value creation for your organization.
Not every organization can afford to have a full time CIO on staff. But someone will be fulfilling the role, even without the title. This seminar will help you understand the role a CIO fulfills within your organization, the areas you may not be addressing without a CIO, the risks and opportunities mitigated by the presence of a CIO, and the new world of outsourced IT.
Additionally, we will discuss if your organization can thrive without the latest technology, whether your IT team is doing what they should be, how your IT infrastructure measures up to best practices, and what technology you may be missing out on.
With the ever-increasing threat of viruses, security breaches, and cyber theft, it is important to understand the basics of network and internet security. In this session, you will learn how to pass the security portion of your audit and how to protect your hardware. We will also discuss security in the cloud and Privacy Laws.
This class is beneficial to IT, Operations, and Administrative professionals.
Adam Grant, in a recent Atlantic article, says it best: “People Don’t Actually Know Themselves Very Well.” Do you agree? He argues that your coworkers are much better at rating aspects of your personality than you are. Studying thousands of people at work show that coworkers are more than twice as accurate when asked to assess how stable, dependable, friendly, outgoing and curious you are. In this workshop, we will give you an opportunity to solicit feedback in advance of the workshop, reflect on feedback you’ve received, and provide a safe and confidential environment to explore your blind spots. Those blind spots may be related to the way you see yourself as a manager or leader or perhaps how you think about intergenerational differences. We’ll discuss the importance of self-awareness and provide some tools to help you integrate new knowledge about yourself in practical ways at work.
Not every organization can afford to have a full time CIO on staff. But someone will be fulfilling the role, even without the title. This seminar will help you understand the role a CIO fulfills within your organization, the areas you may not be addressing without a CIO, the risks and opportunities mitigated by the presence of a CIO, and the new world of outsourced IT.
Additionally, we will discuss if your organization can thrive without the latest technology, whether your IT team is doing what they should be, how your IT infrastructure measures up to best practices, and what technology you may be missing out on.
Keeping reserves for a “rainy day” is a good practice for all nonprofit institutions, but how much should your organization set aside? A percentage of annual budget? Three-to-six months? Our answer is: it depends. Each nonprofit is unique and can experience distinct unexpected circumstances that may affect its long-term financial health.
This session, led by mark Murphy of Raffa Wealth Management, will focus on how to conduct a risk assessment that will assist your nonprofit in quantifying financial risks and opportunities. Once completed, this risk assessment aims to assist in finding the appropriate reserve level for your unique organization.
Whether you are in the initial phases of creating your nest egg or revaluating longstanding reserve levels, this session is for you.
Help your organization make better informed decisions. Join the Raffa Technology team and Prophix to discover how best in class organizations are using financial automation to drive improved budgeting, strategic financial analysis and better business decision making.
Learn how organizations are automating the financial budget process to deliver more accurate and timely information in the financial planning process.
Not every organization can afford to have a full time CIO on staff. But someone will be fulfilling the role, even without the title. This seminar will help you understand the role a CIO fulfills within your organization, the areas you may not be addressing without a CIO, the risks and opportunities mitigated by the presence of a CIO, and the new world of outsourced IT.
Additionally, we will discuss if your organization can thrive without the latest technology, whether your IT team is doing what they should be, how your IT infrastructure measures up to best practices, and what technology you may be missing out on.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
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how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.
2013-04-04 Nonprofit Fraud: Part I
1. Nonprofit Fraud: What
You Need to Know
Part I: The Fraud
Lawrence J. Hoffman, CPA/CFF, CVA, CFE
Senior Partner, & Director of Forensic Consulting Services
April 4, 2013
Thrive. Grow. Achieve.
2. OBJECTIVES
NONPROFIT FRAUD: THREE-PART SERIES
PART I: THE FRAUD
• Why it is important that you are educated in fraud
• The magnitude of fraud in nonprofits
• The types of frauds in nonprofits
• Why does fraud occur in nonprofits
• Some important fraud prevention measures
PART II: THE DETECTION
• Who are the fraud perpetrators?
• Why do people commit fraud?
• How is fraud detected?
• What are fraud red flags?
• Fraud detection techniques
• What do you do when you uncover fraud?
PART III: THE PREVENTION
• What are the primary factors contributing to fraud in nonprofits?
• Detective versus preventative controls
• What are the best preventative measures?
• The five critical takeaways!
Part I: The Fraud * Page 2
3. AGENDA
• Why you need to be educated about fraud
• What you need to know about the impact of fraud
• Common types of fraud in nonprofits
• Case study # 1
• Case study # 2
• More case studies
• Summary – the important takeaways!
• How can Raffa assist you in preventing and detecting fraud?
• Resources and suggested reading
• Questions and answers
Part I: The Fraud * Page 3
4. WHY YOU NEED TO KNOW ABOUT FRAUD
THE TOP TEN REASONS!
1. Nonprofit organizations are very susceptible
to fraud and abuse
1. Don’t count on your outside auditor to uncover the fraud
2. Fraud increases when the “pressure / incentive” increases,
which increases in a poor economy1 and layoffs (fewer
employees doing more)
3. You probably have some sort of fraud in your organization
going on and you don’t know it
4. A fraud in your organization could bring unwanted outcomes,
such as adverse publicity, loss of support, lower employee
morale, and disruption of your operations
1
See article, “In Tough Economy, Employee Theft Climbs to Epidemic Proportions, Expert Says,”
Statesman.com, November 2011.
Part I: The Fraud * Page 4
5. WHY YOU NEED TO KNOW ABOUT FRAUD
THE TOP TEN REASONS! (CONTINUED)
6. The IRS requires you to disclose instances of fraud – Form 990
– more transparent to donors
7. You cannot afford the loss, cost of the investigation, and
disruption to your operations
8. Asset (cash ) misappropriations are by far the most prevalent
frauds committed against nonprofits and the most important
resource
9. The fraud perpetrator is not easily known to the organization.
In many cases, the perpetrator is “someone you know and
trust”
10. You could find yourself personally liable for damages
Part I: The Fraud * Page 5
6. WHY YOU NEED TO KNOW ABOUT FRAUD
FORM 990 RETURN OF ORGANIZATION EXEMPT FROM
INCOME TAX
Part I: The Fraud * Page 6
7. WHAT YOU NEED TO KNOW ABOUT FRAUD
Go to http://www.acfe.com/rttn.aspx to download the report.
Part I: The Fraud * Page 7
8. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS
• Typical organization loses 5% of its annual revenue to fraud (applied to
2011Gross World Product = $3.5 trillion)
• Median loss is $140,000
• Fraud lasted 18 months before being detected
• 87% are asset misappropriation schemes
• Most likely detected by a tip than any other means
• Small organizations are disproportionately victimized
• Most occupational fraudsters are first-time offenders with clean
employment histories. Approximately 87% of occupational fraudsters had never
been charged or convicted of a fraud-related offense, and 84% had never been
punished or terminated by an employer for fraud-related conduct
• In 81% of cases, the fraudster displayed one or more behavioral red flags
that are often associated with fraudulent conduct.
– Living beyond their means (36%)
– Experiencing financial difficulties (27%)
– Unusually close association with vendors or customers (19%)
– Excessive control issues (18%)
Part I: The Fraud * Page 8
9. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS (CONTINUED)
• Perpetrators with higher levels of authority tend to cause much
larger losses. The median loss among frauds committed by owners /
executives was $573,000, the median loss caused by managers was
$180,000, and the median loss caused by employees was $60,000
• The longer a perpetrator has worked for an organization, the
higher fraud losses tend to be. Perpetrators with more than 10
years of experience at the victim organization caused a median loss of
$229,000. By comparison, the median loss caused by perpetrators
who committed fraud in their first year on the job was only $25,000
• 77% of all frauds in the study were committed by individuals
working in one of six departments: accounting, operations, sales,
executive / upper management, customer service, and publishing
• Nearly half of victim organizations do not recover any losses that
they suffer due to fraud. 49% of victims had not recovered any of
the perpetrator’s takings; this finding is consistent with previous
research, which indicates that 40-50% of victim organizations do not
recover any of their fraud-related losses
Part I: The Fraud * Page 9
10. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS (CONTINUED)
• Not-for-profit organizations made up the smallest portion of the
ACFE’s dataset, accounting for more slightly more than 10% of
reported cases
Part I: The Fraud * Page 10
11. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS (CONTINUED)
Part I: The Fraud * Page 11
12. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS (CONTINUED)
• Small organizations (those with fewer than 100 employees)
continue to be the most common victims in fraud
Part I: The Fraud * Page 12
13. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS (CONTINUED)
Part I: The Fraud * Page 13
14. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS (CONTINUED)
Part I: The Fraud * Page 14
15. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS (CONTINUED)
Part I: The Fraud * Page 15
16. WHAT YOU NEED TO KNOW ABOUT FRAUD
CONCLUSIONS AND RECOMMENDATIONS
• Occupational fraud is a global problem
• Fraud reporting mechanisms (hotlines) are a critical component
of an effective fraud prevention and detection system
• Organizations tend to over-rely on audits
• Employee education is the foundation of preventing and detecting
fraud
• Surprise audits are an effective, yet underutilized tool
• Small businesses are particularly vulnerable to fraud
• Internal controls alone are insufficient to fully prevent fraud
• Fraudsters exhibit behavioral warning signs of their misdeeds
• Effective fraud prevention measures are critical
Part I: The Fraud * Page 16
17. WHAT YOU NEED TO KNOW ABOUT FRAUD
JP SIMS CONSULTING – CASES REPORTED IN LAST SIX
MONTHS IN THE NONPROFIT SECTOR
• “Brooklyn Woman Sentenced in Manhattan Federal Court to Two
Years in Prison for Participating in $57.3 Million Fraud on
Organization that Makes Reparations to Victims of Nazi
Persecution”
• “Former President and Executive Director of Vanguard Public
Foundation Sentenced to 40 Months in Prison for Fraud and
Money Laundering”
• “Monroeton Woman Sentenced for Embezzling Money from
Martha Lloyd Community Services”
• “A.G. Schneiderman Announces $2.3 Million Settlement with St.
Luke’s-Roosevelt Hospital for Overbilling Medicaid and Medicare”
• “Miami-Area Therapist Sentenced to Prison in Florida in $205
Million Community Mental Health Fraud Scheme”
www.jpsimsconsulting.com
Part I: The Fraud * Page 17
18. WHAT YOU NEED TO KNOW ABOUT FRAUD
NONPROFIT FRAUD
• Why nonprofits face a disproportionate level of fraud:
– Lack of internal controls / segregation of duties
– Lack of tone at the top / oversight – “volunteers” vs. “the store owner
– Lack of hiring – due diligence
– Lack of anti-fraud programs
– Too much reliance on audits to catch fraud
– More “mission” driven versus “profit” driven
– Greater culture of “trust”
Part I: The Fraud * Page 18
19. WHAT YOU NEED TO KNOW ABOUT FRAUD
THE SIZE OF THE NONPROFIT SECTOR2
• 1,551,705 tax-exempt organizations composed of:
– 963,255 public charities
– 97,941 private foundations
– 490,509 other types of organizations (e.g., chambers of commerce, fraternal
organizations, and civic leagues)
• Nonprofits’ share of the U.S. GDP was 5.5% in 2012
• In 2010 (the most recent date in which these figures were
aggregated), public charities accounted for:
– $1.51 trillion in revenue
• Of the revenue, 22% came from contributions, gifts, and government grants; 73%
came from program services revenues, which include government fees and contracts;
and 5% came from “other” sources, including dues, rental income, special event
income, and gains or losses from goods sold
• In 2011(the most recent date in which these figures were
aggregated), private charitable contributions, which include
giving to public charities and religious congregations, totalled
$298.4 billion
2
National Center for Charitable Statistics, “Quick Facts about Nonprofits,” http://nccs.urban.org/statistics/quickfacts.cfm.
Part I: The Fraud * Page 19
20. WHAT YOU NEED TO KNOW ABOUT FRAUD
THE MOST IMPORTANT POINTS YOU WILL TAKE AWAY
FROM THIS SEMINAR SERIES
• Design your systems and procedures so you do not have to rely
on trust as a control!
• Any person is capable of committing fraud!
• TRUST IS NOT AN INTERNAL CONTROL!
Part I: The Fraud * Page 20
21. FAMOUS QUOTES
“Trust, but verify.”
• 40th President of the United States Ronald W. Reagan (1911-2004)
“Verify, then verify some more.”
• Senior Partner, Raffa, P.C., Lawrence J. Hoffman, CPA/CFF, CVA,
CFE (1954-?)
Part I: The Fraud * Page 21
23. WHAT YOU NEED TO KNOW ABOUT FRAUD
THE FIVE MOST IMPORTANT TAKEAWAYS
1. Trust is not an internal control!
– Establish, to the extent possible, controls and procedures that eliminate the
element of trust
– Always segregate the custody of the asset with the recordkeeping for the asset
2. Set the tone from the top!
– “If you are stealing, your employees are stealing!”
– E.g., office supplies, expense reports, etc.
3. Know your employees!
– Background investigations and public records checks before hiring
– Meet and establish a baseline relationship
4. Institute a fraud policy
– No tolerance
– Will prosecute
5. Establish a hotline for tips
– Number one method for detecting fraud!
– Can outsource
Part I: The Fraud * Page 23
24. TYPES OF FRAUD
THREE BROAD CATEGORIES OF FRAUD
• Fraudulent statements
• Corruption
• Misappropriation of assets
Part I: The Fraud * Page 24
26. TYPES OF FRAUD
FRAUDULENT STATEMENTS
• Fraudulent financial reporting (“cooking the books”). Intentional
misstatement or omissions of amounts or disclosers in financial
statements designed to deceive financial users when the effect
causes the financial statements not to be presented , in all
material respects, in conformity with GAAP
– Examples:
• Falsification of accounting records
• Omissions of transactions or disclosers
• Non-Financial
– Employment credentials
– Internal and external documents
Part I: The Fraud * Page 26
27. TYPES OF FRAUD
CORRUPTION
• Schemes that involve the employee’s use of his or her influence
in business transactions in a way that violates their duty to the
employer and obtains benefit for themselves or others:
– Conflicts of interest
– Bribery
– Illegal gratuities
– Economic extortion
Part I: The Fraud * Page 27
28. TYPES OF FRAUD
MISAPPROPRIATION OF ASSETS
• The theft of an entity’s assets where the effect of the theft causes
the financial statements not to be presented in conformity with
GAAP (sometimes referred to as “defalcation”)
• Misappropriation of assets can be accomplished in various ways,
including:
– Embezzling
– Stealing assets
– Causing an entity to pay for goods or services that have not been
received or causing an entity to overpay for goods or services actually
received
Part I: The Fraud * Page 28
29. TYPES OF FRAUD
MISAPPROPRIATION OF ASSETS
• Revenue and cash receipts (collections) schemes:
– Cash skimming / unrecorded sales / contributions
– Cash larceny
– Lapping schemes
– Write-off of accounts receivable
– Unauthorized credits
– Check tampering (stolen, altered)
Part I: The Fraud * Page 29
30. TYPES OF FRAUD
PURCHASING AND CASH DISBURSEMENT SCHEMES
• Fictitious invoices and vendors (shell company)
• Check tampering
– Forged maker (check signer)
– Forged endorsement
– Altered payee
• Bank wire transfers
Part I: The Fraud * Page 30
32. TYPES OF FRAUD
NONCASH ASSET MISAPPROPRIATIONS
• Misuse of assets for personal use
• Inventory
Part I: The Fraud * Page 32
33. CASE STUDY # 1
The Washington Post, Wednesday, June 3, 2009.
Part I: The Fraud * Page 33
34. CASE STUDY # 1
WHAT WENT WRONG?
• Position of perpetrator: Controller
• Length of time employed: 3 years, 11 months
• Length of time fraud lasted: 3 years, 6 months
• Schemes involved in fraud:
– Fraudulent checks and wire transfers
– Used electronic signatures and signature stamps
– Falsified accounting of transactions in books and records
– Provided forged documents, including bank statements, to independent
auditors
• How was the fraud discovered?: Executive Director found checks
written to perpetrator and an unknown bank account statement in his
office after he was terminated for poor performance
Part I: The Fraud * Page 34
35. CASE STUDY # 1
HOW MUCH DID IT COST?
• Organization’s annual budget: $2.7 million
• Total fraud loss to the organization: $425,558 (fidelity bond was
only $30,000 with $5,000 deduction)
• Other losses to the organization: Disruption to operations and legal
and forensic consulting fees
• Where did all the money go?: New 2006 BMW 325i car, furniture,
vacations
• What happened to the perpetrator?:
– Criminal prosecution
– Conviction
– 41 months in Allenwood, a low-security correctional institution in White Deer,
PA
– Ordered to pay restitution of $470,990.59
Part I: The Fraud * Page 35
36. CASE STUDY # 1
LESSONS LEARNED
• Lack of segregation of duties – a “one-man show”!
– Segregate the custody of the asset with the recordkeeping!
• Lack of oversight controls and financial reviews, including review
of financial statements, reconciliations
• Use of signature stamp
• Inadequate fidelity bond coverage
• Too much trust and not enough verification!
Part I: The Fraud * Page 36
37. CASE STUDY # 2
ORGANIZATION CURRENTLY UNDISCLOSED
Part I: The Fraud * Page 37
38. CASE STUDY # 2
WHAT WENT WRONG?
• Position of perpetrator: Director of Information Technology
• Length of time employed: 7 years, 7 months – voluntarily left
employment and left country
• Length of time fraud lasted: 7 years, 5 months
• Schemes involved in fraud:
– Billing scheme – shell company – billed for IT equipment that was never
received by the organization
• How was the fraud discovered?:
– Whistleblower – person who replaced perpetrator notices discrepancies and
anomalies in past IT inventory and procedures
Part I: The Fraud * Page 38
39. CASE STUDY # 2
HOW MUCH DID IT COST?
• Total fraud loss to the organization: $3.5 million ($1.3 million
recovered from insurance)
• Other losses to the organization: Disruption to operations and
forensic consulting fees
• Where did all the money go?: Amusement park in foreign country
• What happened to the perpetrator?: Fled the country
Part I: The Fraud * Page 39
40. CASE STUDY # 2
LESSONS LEARNED
• Lack of internal controls / segregation of duties
– No separation of custody of asset with recordkeeping
• Lack of a packing and receiving reports match
• One person controlled the procurement, receipt, and deployment
of the assets
• Lack of inventory controls – “The wolf watching over the hen
house”
• Too much trust and not enough verification!
Part I: The Fraud * Page 40
50. WHAT YOU NEED TO KNOW ABOUT FRAUD
THE FIVE MOST IMPORTANT TAKEAWAYS – AGAIN!
1. Trust is not an internal control!
– Establish, to the extent possible, controls and procedures that eliminate the
element of trust
– Always segregate the custody of the asset with the recordkeeping for the asset
2. Set the tone from the top!
– “If you are stealing, your employees are stealing!”
– E.g., office supplies, expense reports, etc.
3. Know your employees!
– Background investigations and public records checks before hiring
– Meet and establish a baseline relationship
4. Institute a fraud policy
– No tolerance
– Will prosecute
5. Establish a hotline for tips
– Number one method for detecting fraud!
– Can outsource
Part I: The Fraud * Page 50
51. HOW CAN RAFFA ASSIST YOU IN
PREVENTING AND DETECTING FRAUD?
FORENSIC CONSULTING SERVICES
• Pre-hire investigations and background checks
• Fraud risk assessment
• Internal control / program review
• Fraud awareness training
• Fraud prevention programs and policies implementation
• Due diligence investigations
• Fraud investigations
Part I: The Fraud * Page 51
52. SOME AREAS WE WILL BE GOING OVER IN
OUR FINAL PRESENTATION
PART II: THE DETECTION – MAY 7, 2013, 12:00-2:00 P.M.
• Who are these people that commit fraud?
• Why do they commit fraud?
• How are most frauds really detected?
• Specific things you should have in place to help detect fraud
• What should you do when you uncover fraud?
PART III: THE PREVENTION – JUNE 5, 2013, 12:00-2:00 P.M.
• What are the primary factors contributing to fraud in nonprofits?
• Detective versus preventative measures and controls
• The best preventative controls and practices
• The critical takeaways and how to implement them
Part I: The Fraud * Page 52
53. RESOURCES AND SUGGESTED READING
• 2012 Report to the Nations on Occupational Fraud and Abuse,
Association of Certified Fraud Examiners,
http://www.acfe.com/rttn.aspx
• “The American Fraud Report,” www.jpsimsconsulting.com
• The CPA’s Handbook of Fraud and Commercial Crime Prevention,
AICPA
• Managing the Business Risk of Fraud: A Practical Guide; AICPA,
ITA, and ACFE; https://na.theiia.org/standards-
guidance/Public%20Documents/fraud%20paper.pdf
Part I: The Fraud * Page 53
55. BIOGRAPHY
• 35 years of consulting, audit, accounting and tax experience in the public and private
sectors.
• Started career with a Big-Four international accounting firm in Washington, DC.
• Founded a regional certified public accounting and consulting firm in 1982 and grew it to
LAWRENCE J. HOFFMAN, on of the Washington, DC’s largest firms in seven years. Merged his practice with Raffa
CPA/CFF, CVA, CFE P.C. in 2008.
• Managed and conducted audit and accounting engagements ranging from small privately
held to large publicly held businesses in various industries, including multi-national
businesses, nonprofit organizations, and governmental entities and agencies.
• Performed economic and financial analysis, including projections and forecasts, in support
of litigation and claims for lost earnings and profits, business interruption, shareholder
disputes, patent and trademark infringements, bankruptcy and restructuring, and structural
settlements; assistance with interrogatories, document requests and depositions; and
serving as an expert and consulting witness.
• Performed and supervised business valuations for both public and closely held companies
in a variety of industries, individuals and estates, family limited partnerships and limited
liability companies, including valuations for business combinations (SFAS 141R), mergers,
SENIOR PARTNER
acquisitions, and divestitures, estate and gift taxes, marital dissolution proceedings, buy-
RAFFA, P.C. sell agreements, intangible assets and intellectual property, purchase price allocations,
1899 L STREET, NW
goodwill (SFAS 142) and long-lived asset (SFAS 144) impairment, fair value accounting
WASHINGTON, DC 20036
(SFAS 157), cheap stock (IRC 409A), stock-based compensation (SFAS 123R), phantom
stock and employee stock ownership plans.
TEL. 202-822-5408
FAX 202-822-0669 • Conducted and led teams of forensic accountants on fraud audits and investigations,
LHOFFMAN@RAFFA.COM including fraudulent financial statements, misappropriations of assets and embezzlements;
money laundering, kickbacks, bribery and conflicts of interest; insurance claims;
bankruptcy; financial institutions and loan fraud. Also has conducted fraud risk
assessments, anti-fraud programs, and fraud training and education.
Part I: The Fraud * Page 55
56. BIOGRAPHY
• Assisted companies and nonprofits with restructuring and turnaround situations, including
recapitalizations, reorganizations and liquidations. Advised entities on Chapters 11 and 7,
bankruptcy filings and proceedings and non-judicial workouts. Developed and
administered crisis management plans, cash flows, liquidation and turnaround analysis,
debt restructuring and creditor negotiations, and turnaround plans.
LAWRENCE J. HOFFMAN,
CPA/CFF, CVA, CFE • Formulated strategic short- and long-term business and financial planning for various
business organizations and served as interim “C” level positions, including for a major
North American sports league, European and U.S. aircraft manufacturer, aviation charter
airline and travel company, and a multi-chain quick service food chain.
• Formulated syndication strategies and prepared business plans and private placement
offerings, including financial forecasts, market research and analysis, due diligence,
securities pricing and structuring for various public and private securities offerings,
including SEC filing.
• Founded and developed a regional NASD licensed broker dealer investment banking firm.
Placed over $150 million in debt and equity and represented over $200 million in merger
and acquisition transactions.
• Founded and developed two private equity funds in excess of $10 million, including
SENIOR PARTNER investments in early stage and mature emerging companies in the form of debt and equity.
Portfolio investments included aviation, food and hospitality, software and technology,
telecommunications, sports and entertainment, banking and financial institutions,
healthcare, and wholesale and retail.
• Co-founded and managed various real estate acquisition, ownership, and operating
entities, including commercial office buildings, shopping centers, flex warehouses,
residential housing and developed land.
• Performed tax and financial consulting services for individuals and closely held
businesses.
• Instructor in audit, accounting, finance, and forensic accounting.
Part I: The Fraud * Page 56
57. BIOGRAPHY
EDUCATION & CERTIFICATIONS
• Bachelor of Science, Accounting – Mount St. Mary’s University
• Certified Public Accountant (CPA)
LAWRENCE J. HOFFMAN, • Certified Fraud Examiner (CFE)
CPA/CFF, CVA, CFE • Certified in Financial Forensics (CFF)
• Certified Valuation Analyst (CVA)
• Private Investigator (PI), Virginia
• Series 7 General Securities Representative (not active)
• Series 24 General Securities Principal (not active)
• Series 63 Uniform Securities Agent (not active)
PROFESSIONAL ASSOCIATIONS & AFFILIATIONS
• American Institute of Certified Public Accountants, Member
• Virginia Society of Certified Public Accountants
• Association of Certified Fraud Examiners
SENIOR PARTNER • National Association of Certified Valuation Analysts
• Institute of Business Appraisers
PERSONAL INTERESTS
• Private pilot with instrument, multi-engine, high performance complex and aircraft ratings
• Golf and fishing
• Reading and politics
Part I: The Fraud * Page 57