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 document discusses fraud in nonprofits. It provides an overview of a three-part series on nonprofit fraud, including the types of fraud, why it occurs, detection, and prevention. It notes that asset misappropriation is the most common fraud in nonprofits. The document also summarizes findings from the ACFE Report to the Nations on occupational fraud, including that the typical organization loses 5% of annual revenue to fraud and the median fraud lasts 18 months before detection. It emphasizes that trust alone is not an internal control and that prevention requires controls, education, and oversight.
2014-05-07 Nonprofit Fraud - What You Need to Know Part II - The DetectionRaffa Learning Community
This document provides an overview of fraud detection for nonprofits. It discusses why people commit fraud, how fraud is detected, and who the typical fraud perpetrators are. Regarding why fraud occurs, it describes the "fraud triangle" of opportunity, pressure or incentive, and rationalization. It notes that fraud is often detected through tips, internal controls, audits, and fraud risk assessments. Typical fraud perpetrators are profiled as trusted individuals living beyond their means who rationalize their criminal acts. The document aims to educate nonprofits on identifying and preventing fraud.
This document discusses part two of a three-part series on nonprofit fraud detection. It begins by outlining the objectives and agenda of part two, which focuses on why people commit fraud, how fraud is detected, who the perpetrators are, fraud detection techniques, and what to do when fraud is uncovered. It then goes on to explain the fraud triangle of pressure/incentive, opportunity, and rationalization that can motivate fraud. Common fraud perpetrator profiles are presented, noting they are typically employees exhibiting no prior criminal history. Various fraud detection methods and red flags are also outlined. The document stresses establishing policies and protections to prevent, detect, and respond to potential fraud.
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!
This document provides an overview of fraud in nonprofits from a three-part series on nonprofit fraud. It discusses why nonprofits are susceptible to fraud, common types of fraud experienced by nonprofits, and statistics on fraud from the ACFE Report to the Nations. Key findings include that the typical organization loses 5% of annual revenue to fraud, 87% of fraud cases involve asset misappropriation, and nonprofits lack some controls that other sectors have. The document aims to educate nonprofits on fraud risks and prevention.
The document discusses fraud awareness for managers. It defines fraud and provides examples of regulatory definitions. It outlines factors that can contribute to fraud such as lack of controls and management oversight. The document emphasizes the importance of prevention through controls and establishes tone at the top. It lists behavioral and other red flags that could indicate fraud.
company names mentioned herein are for identification and educational purposes only and are the property of, and may be trademarks of, their respective owners.
The document discusses fraud in nonprofits. It provides an overview of a three-part series on nonprofit fraud, including the types of fraud, why it occurs, detection, and prevention. It notes that asset misappropriation is the most common fraud in nonprofits. The document also summarizes findings from the ACFE Report to the Nations on occupational fraud, including that the typical organization loses 5% of annual revenue to fraud and the median fraud lasts 18 months before detection. It emphasizes that trust alone is not an internal control and that prevention requires controls, education, and oversight.
2014-05-07 Nonprofit Fraud - What You Need to Know Part II - The DetectionRaffa Learning Community
This document provides an overview of fraud detection for nonprofits. It discusses why people commit fraud, how fraud is detected, and who the typical fraud perpetrators are. Regarding why fraud occurs, it describes the "fraud triangle" of opportunity, pressure or incentive, and rationalization. It notes that fraud is often detected through tips, internal controls, audits, and fraud risk assessments. Typical fraud perpetrators are profiled as trusted individuals living beyond their means who rationalize their criminal acts. The document aims to educate nonprofits on identifying and preventing fraud.
This document discusses part two of a three-part series on nonprofit fraud detection. It begins by outlining the objectives and agenda of part two, which focuses on why people commit fraud, how fraud is detected, who the perpetrators are, fraud detection techniques, and what to do when fraud is uncovered. It then goes on to explain the fraud triangle of pressure/incentive, opportunity, and rationalization that can motivate fraud. Common fraud perpetrator profiles are presented, noting they are typically employees exhibiting no prior criminal history. Various fraud detection methods and red flags are also outlined. The document stresses establishing policies and protections to prevent, detect, and respond to potential fraud.
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!
This document provides an overview of fraud in nonprofits from a three-part series on nonprofit fraud. It discusses why nonprofits are susceptible to fraud, common types of fraud experienced by nonprofits, and statistics on fraud from the ACFE Report to the Nations. Key findings include that the typical organization loses 5% of annual revenue to fraud, 87% of fraud cases involve asset misappropriation, and nonprofits lack some controls that other sectors have. The document aims to educate nonprofits on fraud risks and prevention.
The document discusses fraud awareness for managers. It defines fraud and provides examples of regulatory definitions. It outlines factors that can contribute to fraud such as lack of controls and management oversight. The document emphasizes the importance of prevention through controls and establishes tone at the top. It lists behavioral and other red flags that could indicate fraud.
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: Understanding Fraud and Our ResponsibilitiesJason Lundell
This document discusses various types of fraud, famous fraudsters, how fraud is detected, and ways to prevent fraud. It provides details on common fraud schemes like asset misappropriation, corruption, and financial statement fraud. The largest fraudsters discussed are Bernie Madoff, whose Ponzi scheme resulted in $65 billion in losses, and Ken Lay of Enron, which led to a $100 billion loss for investors. Fraud is most often detected through tips, internal controls, and audits. Strong internal controls like surprise audits and job rotation were found to significantly reduce median fraud losses.
Trade-based money laundering is among the most sophisticated methods for cleaning dirty money. It involves a variety of schemes designed to obscure the documentation of legitimate trade transactions. It’s also one of the most difficult to detect, and a serious challenge for compliance officers and investigators.
Join financial crime compliance advisory and training specialist Michael Schidlow, as he examines one of the most lucrative forms of money laundering.
The document discusses how fraud and integrity risks are changing and increasing during the economic downturn. It summarizes that incentive/pressure, opportunity, and rationalization - the three conditions of the fraud triangle - are all heightened. Specific fraud risks that may emerge include issues in the supply chain, revenue leakage, bribery, anticompetitive practices, improper financial reporting, data theft, and weakened internal controls. The document recommends that organizations assess these risks, employ data analytics to detect misconduct, and implement a comprehensive antifraud framework based on the COSO model to proactively manage fraud risks.
William Black The Best Way to Rob a Bank is to Own One!Dulce Vendetta
The document discusses how control fraud, where the leaders of seemingly legitimate organizations use them to commit fraud, has been the driving factor behind major financial crises like the savings and loan debacle and Enron scandal. It argues that compensation structures provide incentives for control fraud, and a lack of regulation allows such fraud to thrive and spread through entire sectors of the economy. The author advocates for incorporating criminology theories into economics to better understand and prevent control fraud and the financial crises it causes.
Corporate fraud and corruption are growing problems globally according to the document. Some key points:
- Developing countries lost nearly $1 trillion to corruption, tax evasion, and trade misinvoicing in 2011 alone. Over the past decade, these countries lost almost $6 trillion illicitly.
- Fraud affects 70% of companies annually on average, costing 1.4% of revenues. Common fraud types include asset misappropriation, corruption, and financial statement fraud.
- Median fraud losses are $145,000 but 22% of cases result in losses over $1 million. Cases involving collusion or multiple perpetrators tend to be more costly.
- While no country is immune
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.
This document summarizes a fraud awareness workshop presented by Iyad Mourtada. The workshop covered case studies of occupational fraud, including Nick Leeson whose unauthorized speculative trading bankrupted Barings Bank. It discussed lessons learned around controls, monitoring, and segregation of duties. It defined fraud and internal controls, and examined the roles and responsibilities in maintaining controls. It also looked at different types of fraud schemes, how fraud is committed and detected, profiles of fraud perpetrators, and the certification process for becoming a Certified Fraud Examiner.
Financial scams are caused by corruption, lack of employment opportunities, electing dishonest leaders, and lack of oversight to prevent bribery. They negatively impact the Indian economy by potentially putting employees out of work, raising inflation, and causing shareholders to overpay for investments. To minimize scams, people should seek honest professionals, raise awareness, elect ethical leaders, and create independent oversight organizations.
Trade based money laundering dr. arefin , dg (prevention ) acc) on 23 may 2017Shamsul Arefin
This document discusses trade-based money laundering (TBML) and the challenges banks face in identifying and investigating suspicious TBML transactions. It provides examples of how under-invoicing exports and over-invoicing imports can be used to move money across borders. The document also notes documentation problems in trade financing and suggests banks request documentation based on import and export customs forms to help address these challenges.
This document summarizes a presentation about financial accountability and risk management for nonprofits. The presentation covers compliance with government regulations, accountability through financial policies and oversight, identifying and managing risks, and crisis management strategies. It provides tips and checklists for preventing fraud, responding to financial crises, and maintaining public trust through transparency and ethical practices.
This document discusses fraud risk management and occupational fraud. It begins with definitions of occupational fraud, including asset misappropriation, corruption, and financial statement fraud. It then summarizes key findings from the 2014 ACFE Global Fraud Study, such as typical fraud losses, detection methods, and fraud red flags. The rest of the document covers fraud risks and schemes, identifying and assessing fraud risks, fraud mitigation strategies like the fraud triangle and seven keys to reducing fraud. It provides examples and discussion of establishing an anti-fraud culture and related policies, training, fraud reporting mechanisms, and improving controls.
New age of risk for contractors slide presentation1paramount
The document discusses trends in fraud, including that fraud occurrences have increased since the 2008 economic crisis. Theft of company property and embezzlement have seen the greatest increases. Most frauds are uncovered by tips, management review, or internal audit. For construction companies specifically, the most common fraud schemes are corruption, billing, check tampering, skimming, and expense reimbursements, with the median fraud loss being $200,000. The document also outlines the fraud triangle of opportunity, pressure, and rationalization as factors that can contribute to fraud. It provides recommendations for fraud prevention, including eliminating opportunity through strong internal controls and increasing the perception of detection.
The document provides information about recognizing signs of human trafficking. It lists common work and living conditions as well as mental and physical health indicators that may suggest a person is a trafficking victim. These include having no freedom or control over their situation or identification documents, working excessively long hours for little or no pay, and exhibiting anxious, fearful or malnourished behavior. It encourages people to be vigilant for potential trafficking situations by looking for these types of red flags and contacting the National Human Trafficking Resource Center hotline to report them.
The document provides information about recognizing signs of human trafficking. It lists common work and living conditions as well as mental and physical health indicators that may suggest a person is a trafficking victim. These include having no freedom or control over their situation or identification documents, working excessively long hours for little or no pay, and exhibiting anxious, fearful or malnourished behavior. It encourages people to be vigilant for potential trafficking situations by looking for these types of red flags and contacting the National Human Trafficking Resource Center hotline to report them.
White Collar Crime A growing global problemOvais Rehman
This document discusses white collar crime as a growing global problem. It analyzes the Enron accounting scandal in detail, explaining reasons for Enron's bankruptcy such as fraudulent accounting practices. Cybercrime is also examined as a major issue, with examples like the JPMorgan hack impacting 76 million households. The European Union and Europol are working to combat cybercrime through new directives and the European Cybercrime Center. Overall the document analyzes white collar crimes like accounting fraud and emerging threats from cybercrime, their impacts, and efforts to strengthen regulations and enforcement.
Occupational Fraud The Facts and How to Protect Your Organization Webinar_FIN...Ron Steinkamp
The document is a presentation on occupational fraud that includes:
1) A summary of findings from the ACFE's global fraud study showing that the median fraud lasts 18 months and causes a loss of $150,000, with asset misappropriation being the most common form at 83% of cases.
2) Descriptions of the three categories of occupational fraud - asset misappropriation, corruption, and financial statement fraud - and some common schemes within each category.
3) Details on red flags of fraud, such as behavioral indicators and a typical fraudster profile, as well as recommendations for establishing an anti-fraud culture and controls to help prevent and detect fraud.
St. Louis County Municipal League - 7 keys to fraud preventionRon Steinkamp
The document provides an overview of occupational fraud including definitions of the three main categories: asset misappropriation, corruption, and financial statement fraud. It summarizes the key findings of the 2012 ACFE Global Fraud Study such as the typical fraud loss amount and how most frauds are detected. The document also outlines seven keys to fraud prevention and detection including establishing an anti-fraud culture, fraud awareness training, assessing fraud risks, and improving controls. It provides examples of "red flags" and discusses fraud investigations.
Threat Finance – How financial institutions and governments can choke off fin...emermell
This document summarizes a panel discussion on threat finance and how financial institutions and governments can prevent the financing of national security threats. The panelists were Jim Bischoff from US Special Operations Command, George Prokop from PwC, Don Semesky from Financial Operations Consultants, and Bill Ward from UnionBank. The panel discussed how threat actors like terrorist organizations use legitimate financial systems to raise, move and store funds. They provided examples of how this occurs through various licit and illicit means. The panel also discussed how financing allows threat actors to operate and achieve their objectives. The discussion concluded with recommendations for financial institutions to identify weak links in their anti-money laundering systems and the importance of public-private partnerships
This document provides an introduction to fraud awareness and examines various fraud-related topics. It defines fraud and discusses the evolution of notable fraud cases throughout history. The psychology of fraudsters is explored using different frameworks. Various types of fraud are categorized and described briefly. Key concepts like forensic accounting, the roles of fraud examiners, red flags, and internal controls are also introduced and their meanings and significance explained in a few sentences. The document aims to provide a high-level overview of the world of frauds.
This POWER POINT PRESENTATION is intended to bring awareness to public about Frauds that became A daily routine across the world without exception and increasing day by day.
Fraudsters have become more active during this pandemic COVID-19 exploiting the difficult times by false promises online!!
Fraud: Understanding Fraud and Our ResponsibilitiesJason Lundell
This document discusses various types of fraud, famous fraudsters, how fraud is detected, and ways to prevent fraud. It provides details on common fraud schemes like asset misappropriation, corruption, and financial statement fraud. The largest fraudsters discussed are Bernie Madoff, whose Ponzi scheme resulted in $65 billion in losses, and Ken Lay of Enron, which led to a $100 billion loss for investors. Fraud is most often detected through tips, internal controls, and audits. Strong internal controls like surprise audits and job rotation were found to significantly reduce median fraud losses.
Trade-based money laundering is among the most sophisticated methods for cleaning dirty money. It involves a variety of schemes designed to obscure the documentation of legitimate trade transactions. It’s also one of the most difficult to detect, and a serious challenge for compliance officers and investigators.
Join financial crime compliance advisory and training specialist Michael Schidlow, as he examines one of the most lucrative forms of money laundering.
The document discusses how fraud and integrity risks are changing and increasing during the economic downturn. It summarizes that incentive/pressure, opportunity, and rationalization - the three conditions of the fraud triangle - are all heightened. Specific fraud risks that may emerge include issues in the supply chain, revenue leakage, bribery, anticompetitive practices, improper financial reporting, data theft, and weakened internal controls. The document recommends that organizations assess these risks, employ data analytics to detect misconduct, and implement a comprehensive antifraud framework based on the COSO model to proactively manage fraud risks.
William Black The Best Way to Rob a Bank is to Own One!Dulce Vendetta
The document discusses how control fraud, where the leaders of seemingly legitimate organizations use them to commit fraud, has been the driving factor behind major financial crises like the savings and loan debacle and Enron scandal. It argues that compensation structures provide incentives for control fraud, and a lack of regulation allows such fraud to thrive and spread through entire sectors of the economy. The author advocates for incorporating criminology theories into economics to better understand and prevent control fraud and the financial crises it causes.
Corporate fraud and corruption are growing problems globally according to the document. Some key points:
- Developing countries lost nearly $1 trillion to corruption, tax evasion, and trade misinvoicing in 2011 alone. Over the past decade, these countries lost almost $6 trillion illicitly.
- Fraud affects 70% of companies annually on average, costing 1.4% of revenues. Common fraud types include asset misappropriation, corruption, and financial statement fraud.
- Median fraud losses are $145,000 but 22% of cases result in losses over $1 million. Cases involving collusion or multiple perpetrators tend to be more costly.
- While no country is immune
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.
This document summarizes a fraud awareness workshop presented by Iyad Mourtada. The workshop covered case studies of occupational fraud, including Nick Leeson whose unauthorized speculative trading bankrupted Barings Bank. It discussed lessons learned around controls, monitoring, and segregation of duties. It defined fraud and internal controls, and examined the roles and responsibilities in maintaining controls. It also looked at different types of fraud schemes, how fraud is committed and detected, profiles of fraud perpetrators, and the certification process for becoming a Certified Fraud Examiner.
Financial scams are caused by corruption, lack of employment opportunities, electing dishonest leaders, and lack of oversight to prevent bribery. They negatively impact the Indian economy by potentially putting employees out of work, raising inflation, and causing shareholders to overpay for investments. To minimize scams, people should seek honest professionals, raise awareness, elect ethical leaders, and create independent oversight organizations.
Trade based money laundering dr. arefin , dg (prevention ) acc) on 23 may 2017Shamsul Arefin
This document discusses trade-based money laundering (TBML) and the challenges banks face in identifying and investigating suspicious TBML transactions. It provides examples of how under-invoicing exports and over-invoicing imports can be used to move money across borders. The document also notes documentation problems in trade financing and suggests banks request documentation based on import and export customs forms to help address these challenges.
This document summarizes a presentation about financial accountability and risk management for nonprofits. The presentation covers compliance with government regulations, accountability through financial policies and oversight, identifying and managing risks, and crisis management strategies. It provides tips and checklists for preventing fraud, responding to financial crises, and maintaining public trust through transparency and ethical practices.
This document discusses fraud risk management and occupational fraud. It begins with definitions of occupational fraud, including asset misappropriation, corruption, and financial statement fraud. It then summarizes key findings from the 2014 ACFE Global Fraud Study, such as typical fraud losses, detection methods, and fraud red flags. The rest of the document covers fraud risks and schemes, identifying and assessing fraud risks, fraud mitigation strategies like the fraud triangle and seven keys to reducing fraud. It provides examples and discussion of establishing an anti-fraud culture and related policies, training, fraud reporting mechanisms, and improving controls.
New age of risk for contractors slide presentation1paramount
The document discusses trends in fraud, including that fraud occurrences have increased since the 2008 economic crisis. Theft of company property and embezzlement have seen the greatest increases. Most frauds are uncovered by tips, management review, or internal audit. For construction companies specifically, the most common fraud schemes are corruption, billing, check tampering, skimming, and expense reimbursements, with the median fraud loss being $200,000. The document also outlines the fraud triangle of opportunity, pressure, and rationalization as factors that can contribute to fraud. It provides recommendations for fraud prevention, including eliminating opportunity through strong internal controls and increasing the perception of detection.
The document provides information about recognizing signs of human trafficking. It lists common work and living conditions as well as mental and physical health indicators that may suggest a person is a trafficking victim. These include having no freedom or control over their situation or identification documents, working excessively long hours for little or no pay, and exhibiting anxious, fearful or malnourished behavior. It encourages people to be vigilant for potential trafficking situations by looking for these types of red flags and contacting the National Human Trafficking Resource Center hotline to report them.
The document provides information about recognizing signs of human trafficking. It lists common work and living conditions as well as mental and physical health indicators that may suggest a person is a trafficking victim. These include having no freedom or control over their situation or identification documents, working excessively long hours for little or no pay, and exhibiting anxious, fearful or malnourished behavior. It encourages people to be vigilant for potential trafficking situations by looking for these types of red flags and contacting the National Human Trafficking Resource Center hotline to report them.
White Collar Crime A growing global problemOvais Rehman
This document discusses white collar crime as a growing global problem. It analyzes the Enron accounting scandal in detail, explaining reasons for Enron's bankruptcy such as fraudulent accounting practices. Cybercrime is also examined as a major issue, with examples like the JPMorgan hack impacting 76 million households. The European Union and Europol are working to combat cybercrime through new directives and the European Cybercrime Center. Overall the document analyzes white collar crimes like accounting fraud and emerging threats from cybercrime, their impacts, and efforts to strengthen regulations and enforcement.
Occupational Fraud The Facts and How to Protect Your Organization Webinar_FIN...Ron Steinkamp
The document is a presentation on occupational fraud that includes:
1) A summary of findings from the ACFE's global fraud study showing that the median fraud lasts 18 months and causes a loss of $150,000, with asset misappropriation being the most common form at 83% of cases.
2) Descriptions of the three categories of occupational fraud - asset misappropriation, corruption, and financial statement fraud - and some common schemes within each category.
3) Details on red flags of fraud, such as behavioral indicators and a typical fraudster profile, as well as recommendations for establishing an anti-fraud culture and controls to help prevent and detect fraud.
St. Louis County Municipal League - 7 keys to fraud preventionRon Steinkamp
The document provides an overview of occupational fraud including definitions of the three main categories: asset misappropriation, corruption, and financial statement fraud. It summarizes the key findings of the 2012 ACFE Global Fraud Study such as the typical fraud loss amount and how most frauds are detected. The document also outlines seven keys to fraud prevention and detection including establishing an anti-fraud culture, fraud awareness training, assessing fraud risks, and improving controls. It provides examples of "red flags" and discusses fraud investigations.
Threat Finance – How financial institutions and governments can choke off fin...emermell
This document summarizes a panel discussion on threat finance and how financial institutions and governments can prevent the financing of national security threats. The panelists were Jim Bischoff from US Special Operations Command, George Prokop from PwC, Don Semesky from Financial Operations Consultants, and Bill Ward from UnionBank. The panel discussed how threat actors like terrorist organizations use legitimate financial systems to raise, move and store funds. They provided examples of how this occurs through various licit and illicit means. The panel also discussed how financing allows threat actors to operate and achieve their objectives. The discussion concluded with recommendations for financial institutions to identify weak links in their anti-money laundering systems and the importance of public-private partnerships
This document provides an introduction to fraud awareness and examines various fraud-related topics. It defines fraud and discusses the evolution of notable fraud cases throughout history. The psychology of fraudsters is explored using different frameworks. Various types of fraud are categorized and described briefly. Key concepts like forensic accounting, the roles of fraud examiners, red flags, and internal controls are also introduced and their meanings and significance explained in a few sentences. The document aims to provide a high-level overview of the world of frauds.
This POWER POINT PRESENTATION is intended to bring awareness to public about Frauds that became A daily routine across the world without exception and increasing day by day.
Fraudsters have become more active during this pandemic COVID-19 exploiting the difficult times by false promises online!!
Based on the symptoms and signs described, it seems the FBI profile is referring to a psychopath. Psychopaths are known for their arrogance, charm, manipulation of others' emotions, disregard for safety of self and others, and inability to feel empathy, guilt or remorse.
The document discusses various principles of fraud including:
1) Definitions of fraud, corporate fraud, management fraud, and financial statement fraud.
2) The fraud triangle consisting of pressure/motivation, opportunity, and rationalization as the three elements common to every fraud.
3) Characteristics of typical fraudsters including that they are usually someone trusted and not initially suspected, and profiles of high-level and low-level thieves.
4) Taxonomies used to classify fraud including against customers/investors, criminal/civil, for/against the company, and internal/external fraud.
5) The "fraud tree" categorizing fraud into fraudulent statements, asset
The document discusses profiling fraudsters and their common personality traits, specifically narcissistic personality disorder (NPD). It notes that fraudsters often exhibit a captivating surface presentation, relentless need for attention and control, entitlement, rule-bending, lack of remorse, and grandiose sense of self-importance. Understanding these traits can help identify potential fraud and prevent people from being swindled. However, regulators and victims still often fail to apply due diligence and scrutiny to examine fraudsters' behaviors and validate their stories. Recognizing warning signs of NPD traits in people could help curb fraud, but human nature makes it difficult to discern and act on such behaviors.
This document discusses detection and investigation of financial statement fraud. It covers common symptoms of fraud including irregular source documents, faulty journal entries, inaccuracies in ledgers, and unusual behaviors. It also examines motives for fraud such as pressure, opportunity, and rationalization. The document outlines key aspects of an internal control system including control environment, accounting systems, control activities, monitoring, and communication. It provides examples of internal control weaknesses that can enable fraud. Overall, the document provides an overview of detecting and preventing financial statement fraud through understanding motives and strengthening internal controls.
Knowing Your Customers: Pinpointing Patterns for Increased VigilanceJay Postma
October 8, 2014 presentation before International Money Transmitters Conference - Miami by John Schmarkey, CAMS, CFE and Jay Postma, CAMS. Covering Customer Identification, Due Diligence, Culture of Compliance, identifying and understanding customers, etc.
This document discusses protecting personal identity in the age of increased information tracking. It outlines the risks of identity theft, how thieves steal identities, and statistics on identity theft victims. Key points include that identity theft costs the US economy an estimated $100 billion annually, 47% of victims in 2015 experienced tax or wage-related identity theft, and children and the elderly are particularly vulnerable targets. The document provides tips on reducing identity theft risks and resolving identity theft issues.
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.
The fraud triangle framework identifies three elements that are commonly present when fraud occurs: pressure, opportunity, and rationalization. Pressure refers to incentives or motivations for committing fraud, such as financial problems or unrealistic work targets. Opportunity involves circumstances that allow fraud to take place, like weak internal controls or poor oversight. Rationalization is the justification or attitude that allows someone to commit fraud, such as believing they are entitled to the money or that the victim deserves it. The fraud diamond later added a fourth element of capability, referring to the traits and abilities needed to carry out the fraud. Together, these elements help explain why individuals and organizations commit fraud.
The Ultimate Financial Fraud Examination & Prevention ChecklistVeriti Consulting LLC
Did you know between 12.5 and 15 percent of the population are victims of financial fraud every year? Get the important facts about prevention and detection.
Veriti Consulting LLC provides various fraud and forensic accounting services for individuals and businesses across the United States. Veriti is also a licensed private investigation agency. If you would like to learn more about the types of fraud and forensic investigative services we offer click here or call 855.232.4410.
The document provides an agenda for a 3-day national forensic conference on fraud in Cameroon. Day 1 will define fraud and how it occurs, as well as common fraud schemes and targets. Day 2 will cover interviewing for fraud in audits. Day 3 will focus on fraud investigations and interviewing techniques. The conference aims to bring together experts to address fraud and corruption issues in Africa.
The document defines corruption and outlines its types and potential solutions. Corruption is defined as morally wrong and dishonest behavior that involves the misuse of public power for private gain. The document discusses socio-economic approaches to understanding corruption and introduces the Corruption Perception Index. It identifies the main types of corruption as administrative, political, grand, and petty. Potential solutions proposed include preventative measures, national integrity workshops, enforcing codes of conduct, and increasing transparency, accountability and international cooperation at both the individual and government levels.
Forensic Accounting – How To Uncover Fraud Jan 2012Hermerding
Richard Hermerding provides an overview of forensic accounting and how it can help uncover fraud. He discusses his qualifications and experience in forensic accounting. The document then discusses the seriousness of fraud based on surveys, who typically commits fraud, common fraud schemes, and warning signs. It provides examples of how forensic accounting techniques like document review, interviews, and financial transaction analysis can be used to detect financial statement fraud and other frauds.
This document provides information about identity theft, including how to prevent, detect, and respond to identity theft. It begins by defining identity theft as the misuse of another person's personal information for financial or other gain.
It then provides the following key points:
- To prevent identity theft, secure your mail, personal information, payment tools, and computer by taking steps like shredding documents, being careful who you share information with, using antivirus software, and not saving passwords on your computer.
- The best way to detect identity theft is to regularly check financial accounts and statements online or on paper, monitor credit reports and scores, and be wary of unexpected calls or charges. Acting quickly can reduce
Combating Human Trafficking in the USA and investigating it RightByron Olivere
This document provides an overview of human trafficking. It discusses the trafficker's methods, including grooming victims and controlling them through force, fraud and coercion. It also covers investigations, noting the importance of identifying victims, understanding trauma responses, and collaborating across agencies. Trafficking is very profitable with low risk. Reducing demand through customer deterrence is key to impacting the issue. Law enforcement training and resources need to increase to effectively address this crime.
Bernie Madoff orchestrated one of the most infamous and devastating financial frauds in history. His crimes involved operating a Ponzi scheme, named after Charles Ponzi, in which he promised high returns to investors but instead used new investors' funds to pay returns to earlier investors, creating the illusion of a profitable enterprise.
Brendan SchadeOutline· How are these crimes investigated and .docxAASTHA76
Brendan Schade
Outline:
· How are these crimes investigated and who investigates them (white collar)
· Re explain white collar crimes
· Why is this type of investigation so complicated
· Explain types of white collar crime (find sources first so you can explain what type of white collar crime they committed)
· Then briefly include other types (from textbook) 1-2 sentences per type
· What are some examples of white collar crime
· 2 sources (examples of RECENT white collar crimes)
· How are these criminals caught
· 5 ways they are caught (strategies/government protocol?)
· Who catches them
· How is corporate crime controlled by legislation; could RICO laws be used against corrupt corporations, agencies and their executives
· 4-5 sentences on how crime is controlled
· answer the RICO question in 4 sentences
· NOTES ON MARKOPOLOS: 2-3 sentences per bullet
· After researching the book “---“ my understanding of the specific white collar crime “ “ has shown me “ ”
· What was the ponzi scheme? (explain how the criminals activites are limited to this because … )
· Securities fraud-United States (relate to book)
· Hedge funds- United States (relate to book)
· Investment advisors- Corrupt practice- United States (relate to book)
· further compare book to topic
· Make a citation page (use easy bib.com)
· The Ebook online
· Your textbook
· 2 internet sources
An individual in the position where they are granted a substantial amount of power can also fall into the well-known trap of financial motivated crimes. White-collar crimes consist of non-violent actions committed, by people of high social status or who are trusted in the course of their occupation, in other words, business and government professionals. Illegal acts such as fraud, larceny, theft, concealment, public corruption, money laundering, corporate fraud, securities and commodities fraud are instances that all pertain to White-collar crimes. These crimes are motivated through individuals avoiding to lose money, property, or to secure a business advantage. White-collar crimes are investigated by federal authorities which can be taken as more of a serious deal than a crime involving violence or drugs. Typically the individual partaking in a White-collar crime is well educated, and respected members of his or her community, making it hard for them to get caught considering this type of crime does not include violence. White-collar crimes are mostly based off of individual’s greed or redemption from prior mistakes.
Crimes considered that are considered to be “White collar” are more than often committed by people of higher intelligence which makes it harder to investigate them. These people are usually highly educated and are smart enough to crack the system for long periods of time before being caught. This leads to cases being handled by the highest law enforcement agencies in the country, mostly the FBI. Crimes such as theft, larceny, fraud and money laundering are simply to ...
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2013-05-07 Nonprofit Fraud: Part II
1. Thrive. Grow. Achieve.
Nonprofit Fraud: What
You Need to Know
Part II: The Detection
Lawrence J. Hoffman, CPA/CFF, CVA, CFE
Senior Partner, & Director of Forensic Consulting Services
May 7, 2013
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
• Why do people commit fraud?
• How is fraud detected?
• Who are the fraud perpetrators?
• Fraud detection techniques
• What should you do when you uncover fraud?
PART III: THE PREVENTION
• Fraud risk assessments
• Setting the tone at the top and your board of directors
• What are the best preventative measures and controls?
• The five critical takeaways!
Part II: The Detection * Page 2
3. AGENDA
• Why do people commit fraud?
• How is fraud detected?
• Who are the perpetrators?
• Fraud detection techniques
• What should you do when you uncover a fraud?
Part II: The Detection * Page 3
4. WHY DO PEOPLE COMMIT FRAUD?
THREE REASONS WHY PEOPLE COMMIT CRIMES
• Economics $$$$$
• Passion love, lust, a cause (religious beliefs)
• Mental instability nuts
Part II: The Detection * Page 4
5. WHY DO PEOPLE COMMIT FRAUD?
THE FRAUD TRIANGLE
Part II: The Detection * Page 5
Rationalization
(frame of mind or
ethical character)
Opportunity
(lack of controls)
Pressure / Incentive (The
“Unshareable” Need)
6. WHY DO PEOPLE COMMIT FRAUD?
THE FRAUD TRIANGLE
THE FRAUD TRIANGLE ORIGINATED FROM
DR. DONALD CRESSEY'S HYPOTHESIS:
“Trusted persons become trust violators when they conceive of
themselves as having a financial problem which is non-
shareable, are aware this problem can be secretly resolved by
violation of the position of financial trust, and are able to apply to
their own conduct in that situation verbalizations which enable
them to adjust their conceptions of themselves as trusted
persons with their conceptions of themselves as users of the
entrusted funds or property.1 ”
1DONALD R. CRESSEY, OTHER PEOPLE'S MONEY
(MONTCLAIR: PATTERSON SMITH, 1973) P. 30.
Part II: The Detection * Page 6
7. WHY DO PEOPLE COMMIT FRAUD?
PRESSURE / INCENTIVE
(THE NEED, PERCEIVED OR ACTUAL)
• Financial pressure and debts
• Greed – need for high lifestyle-living beyond their means
• Feed a habit – gambling, drugs, other addictive behaviors
• Retribution / vendetta – feels abused or exploited-holds a
grudge
• Make earnings target or financial metric (bonuses)
• Need for praise and gratification
• Competitive pressures – keep your job
• Medical issues of family or self
Part II: The Detection * Page 7
8. WHY DO PEOPLE COMMIT FRAUD?
OPPORTUNITY (PERCEIVED)
• Weak or non-existent internal controls – lack of segregation of
duties
• Has sufficient access to assets and information that enables
the crime
• Has assessed that that the fraud can be committed and also
successfully concealed
• Too much trust placed in person or position. (Remember: trust
is not an internal control!)
• Poor communication within organization
• Lack of oversight and supervision
• Lack of disciplinary action for previous frauds
Part II: The Detection * Page 8
9. WHY DO PEOPLE COMMIT FRAUD?
RATIONALIZATION (A WAY TO RATIONALIZE THE
BEHAVIOR AS ACCEPTABLE)
• “I am just borrowing the money and will repay it”
• “I’ll stop once I pay off my debts”
• “The company won’t even realize this amount is gone; it’s not
that much”
• They feel they deserve it: “I am getting underpaid and am
underappreciated”
• “Management is ‘living high,’ while I am oppressed”
• “Everyone’s doing it, I am no different”
• “It is for a good purpose”
• They need the money
Part II: The Detection * Page 9
10. HOW IS FRAUD DETECTED?
• The detection of fraud involves the ability to recognize in a
timely manner whether fraud has occurred or is occurring
• However, a properly designed and executed audit may still
NOT detect material fraud, especially one involving:
– Forgery
– Deliberate failure to record transactions
– Intentional misrepresentations
– Collusion
• Ability to detect fraud depends on:
– Skillfulness of perpetrator
– Frequency and extent of manipulation
– Degree of collusion
– Relative size of individual amounts manipulated
– Seniority of individuals involved
Part II: The Detection * Page 10
11. HOW IS FRAUD DETECTED?
Part II: The Detection * Page 11
2012 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
12. HOW IS FRAUD DETECTED?
Part II: The Detection * Page 12
2012 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
13. Part II: The Detection * Page 13
HOW IS FRAUD DETECTED?
2012 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
14. HOW IS FRAUD DETECTED?
KEY TAKEAWAY: ESTABLISH POLICIES,
PROCEDURES AND MECHANISMS FOR TIPS!
• Employees
• Vendors
• Customers
• Other stakeholders
Part II: The Detection * Page 14
15. WHO ARE THE PERPETRATORS?
THE FACES OF FRAUD
Part II: The Detection * Page 15
16. WHO ARE THE PERPETRATORS?
TYPICAL PROFILE
• Usually living above their means or has an addictive need
• Does not have a prior criminal conviction or charged with a fraud
• Has a position of trust and responsibility
• Most likely a male between the age of 31 to 45
• Is well educated
• Understands and skillfully uses technology
• Usually comes across as a nice person, charming
• Usually well respected
• They usually spend everything they steal!
• 80% will buy a new car!
Part II: The Detection * Page 16
17. WHO ARE THE PERPETRATORS?
Part II: The Detection * Page 17
2012 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
FRAUD PERPETRATORS ARE NOT CAREER CRIMINALS
18. WHO ARE THE PERPETRATORS?
Part II: The Detection * Page 18
2012 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
FRAUD PERPETRATORS DO NOT HAVE A PRIOR HISTORY OF
BEING PUNISHED OR TERMINATED BY AN EMPLOYER FOR A
FRAUD-RELATED OFFENSE
19. WHO ARE THE PERPETRATORS?
Part II: The Detection * Page 19
2012 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
FRAUD PERPETRATOR IS TYPICALLY AN EMPLOYEE OR
MANAGER
20. WHO ARE THE PERPETRATORS?
Part II: The Detection * Page 20
2012 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
LARGER LOSSES WITH THE OWNER/EXECUTIVE
21. WHO ARE THE PERPETRATORS?
Part II: The Detection * Page 21
2012 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
MALES TEND TO ACCOUNT FOR ABOUT TWO-THIRDS OF
ALL FRAUD CASES
22. WHO ARE THE PERPETRATORS?
Part II: The Detection * Page 22
2012 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
TYPICALLY BETWEEN AGES 31 AND 45
23. WHO ARE THE PERPETRATORS?
Part II: The Detection * Page 23
2012 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
AMOUNT OF LOSS ROSE WITH AGE!
24. WHO ARE THE PERPETRATORS?
Part II: The Detection * Page 24
2012 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
LOSS WAS GREATER WITH TENURE OF PERPETRATOR
25. WHO ARE THE PERPETRATORS?
Part II: The Detection * Page 25
2012 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
MORE THAN HALF HAD A COLLEGE DEGREE OR HIGHER!
26. WHO ARE THE PERPETRATORS?
Part II: The Detection * Page 26
2012 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
ACCOUNTING DEPARTMENT TOPS THE LIST!
27. WHO ARE THE PERPETRATORS?
WHO DID THE FBI PROFILE WITH
THESE SYMPTOMS AND SIGNS?
• Anger and arrogance
• Capable of acting witty and charming
• Good at flattery and manipulating other people’s emotions
• Disregards the safety of self and others
• Does not show any guilt
• Lies, steals, and fights often
• Breaks the law repeatedly
• Substance abuse and/or legal problems
Part II: The Detection * Page 27
28. WHO ARE THE PERPETRATORS?
Part II: The Detection * Page 28
29. WHO ARE THE PERPETRATORS?
BERNIE’S JAIL CELL
Part II: The Detection * Page 29
30. WHO ARE THE PERPETRATORS?
Madoff says “he is happier in prison than he was on the outside
because he no longer lives in fear of being arrested and knows
he will die in prison.”
Part II: The Detection * Page 30
31. WHO ARE THE PERPETRATORS?
ANTISOCIAL PERSONALITY DISORDER (ASPD OR APD)
• A psychiatric condition in which a person manipulates, exploits,
or violates the rights of others
• Usually begins in childhood or early adolescence and
continues into adulthood
• “Boomerang Personality”-everything you throw at them, they
throw back at you. It is always the other person’s fault. Will not
accept responsibility
• Person with no conscience
• Is usually criminal
• Also referred to as “sociopaths” and “psychopaths”
Part II: The Detection * Page 31
32. WHO ARE THE PERPETRATORS?
SOCIOPATHS
• Are unable to experience emotional responses for other people
outside of their own personal interests
• Psychological inability to show emotion or caring for others
• While a sociopath can feel emotion, it is (even if it results in
care for another), because they find it viable for themselves as
opposed to what would be termed as selflessness
Part II: The Detection * Page 32
33. WHO ARE THE PERPETRATORS?
THE DILEMMA
• Everyone has to a degree a propensity to commit a crime!
• 93-95% of the population may commit a crime
• 5-7% are hard-core white collar criminals
• We are interested in the severity of the propensity of the 93-
95% and definitely don’t want the 5-7% working for us!
Part II: The Detection * Page 33
34. WHO ARE THE PERPETRATORS?
THE SYNTONIC SYNDROME
Five key characteristics of the hard-core white collar
criminal (5-7%)
• Ego-syntonic: “not my fault-ism”, where they re-arrange
events to be continually interpreted in their favor, often at the
expense of another person (vs. “ego-dystonic”)
• Personality disorders: the person probably has a
psychological problem called a personality disorder
• High IQ: the person has a high IQ
• Differential treatment: the person treats different people
differently within organization, usually based on who can give
them what they want. Bottom line: people are carefully
manipulated
• Controls decisions: the person seeks to control – or create –
the (decision-making) process, especially in areas where they
can personally benefit
Part II: The Detection * Page 34
35. FRAUD DETECTION TECHNIQUES
RED FLAGS
BEHAVIOR FLAGS
• Financial difficulties
• Living beyond means relative to known income level
• Family problems
• Serious addiction to drugs, alcohol, or gambling
• An unwillingness to share duties or allow others to help
• Defensive behavior-overly nervous when questioned
• A refusal to take vacations or very short vacations
• Over-devotion to the job-working a lot of overtime and
weekends-never calls in sick or misses work!
• A close personal relationship with vendors or customers
• Change in behavior
• Rule breakers
Part II: The Detection * Page 35
36. FRAUD DETECTION TECHNIQUES
Part II: The Detection * Page 36
2012 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
LIVING BEYOND MEANS #1!
37. FRAUD DETECTION TECHNIQUES
Part II: The Detection * Page 37
2012 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE
LIVING BEYOND MEANS FUELED BY ASSET MISAPPROPRIATION!
38. FRAUD DETECTION TECHNIQUES
FINANCIAL AND BUSINESS FLAGS
• Business is inexplicably unprofitable
• Company is having cash flow problems
• Under capitalized
• Financial statements are always late
• Financial statement trends/ratios are inconsistent and do not
make sense
• Financial records and books are in disarray and always out of
balance
• Management’s operating and financial decisions are
dominated by a single person or a few persons acting in
concert
• Background checks are not conducted on key employees
• High turnover of management and/or key accounting personnel
• Management displays a propensity to take undue risks
Part II: The Detection * Page 38
39. FRAUD DETECTION TECHNIQUES
FINANCIAL AND BUSINESS FLAGS (continued)
• Accounting personnel exhibit inexperience or laxity in
performing their duties
• Numerous banks and accounts
• Frequent change in independent auditors/accounting firm
• Management places undue pressures on the auditors, through
fees and unreasonable deadlines
• Frequent legal matters
• Frequent change in legal counsel and multiple law firms
• Operates on a “crisis” basis
• Fire people quickly if they don’t do what they want
• Significant transactions with related parties
• Problems with governmental and regulatory agencies
Part II: The Detection * Page 39
40. FRAUD DETECTION TECHNIQUES
INTERNAL CONTROL FLAGS
• A single employee controls the company finances and
accounting-lack of segregation of duties!
• Bank accounts are not timely reconciled and not reviewed by
someone independent of preparer
• Invoices are paid without verifying receipt or purchase
authorizations
• Reimbursements are not supported by receipts or other
supporting documentation
• Excessive sales voids and credit memos
• Missing deposit slips and/or cancelled checks
• Unexplained inventory shortages or adjustments
• Subsidiary account balances not reconciled
• Unexplained and numerous end-of-period adjusting entries
Part II: The Detection * Page 40
41. FRAUD DETECTION TECHNIQUES
INTERNAL CONTROL FLAGS (continued)
• A single employee controls the company finances and
accounting
• Bank accounts are not timely reconciled and not reviewed by
someone independent of preparer
• Missing documents
• Altered documents
• Photocopy of documents when originals should be available
Part II: The Detection * Page 41
43. FRAUD DETECTION TECHNIQUES
PREVENTIVE CONTROLS
Preventive controls attempt to deter or prevent undesirable
events from occurring. They are proactive controls that help
prevent a loss.
DETECTIVE CONTROLS
Detective controls, on the other hand, attempt to detect
undesirable acts. The provide evidence that a loss has occurred
but do not prevent a loss from occurring.
Detective techniques should be used to uncover fraud events
when preventive measures fail or unmitigated risks are realized.
Part II: The Detection * Page 43
44. FRAUD DETECTION TECHNIQUES
PREVENTIVE CONTROLS
• Segregations of duties with well defined job descriptions and
policies and procedures
• Job rotation
• Mandatory vacations
• Obtaining pre-approval on transactions before processing
• Require dual signatures on checks above a certain amount
• Using document control numbers to account for all
transactions-checks, purchase orders, invoices etc…
• Matching and comparing documents
• Testing clerical accuracy
• Physical controls over cash, checks, signatures, inventory and
other assets
• Computer passwords and access controls to prevent
unauthorized electronic access
Part II: The Detection * Page 44
45. FRAUD DETECTION TECHNIQUES
PREVENTIVE CONTROLS (CONTINUED)
• Back up financial files daily
• Pre-employment background investigations
• Employee training programs-fraud prevention
• Prosecute the guilty
Part II: The Detection * Page 45
46. FRAUD DETECTION TECHNIQUES
DETECTIVE CONTROLS
• Whistleblower Policies and Hotlines (TIPS!!!)
• Management and supervisory reviews and approvals
• Reconciliations
• Independent review of bank reconciliations and supporting
documents-cancelled checks
• Independent review of vendor control file for suspicious
vendors
• Independent review of payroll files for suspicious employees.
• Investigate customer and vendor complaints promptly
• Physical inspections/counts
• Financial analysis, budget vs. actual
• Data analysis, data mining and continuous auditing techniques
• Other technology tools
• Audits-external, internal, surprise
Part II: The Detection * Page 46
47. WHAT SHOULD YOU DO WHEN YOU
UNCOVER FRAUD?
• BE AWARE OF WARNING SIGNS
• REPORT IRREGULARITIES, SPECIFICALLY:
– If someone you work with asks you to do something that is
illegal or unethical
– If you suspect that someone— regardless of rank or
position—is committing fraud or abuse
Part II: The Detection * Page 47
48. WHAT SHOULD YOU DO WHEN YOU
UNCOVER FRAUD?
• Follow your organizations fraud policy
• Report through hotline or other anonymous reporting
mechanism
• Anonymous letter to company official
• Share your concern with your immediate supervisor or
organization’s audit committee
• Do not confront the suspected perpetrator
• Do not investigate the matter on your own
Part II: The Detection * Page 48
49. WHAT SHOULD YOU DO WHEN YOU
UNCOVER FRAUD?
• Organization management should retain counsel-
attorney/client privilege
• Employers have a duty to investigate promptly and thoroughly
• Counsel should retain a forensic expert to assist in the
investigation
• Employee (suspect) may be suspended with or without pay-
but do it swiftly if enough predication is present
• Employee (suspect) access to offices, computer systems,
banking, communications and other access rights and
privileges should be suspended or terminated
• Preserve evidence
• Understand legal implications
• Inform your insurance carriers
Part II: The Detection * Page 49
50. WHAT SHOULD YOU DO WHEN YOU
UNCOVER FRAUD?
• Objectives of the investigation should be conducted with
integrity, fairness, impartiality and respect and include:
– Gathering the facts
– Determining the merits of the complaint
– Complying with legal obligations
– Maintaining confidentiality
– Preserving the reputations of individuals and the
organization
– Taking proper remedial action
– Avoiding liability
– Preventing future claims and incidences
Part II: The Detection * Page 50
51. WHAT SHOULD YOU DO WHEN YOU
UNCOVER FRAUD?
• Everyone in an organization is responsible for fighting fraud.
• Be alert to potential fraud.
• Report any suspicions to your organization
Part II: The Detection * Page 51
52. 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 II: The Detection * Page 52
53. 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 II: The Detection * Page 53
54. SOME AREAS WE WILL BE GOING OVER IN
OUR OTHER PRESENTATION
PART III: THE PREVENTION –
JUNE 5, 2013, 12:00-2:00 P.M.
• Fraud risk assessments
• Setting the tone at the top and your board of directors
• What are the best preventative measures and controls?
• The five critical takeaways!
Part II: The Detection * Page 54
55. 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 II: The Detection * Page 55
57. BIOGRAPHY
Part II: The Detection * Page 57
• 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
on of the Washington, DC’s largest firms in seven years. Merged his practice with Raffa
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,
acquisitions, and divestitures, estate and gift taxes, marital dissolution proceedings, buy-
sell agreements, intangible assets and intellectual property, purchase price allocations,
goodwill (SFAS 142) and long-lived asset (SFAS 144) impairment, fair value accounting
(SFAS 157), cheap stock (IRC 409A), stock-based compensation (SFAS 123R), phantom
stock and employee stock ownership plans.
• Conducted and led teams of forensic accountants on fraud audits and investigations,
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.
LAWRENCE J. HOFFMAN,
CPA/CFF, CVA, CFE
SENIOR PARTNER
RAFFA, P.C.
1899 L STREET, NW
WASHINGTON, DC 20036
TEL. 202-822-5408
FAX 202-822-0669
LHOFFMAN@RAFFA.COM
58. BIOGRAPHY
Part II: The Detection * Page 58
• 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.
• 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
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.
LAWRENCE J. HOFFMAN,
CPA/CFF, CVA, CFE
SENIOR PARTNER
59. BIOGRAPHY
Part II: The Detection * Page 59
LAWRENCE J. HOFFMAN,
CPA/CFF, CVA, CFE
SENIOR PARTNER
EDUCATION & CERTIFICATIONS
• Bachelor of Science, Accounting – Mount St. Mary’s University
• Certified Public Accountant (CPA)
• Certified Fraud Examiner (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
• 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