This document provides an outline and overview of fraud in the workplace. It discusses why organizations should be concerned about fraud, the current climate around fraud including high profile cases, and the differences between criminal and civil fraud. It introduces the fraud triangle and fraudster's profile. It also covers best practices for workplace investigations including preparing for and conducting interviews. The overall message is that the most effective fraud deterrence comes from education and awareness about fraud risks and prevention.
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.
Ran a Fraud Investigation session online for The Institute of Chartered Accountants of Pakistan. These are slides for day 2. Link for session 1 slides at the bottom of the description. These slides cover considerations for fraud interviews, report writing, legal considerations during investigations, roles and responsibilities, some input on understanding fraud prevention and fraud risk management (another link below for a detailed slide deck on this topic), some nuances of modern fraud investigations, and selected specific fraud and corruption scenarios. The last topic was covered in the session for the audiences where I shared some interesting aspects; will probably cover those in a blog post soon for wider sharing.
Links:
Fraud Investigations Session 1 slides: https://www.slideshare.net/ZeeshanShahid1/fraud-investigations-session-1-slides
Fraud Risk Management - High level perspective
https://www.slideshare.net/ZeeshanShahid1/fraud-risk-management-high-level-perspective-for-the-board-of-directors
Role of Internal Audit in fraud prevention and detectionZeeshan Shahid
The document discusses the role of internal audit in fraud prevention and detection. It covers relevant standards, fraud awareness, fraud risks and types of fraud. It describes the roles and responsibilities of management, external auditors, internal auditors in preventing and detecting fraud. It provides facts about typical fraud cases and profiles of fraudsters based on reports by the Association of Certified Fraud Examiners. The document emphasizes the importance of professional skepticism, communication with the board, and fraud risk assessments for internal auditors."
Slide deck from Workshop on Fraud Investigation delivered in January 2018 in Lahore arranged by the Institute of Chartered Accountants of Pakistan.
This slide deck provides a standard
Are you going to introduce a whistleblower hotline to your business? This presentation covers policies, and internal/external considerations you'll need to make note of
Tips for Implementing a Whistleblower HotlineCase IQ
Shannon Walker, President of Whistleblower Security, shares tips for setting up a whistleblower hotline and answers some important questions and concerns often brought up when implementing and maintaining a whistleblower program.
To watch the entire webinar, visit: http://i-sight.com/webinar-how-to-set-up-a-whistleblower-hotline/
The document summarizes a presentation on fraud risk management. It discusses why people commit fraud, proactive vs reactive fraud prevention approaches, what to do if fraud is detected, and concluding with what to do if fraud is suspected. The presentation advocates adopting a "fraud savvy model" with six elements: establishing moral rules, training, risk controls, reporting/monitoring, proactive detection, and thorough investigation/prosecution. If fraud occurs, the presenter recommends a full internal investigation, preserving evidence, seeking legal advice, and implementing fraud mitigation measures, but expresses that focusing on recovery may be better than punishment.
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.
Ran a Fraud Investigation session online for The Institute of Chartered Accountants of Pakistan. These are slides for day 2. Link for session 1 slides at the bottom of the description. These slides cover considerations for fraud interviews, report writing, legal considerations during investigations, roles and responsibilities, some input on understanding fraud prevention and fraud risk management (another link below for a detailed slide deck on this topic), some nuances of modern fraud investigations, and selected specific fraud and corruption scenarios. The last topic was covered in the session for the audiences where I shared some interesting aspects; will probably cover those in a blog post soon for wider sharing.
Links:
Fraud Investigations Session 1 slides: https://www.slideshare.net/ZeeshanShahid1/fraud-investigations-session-1-slides
Fraud Risk Management - High level perspective
https://www.slideshare.net/ZeeshanShahid1/fraud-risk-management-high-level-perspective-for-the-board-of-directors
Role of Internal Audit in fraud prevention and detectionZeeshan Shahid
The document discusses the role of internal audit in fraud prevention and detection. It covers relevant standards, fraud awareness, fraud risks and types of fraud. It describes the roles and responsibilities of management, external auditors, internal auditors in preventing and detecting fraud. It provides facts about typical fraud cases and profiles of fraudsters based on reports by the Association of Certified Fraud Examiners. The document emphasizes the importance of professional skepticism, communication with the board, and fraud risk assessments for internal auditors."
Slide deck from Workshop on Fraud Investigation delivered in January 2018 in Lahore arranged by the Institute of Chartered Accountants of Pakistan.
This slide deck provides a standard
Are you going to introduce a whistleblower hotline to your business? This presentation covers policies, and internal/external considerations you'll need to make note of
Tips for Implementing a Whistleblower HotlineCase IQ
Shannon Walker, President of Whistleblower Security, shares tips for setting up a whistleblower hotline and answers some important questions and concerns often brought up when implementing and maintaining a whistleblower program.
To watch the entire webinar, visit: http://i-sight.com/webinar-how-to-set-up-a-whistleblower-hotline/
The document summarizes a presentation on fraud risk management. It discusses why people commit fraud, proactive vs reactive fraud prevention approaches, what to do if fraud is detected, and concluding with what to do if fraud is suspected. The presentation advocates adopting a "fraud savvy model" with six elements: establishing moral rules, training, risk controls, reporting/monitoring, proactive detection, and thorough investigation/prosecution. If fraud occurs, the presenter recommends a full internal investigation, preserving evidence, seeking legal advice, and implementing fraud mitigation measures, but expresses that focusing on recovery may be better than punishment.
Un docente le escribe una carta al presidente comparando sus roles. El docente señala que mientras el presidente pasará a la historia, él quedará en la memoria de los estudiantes. Además, mientras el presidente decreta y dirige, el docente enseña y es justo. El docente también indica que a diferencia del presidente, él paga impuestos y suma conocimientos en lugar de descuentos.
El documento proporciona información sobre varios lugares y sitios arqueológicos importantes del Perú, incluyendo Machu Picchu, el Camino Inca, Kuelap, el Señor de Sipán, y Caral. Caral es el asentamiento urbano más antiguo de las Américas, datando de entre 2600-2100 a.C., y contiene seis grandes pirámides y otras estructuras arquitectónicas.
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 an overview of internal investigations conducted by a private investigations firm. It discusses the firm's history and services. The firm conducts various types of investigations including fraud, theft, harassment, and due diligence. It also outlines common employee misconduct schemes, resources for internal investigations, and case studies involving issues like asset misappropriation and fraudulent investments. The document aims to educate clients on how the firm can assist with internal investigations and managing employee misconduct risks.
The document summarizes forensic accounting, describing it as the specialty practice area of accountancy used for engagements resulting from actual or anticipated disputes or litigation. It discusses terms like forensic accounting and digital forensics. Applications include fraud investigation, disputes, and mergers and acquisitions. Tools used include financial analytics, investigative techniques, and computer forensics. Credentials for forensic accountants are also outlined.
This presentation provides an overview to preventing and detecting payroll fraud. It is of interest to payroll managers, finance directors, shared services specialists, and internal auditors.
Rushmore Forensic is a specialist forensic accounting firm based in Sydney, Australia.
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.
Investigating Misconduct: Reaching a Decision and Determining Root CausesCase IQ
This document discusses best practices for conducting workplace investigations and determining root causes. It outlines the key elements of a thorough investigation, including debriefing involved parties, gathering and analyzing evidence, and assessing credibility. When making a determination, the investigator should have proof for each policy element and close any gaps. There are three potential conclusions: substantiated, unsubstantiated, or inconclusive. Root cause analysis seeks to understand why the misconduct occurred by examining multiple contributing factors beyond any one individual, such as organizational systems involving people, methods, policies, management, and communication. Identifying all potential causes can help prevent recurrence.
Ethically Litigating Forensic Science Cases: Daubert, Dna and BeyondAdam Tebrugge
What are the shared responsibilities of the analyst, prosecutor ,defense attorney and judge when dealing with forensic science cases? This lecture also covers DNA evidence and focuses on discovery and litigation issues.
Forensic accounting involves investigating potential fraudulent activities by conducting a thorough analysis of financial data. Forensic accountants work in a team to collect evidence, verify data, analyze financial records, and summarize their findings in reports and testimony to help resolve cases related to money laundering, bankruptcy, embezzlement, tax evasion, and other financial crimes or disputes. Some challenges forensic accountants face include the need for advanced technical and financial expertise, potential leaks of confidential information, and high costs of lengthy investigations.
Fooling the auditor - Understand the People RiskJenny Reid
An audit is an evaluation of a person, system or process conducted by an auditor. There are different types of auditors, including forensic, statutory, cost, performance, internal, and quality auditors. The document then discusses how people can fool auditors through internal means such as false representations or inflated expenses by staff, or external means such as dishonest vendors, customers, or hacking. It provides examples of different types of internal and external fraud that people use to fool auditors. The document concludes by outlining strategies organizations can use to prevent fraud like having strong internal controls, ethics policies and training, and programs to encourage proactive identification of issues.
San Francisco Isaca 2010 Fall Security Conference C24 Fraud In The Workplac...Pw Carey
This document discusses fraud in the workplace and provides information about three mock trials that could be used to train auditors and whistleblowers. It includes details about Cressey's Fraud Triad, common mistakes whistleblowers make, and the steps involved in a trial. The document is divided into three parts that describe mock trials involving the companies NetApps, Eli Lilly, and Pfizer regarding allegations of fraud, off-label marketing, and non-compliance. Each case outlines the allegations against the companies, the companies' defenses, and how the cases were ultimately resolved through large fines and penalties.
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The document discusses fraud in the workplace and provides information about fraud trials and whistleblowers. It discusses Cressey's fraud triad of perceived unshareable need, opportunity, and rationalization. It provides steps in a trial process and discusses mistakes whistleblowers commonly make. The rest of the document appears to be mock trial materials, including opening statements, witness testimony, and details about a $128 million settlement in a case between the GSA and NetApp regarding undisclosed discounts.
San Francisco Isaca 2010 Fall Security Conference C24 Fraud In The Workplac...Pw Carey
1) The document discusses Cressey's Fraud Triad which outlines the three factors that commonly lead to fraud: perceived unshareable financial need, perceived opportunity, and rationalization.
2) It provides an overview of common mistakes made by whistleblowers and steps that should be taken when exposing wrongdoing.
3) The document outlines the typical steps involved in a mock trial, including opening statements, witness questioning, closing arguments, and the jury deliberating to reach a verdict.
This document discusses the role of HR after discovering employee fraud. It states that HR should take immediate steps to mitigate losses, consult experts, launch an investigation without delay, and involve departments like legal, security, and management if needed. It provides guidance on effectively conducting internal investigations, including documenting allegations, determining potential losses, reviewing controls and records, interviewing suspects, and gathering facts to prove guilt. The document stresses analyzing lessons learned and implementing deterrents. It also offers tips for fraud prevention, like vetting staff, promoting an anti-fraud culture, monitoring employees, and responding effectively to identified fraud cases.
Un docente le escribe una carta al presidente comparando sus roles. El docente señala que mientras el presidente pasará a la historia, él quedará en la memoria de los estudiantes. Además, mientras el presidente decreta y dirige, el docente enseña y es justo. El docente también indica que a diferencia del presidente, él paga impuestos y suma conocimientos en lugar de descuentos.
El documento proporciona información sobre varios lugares y sitios arqueológicos importantes del Perú, incluyendo Machu Picchu, el Camino Inca, Kuelap, el Señor de Sipán, y Caral. Caral es el asentamiento urbano más antiguo de las Américas, datando de entre 2600-2100 a.C., y contiene seis grandes pirámides y otras estructuras arquitectónicas.
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 an overview of internal investigations conducted by a private investigations firm. It discusses the firm's history and services. The firm conducts various types of investigations including fraud, theft, harassment, and due diligence. It also outlines common employee misconduct schemes, resources for internal investigations, and case studies involving issues like asset misappropriation and fraudulent investments. The document aims to educate clients on how the firm can assist with internal investigations and managing employee misconduct risks.
The document summarizes forensic accounting, describing it as the specialty practice area of accountancy used for engagements resulting from actual or anticipated disputes or litigation. It discusses terms like forensic accounting and digital forensics. Applications include fraud investigation, disputes, and mergers and acquisitions. Tools used include financial analytics, investigative techniques, and computer forensics. Credentials for forensic accountants are also outlined.
This presentation provides an overview to preventing and detecting payroll fraud. It is of interest to payroll managers, finance directors, shared services specialists, and internal auditors.
Rushmore Forensic is a specialist forensic accounting firm based in Sydney, Australia.
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.
Investigating Misconduct: Reaching a Decision and Determining Root CausesCase IQ
This document discusses best practices for conducting workplace investigations and determining root causes. It outlines the key elements of a thorough investigation, including debriefing involved parties, gathering and analyzing evidence, and assessing credibility. When making a determination, the investigator should have proof for each policy element and close any gaps. There are three potential conclusions: substantiated, unsubstantiated, or inconclusive. Root cause analysis seeks to understand why the misconduct occurred by examining multiple contributing factors beyond any one individual, such as organizational systems involving people, methods, policies, management, and communication. Identifying all potential causes can help prevent recurrence.
Ethically Litigating Forensic Science Cases: Daubert, Dna and BeyondAdam Tebrugge
What are the shared responsibilities of the analyst, prosecutor ,defense attorney and judge when dealing with forensic science cases? This lecture also covers DNA evidence and focuses on discovery and litigation issues.
Forensic accounting involves investigating potential fraudulent activities by conducting a thorough analysis of financial data. Forensic accountants work in a team to collect evidence, verify data, analyze financial records, and summarize their findings in reports and testimony to help resolve cases related to money laundering, bankruptcy, embezzlement, tax evasion, and other financial crimes or disputes. Some challenges forensic accountants face include the need for advanced technical and financial expertise, potential leaks of confidential information, and high costs of lengthy investigations.
Fooling the auditor - Understand the People RiskJenny Reid
An audit is an evaluation of a person, system or process conducted by an auditor. There are different types of auditors, including forensic, statutory, cost, performance, internal, and quality auditors. The document then discusses how people can fool auditors through internal means such as false representations or inflated expenses by staff, or external means such as dishonest vendors, customers, or hacking. It provides examples of different types of internal and external fraud that people use to fool auditors. The document concludes by outlining strategies organizations can use to prevent fraud like having strong internal controls, ethics policies and training, and programs to encourage proactive identification of issues.
San Francisco Isaca 2010 Fall Security Conference C24 Fraud In The Workplac...Pw Carey
This document discusses fraud in the workplace and provides information about three mock trials that could be used to train auditors and whistleblowers. It includes details about Cressey's Fraud Triad, common mistakes whistleblowers make, and the steps involved in a trial. The document is divided into three parts that describe mock trials involving the companies NetApps, Eli Lilly, and Pfizer regarding allegations of fraud, off-label marketing, and non-compliance. Each case outlines the allegations against the companies, the companies' defenses, and how the cases were ultimately resolved through large fines and penalties.
C24 Fraud In The Workplace (3 Mock Trials)Pw Carey
The document discusses fraud in the workplace and provides information about fraud trials and whistleblowers. It discusses Cressey's fraud triad of perceived unshareable need, opportunity, and rationalization. It provides steps in a trial process and discusses mistakes whistleblowers commonly make. The rest of the document appears to be mock trial materials, including opening statements, witness testimony, and details about a $128 million settlement in a case between the GSA and NetApp regarding undisclosed discounts.
San Francisco Isaca 2010 Fall Security Conference C24 Fraud In The Workplac...Pw Carey
1) The document discusses Cressey's Fraud Triad which outlines the three factors that commonly lead to fraud: perceived unshareable financial need, perceived opportunity, and rationalization.
2) It provides an overview of common mistakes made by whistleblowers and steps that should be taken when exposing wrongdoing.
3) The document outlines the typical steps involved in a mock trial, including opening statements, witness questioning, closing arguments, and the jury deliberating to reach a verdict.
This document discusses the role of HR after discovering employee fraud. It states that HR should take immediate steps to mitigate losses, consult experts, launch an investigation without delay, and involve departments like legal, security, and management if needed. It provides guidance on effectively conducting internal investigations, including documenting allegations, determining potential losses, reviewing controls and records, interviewing suspects, and gathering facts to prove guilt. The document stresses analyzing lessons learned and implementing deterrents. It also offers tips for fraud prevention, like vetting staff, promoting an anti-fraud culture, monitoring employees, and responding effectively to identified fraud cases.
This document provides information about expungement in Pennsylvania, including what expungement is, eligibility requirements, and how to file for expungement. Expungement is a legal process that removes some criminal offenses from a criminal record so they do not appear on background checks, while still being available to courts and law enforcement. There are various circumstances where expungement is available, including successful completion of an ARD program, summary offenses, court cases, juvenile records, non-convictions, and charges dismissed under the Controlled Substance Act. The process involves obtaining records, filling out the proper forms, paying filing fees, and submitting paperwork to the prothonotary and district attorney's office in the county where the
This document summarizes a webinar on fraud in the public sector. The webinar discusses the definition of fraud, sectors and industries most commonly impacted by fraud, who typically commits fraud, and reasons why fraud occurs. Specific examples of potential public sector fraud in Canada are provided. The webinar also outlines steps that can be taken to reduce fraud risk, such as establishing clear roles and responsibilities, implementing appropriate prevention and detection controls, and regularly communicating fraud management results. Common fraud detection methods and key elements of an effective fraud risk management program are also summarized.
The internet as a corporate security resourceDan Michaluk
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Encouraging Internal Compliance Communication WebinarCase IQ
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ACCA-IIA Singapore Seminar 2015 Part 5 InvestigationBillyCheuk
1. The document provides guidance on conducting internal investigations into potential fraud, including receiving allegations, evaluating evidence, investigation protocols, interviewing suspects and witnesses, and reporting results.
2. Key steps discussed include categorizing issues, conducting objective fact-finding, developing confidential investigation plans, collecting and preserving evidence, and providing recommendations such as disciplinary action or criminal prosecution.
3. The presentation emphasizes the importance of lawful, fair, and impartial investigations to avoid legal risks like defamation or privacy violations while still thoroughly addressing potential fraud issues.
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The sectors make different assumptions and have different focuses - the community sector provides support services, child protection investigates risk of harm, and the family court makes decisions based on evidence. This can lead to a lack of information sharing and understanding between the sectors. The document proposes improvements like better safety assessments, case management protocols, cross-sector training, and clearer guidelines for expert reports to help the systems work together more effectively for children and families
Similar to Etobicoke CPA Association Presentation 2014 (20)
4. Why Be Concerned?
• Not likely to happen to me.
• Not my job
• If something happens, someone else will look
after it – Lawyers, forensic accountants,
investigators, police, etc.
5. The Current Climate
Newsworthy
Incidents of Fraud in all forms are attracting the
attention of national and international media
Kenneth Lay, Bernie Ebbers,
Bernard Madoff, David Walsh,
Conrad Black, Earl Jones, Rashida Samji
6. The Current Climate
Civil Courts
• 2010 - Rules of Civil Procedure being amended –
improve accessibility and affordability
• Length of pre-trial Discovery process reduced
• Increased pressure upon investigation to discover all
relevant evidence
• ADR / Mediation
7. The Current Climate
Criminal Courts
• Prosecution difficult – time/resource constraints – Judges
and Crown Attorneys
• Burden of Proof – Mens Rea difficult to prove
• Large number of witnesses
• Issues tend to be complex with large volume of
documents and electronic data
• Motivated to enter into plea settlements
8. The Current Climate
Enforcement
The resources of municipal, regional, provincial
and national fraud offices are experiencing
overwhelming volumes of files which has a
negative impact upon their ability to
effectively and successfully investigate and
prosecute allegations of fraud.
9. The Current Climate
Industry Making Adjustments
Phone Busters
Financial Services Commission of Ontario
Ministry of Consumer Services
Special Investigations Units (i.e. Insurance)
Private Industry
Financial Transactions and Reports Analysis Centre
of Canada (Fintrac)
10. The Current Climate
The responsibility for effectively preventing and
investigating allegations of fraud and other
workplace incidents is being transferred on a
more regular and consistent basis to private
financial and investigative professionals
11. Poor Investigations - Implications
• Unsuccessful Criminal Prosecution
• Unsuccessful Civil Prosecution
• Civil Liability for the Company
• Potential Personal Liability
• Decreased Workplace Morale
• Loss of Credibility
• Inability to Recover Losses
• Costs
12. The Current Climate
• Most Financial Crimes Units of GTA police
services require that a fraud investigation be
undertaken and a report prepared before they
will undertake a criminal investigation.
• Typically these reports are prepared by a forensic
accountant, investigator or some combination of
the two.
• Enforcement will then use results of preliminary
investigations to conduct search warrants and
further inquiry.
13. Criminal vs Civil Fraud
Criminal Code
Every one who, by deceit, falsehood or other
fraudulent means, whether or not it is a false
pretence within the meaning of this Act,
defrauds the public or any person, whether
ascertained or not, of any property, money or
valuable security or any service…
Source: Criminal Code of Canada
14. Criminal Code Fraud Penalties
• < $5,000.00: Term of imprisonment not
exceeding two years
• > $5,000.00: Term of imprisonment not
exceeding 14 years
15. Criminal Code Fraud Penalties
Standing up for Victims of White Collar Crime
Act (2010):
Where the value of the subject matter of the
offence(s) exceeds one million dollars, the court
shall impose a minimum sentence of two years
imprisonment
16. Criminal Code Fraud – Sentencing
Total of six aggravating circumstances – four are
applicable to instances of fraud in the workplace:
• Magnitude, complexity, duration or degree of
planning of the fraud committed was significant
• The offence had a significant impact on the
victims given their personal circumstances
including their age, health and financial situation
17. Criminal Code Fraud - Sentencing
• The offender did not comply with a licensing
requirement, or professional standard, that is
normally applicable to the activity or conduct
that forms the subject-matter of the offence;
• The offender concealed or destroyed records
related to the fraud or to the disbursement of
the proceeds of the fraud.
18. Civil Fraud
• 2014 – Supreme Court of Canada articulated
the test to be applied to alleged incidents of
civil fraud:
1. False representation made by the defendant;
2. Some level of knowledge of the falsehood of
the representation on the part of the
defendant (whether through knowledge or
recklessness);
19. Civil Fraud
3) The false representation caused the
plaintiff to act; and
4) The plaintiff’s actions resulted in a loss.
Source: Bruno Appliance and Furniture, Inc. v. Hryniak 2014 SCC 8
20. Criminal vs. Civil
Primary Considerations:
(1) – Burden of Proof
• Criminal Fraud – Beyond Reasonable Doubt
• Civil Fraud – Balance of Probabilities
21. Criminal Vs. Civil
Beyond a Reasonable Doubt:
• No strict legal definition
• Tied to the presumption of innocence
• Reasonable doubt – based upon reason and
common sense
• Doubt based upon not only what the evidence
tells you but also what the evidence does not
tell you.
Source: Canadian Judicial Counsel
Revised February 2004
22. Criminal vs. Civil
Balance of Probabilities:
• No strict legal definition
• Based upon the preponderance and weight of
evidence the facts as alleged are probably true
• Lower standard than the criminal courts
• Enhanced Balance of Probabilities struck down
by Supreme Court of Canada.
23. Criminal vs. Civil
(2) Evidence Continuity
(Chain of Custody)
Criminal Code - Strictly enforced
- Must establish continuity of all
evidence presented in court
Civil - Rules more relaxed
24. Criminal vs. Civil
(3) Control of Investigation
Criminal - Investigation controlled by
Police and Crown Attorneys
Civil - Investigation controlled by
client and counsel
25. CRIMINAL VS. CIVIL
(4) Restitution
Criminal - Focused on guilt or innocence
- Restitution Orders survive
bankruptcy
Civil - Focused on liability
- More likely to issue a judgment
awarding financial damages
- Judgments do not survive bankruptcy
31. The Fraud Triangle
OPPORTUNITY
• Weak internal controls
• Poor management oversight
• High levels of trust
• Little or no accountability
32. The Fraud Triangle
RATIONALIZATION
• Entitlement – unacknowledged contributions
to the company; no pay raises; passed over for
promotion
• Need – cannot sustain lifestyle, look after
family
• Borrowing – will repay funds
34. The Fraudster’s Profile
• Male
• 31 – 45 years
• Length of employment > 6 years
• Generally holds a position in accounting
• Collusion – internal and/or external
• No history of prior involvement in fraudulent
activities.
• Holds position of trust among colleagues and
management
• Likely considered a very good employee
35. Two Main Types of Fraudsters
Opportunistic
• Most common
• Generally will be deterred by effective fraud
prevention measures
Predatory
• More rare
• Intent is to defraud his/her employer
37. Workplace Investigations
Common Weak Points
• Poor or inconsistent communication
• Inadequate policies and procedures/Poor internal
controls
• Evidence retrieval and continuity – electronic or
otherwise
• Pre-mature action by management
• Lack of timely and impartial investigations
• Statements – induced, evidence of intimidation
• Non-compliant
• Suspect not provided the opportunity to give their side of
the story
39. Workplace Investigations
Proactive Strategies
• Examination of existing systems and assess fraud
exposure
• Establish Policies and Procedures
• Ensure communication with all staff – reinforce
message (i.e. annual performance reviews)
40. Detection
• Observation - lifestyle
• Awareness - vacation time
• Spot Inspections/Audits
• Communication
• Variance Analysis - margins
- expenses
- inventory
• Inventory Write Down
• Snitch Lines - confidential and safe
- effective tool for detection and
prevention
- must be acted upon
- opportunity for abuse and revenge
41. The Interview
• Purpose
new information
confirmation
identify deception / contradictions
• Preparation
personnel file
associates
job history/duties
• Environment
location
sanitize
42. The Interview
• Dynamics
one on one
two on one
clear and direct questions
accurate and complete record of response
• Record
video
audio - if no, record rejection
- if yes - sign on
- date, time, location
- note those present
- general purpose
- start and stop times
- sign off
handwritten notes
43. The Interview
• Evidence Source
Control
Continuity / Chain of Custody
• Form Question and Answer
Pure Version
Own Handwriting
Signed
44. The Interview
• Concerns Person in Authority
Objectivity
Inducements
Threats
Voluntary
Suitability for Court
Female – ensure witness /
other female present
46. Case Study - Objectives
• Raise awareness regarding how important it is
to be diligent when conducting any attest
engagement.
• Understand how easy it is for a fraudster to
hide a fraud
47. Case Study – How is Fraud Detected?
• ACFE – Report to the Nations - 2014
– Tip – 42.2%
– Management review – 16%
– By Accident – 6.8%
– Account reconciliation – 6.6%
– Document examination – 4.2%
– External audit – 3.6%
– Surveillance monitoring – 2.6%
– Notified by Law Enforcement – 2.2%
– IT Controls – 1.1%
– Confession – 0.8%
– Other - 0.5%
48. Case Study – Employee Fraud
• Company History
– Very successful family owned manufacturing plant
– John and Mary Smith started company in 1980’s
– John President / Mary Treasurer
– Daughter-in-laws trained to do the accounting
– 2007 Company computerized started using
Quickbooks
– 2009 hired an external person
– Oct. 2010 daughter-in-law took maternity leave
49. Case Study – Employee Fraud
• Fraudster – Peggy Greedy
– Friendly, very keen, took on more responsibility
– Learned how the company ran
– She handled AP and ordering supplies
– She assisted with collecting outstanding AR
– Supervised by a daughter-in-law who was
responsible for payroll
– In October 2010 Peggy took over payroll in
addition to AR/AP
50. Case Study – Employee Fraud
• The First Clue
– January 2014 – President noted that the monthly
Visa statement, which he normally reviewed, was
not received
– Continuous follow-up with Peggy re Visa
– There appeared to be a $1,000 payment the
President did not recall authorizing
– Phoned the bank in early February
51. Case Study – Employee Fraud
• Bank Information
– There were numerous Facebook charges to Visa
that were not on the statement provided
– Peggy, could not provide any explanation for the
charges
– Initial thought –Visa account had been
compromised
52. Case Study – Employee Fraud
• Second clue
– Phone call to Senior Account Manager at bank
– Senior Account Manager stated that Peggy
requested the January $1,000 transfer
– In total there were three transfers from Business
account
– Obtained a new copy of the Visa statement
compared it to the copy provided by Peggy
53. Case Study – Employee Fraud
• Third clue
– Accountant was called in second week of February
– President explained issue of Visa
– Reviewed bank statements discovered several
pages were missing from the bank statements
– Reviewed QuickBooks reports
– Discovered several cheques written to Peggy and
her husband
58. Case Study – Employee Fraud
• Estimated Fraud
Cheques - Payees are Peggy and Kane Greedy
December 20, 2010 to January 13, 2014
Cheque # Cheque Date Payee Cheque amount
Cleared
RBC
2748 20-Dec-10 Peggy Greedy 16,895.25 11/Feb/11
3289 6-Sep-11 Kane Greedy 8,846.00 7-Sep-11
3418 4-Nov-11 Peggy Greedy 5,136.51 7/Nov/11
3646 18-Jan-12 Peggy Greedy 2,564.36 19/Jan/12
3656 12-Feb-12 Kane Greedy 4,789.81 19/Mar/12
3805 20-Mar-12 Peggy Greedy 2,577.46 21/Mar/12
3829 5-Apr-12 Peggy Greedy 1,889.62 9/Apr/12
4348 28-Sep-12 Kane Greedy 7,405.31 1/Oct/12
4369 9-Oct-12 Kane Greedy 5,112.58 15-Oct-12
4825 18-Mar-13 Kane Greedy 19,720.00 20-Mar-13
4829 22-Mar-13 Peggy Greedy 607.71 25/Mar/13
4838 27-Mar-13 Peggy Greedy 2,302.06 29/Mar/13
4848 5-Apr-13 Peggy Greedy 3,600.00 3/May/13
5521 31-Dec-13 Peggy Greedy 6,041.36 ** 31/Dec/13
5528 13-Jan-14 Peggy Greedy 3,551.69 13/Jan/14
5531 30-Dec-13 Peggy Greedy 18,800.00 ** 30/Dec/13
$109,839.72
59. Case Study – Employee Fraud
• What went wrong?
– Level of trust placed in Peggy
– Lack of segregation of duties
– Lack of oversight
– Pre-signing of cheques
– Account Manager allowing funds transfer
60. Case Study – Employee Fraud
• Why does this matter to you?
• Review or Compilation Engagements
– Help set the Tone
– Still need some level of diligence
– Anything odd -
don’t ignore
– If it happens help
the client set
objectives &
minimize the loss
61. Case Study – Employee Fraud
• Remedies – depends on client’s objectives
– Civil
• Fidelity Insurance
• Civil law suit
– Criminal
• File a complaint with local Police
62. Fraud in the Workplace
QUESTIONS
????
Steve McIntyre, CFE,CFI, CFS
smcintyre@mgforensics.com
Penny Cookson, CPA, CA.IFA, CFE, CFF
pcookson@mgforensics.com
(416) 362-8743