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.

1. Fraud&Awareness&Workshop&
Iyad&Mourtada,&CIA,&CFE,&CMA,&CCSA,&CRMA,&CPLP,&M.A.&
E x c e p ? o n a l & L e a r n i n g & E x p e r i e n c e & &

2. Case&Study:&Nick&Leeson&&

4. Case&Study:&Nick&Leeson&&
• Leeson&did&an&unauthorized&specula?ve&
trading&that&Bankrupted&the&233Jyear&old&
Barings&Bank&of&London&
• Losses&eventually&reached&£827&million&&
&&&&(US$1.4&billion)&

5. Lesson&Learned: &&
• Controls&should&be&in&place&
• There&should&be&ongoing&Monitoring&&
• There&should&be&segrega?on&of&du?es&

6. The Institute of Internal Auditors
"Any illegal act characterized by deceit,
concealment, or violation of trust. These acts
are not dependent upon threat of violence or
physical force. Frauds are perpetrated by
parties and organizations to obtain money,
property, or services; to avoid payment or loss
of services; or to secure personal or business
advantage”

7. Association of Certified Fraud Examiners
"The use of one's occupation for personal
enrichment through the deliberate misuse or
misapplication of the employing organization's
resources or assets.”

8. Occupa?onal&Fraud&and&Abuse&
Asset&&
Misappropria?ons&
Corrup?on&
Fraudulent&
Statements&
Conflicts
of Interest
Bribery
Illegal
Gratuities
Economic
Extortion
Inventory &
All Other Assets
Cash
Nonfinancial
Financial

10. Fraud&Policy&

11. Internal Control
“Internal&control&is&a&process,&
effected&by&an&en?ty’s&board&of&
directors,&management,&and&other&
personnel,&designed&to&provide&
reasonable&assurance&regarding&
the&achievement&of&objec?ves&
rela?ng&to&opera?ons,&repor?ng,&
and&compliance.”&

12. Who&is&responsible&for&Internal&Controls?&
• Board&of&Director&&&&&&&&&________________&
• Senior&Management&&&________________&
• Management&&&&&&&&&&&&&&&&________________&
• Internal&Auditor&&&&&&&&&&&________________&

13. What is the Control Process
1. &Establish&Standards&&
2. &Measure&Performance&&
3. &Analysis&the&Gap&
4. &Reappraise&the&Standard&
5. &Correct&the&Performance&&

16. “&The&Central&Purchasing&will&
handle&all&purchases&$2,500&worth&
of&business&per&dayJplus&a&small&
addi?onal&margin&for&tax&and&
deliveryJ&is&going&to&any&one&
supplier.”&&

28. Legal&Elements&of&Fraud&
!
1.#A#material#false#statement##
2.#Knowledge#that#the#statement#was#false#when#
it#was#spoken#
3.#Reliance#on#the#false#statement#by#the#victim##
4.#Damages#resulting#from#the#victim’s#reliance#
on#the#false#statement#

29. Hard&Control&vs.&Sof&Control&

30. Evalua?ng&Hard&Internal&Controls&
• Exist&/&Don’t&Exist&&
• Adequate&/&Not&Adequate&&
• Working&&/&Not&Working&&
• Test&of&Control&

31. ControlJSelf&&
Assessment&&

33. Segrega?on&of&Du?es&

34. Segrega?on&of&Du?es&
• Authority!!
• Recording!!
• Custody!!
• Reconcilia4on!!

35. Three!lines!of!Defense!!

39. PAST&PERFORMANCE&IS&NO&
GUARANTEE&OF&FUTURE&
RESULTS,&AND&ANY&PROJECTIONS&
MAY&NOT&REFLECT&ACTUAL&
FUTURE&PERFORMANCE.&

40. Playing&the&&
Forecas?ng&Game&&
using&Hockey&S?cks&&

48. Performance&Measures,&Incen?ves,&and&Rewards&

49. Source:&IRM&

50. ASK:&&Why?&

54. Profit is an Estimate
!

55. Assumptions (What music notes to include)
Estimates (Where to include)
!
You may assume that they re accurate down to the
last dollar. Not true! The balance in the cash account
is exact, but virtually every other number you see in
a financial report is based on an estimate.

56. Increase Revenue
(Revenue Recognition)

57. Round&Trip&Recipe&&
Company& Vender&
PreJPaid&Services&4&Million&&
Current&Revenue&1&Million&&&
Reporting&more&revenue&&

58. Deferral&of&Revenue&Recipe&&
Customer&
Balance&Sheet&
Unearned&Revenue&&2&Million&
1&Million&
Manipulating&revenue&&
Current&Revenue&&

59. - Sold equipment on four-year leases, including service
and maintenance.
- Booked all the revenues up front.
- Xerox mis-stated four years' worth of profits,
resulting in an overstatement of close to $6bn.

60. Reduce Expenses
(Matching Principle)

61. Capitalize&Expenses&Recipe&&
Expenses&
Balance&Sheet&
Capital&8&Million&
8&Million&
Income&Satement&&
Expenses&

62. - Took a pretax charge -a one-time
write off- of 3.54 billion against its
earnings
- Grow rapidly by buying other
garbage companies. But didn't
know to run them.
- Changed the depreciation of
their 20,000 tracks from 8-10
years to 12-15 years and did the
same for their 1.5 million
dumpsters

63. !
!
Underreporting line
costs (interconnection
expenses with other
telecommunication companies)
by capitalizing these costs on
the balance sheet rather than
properly expensing them.

64. !
!
Who controls your organization?
!
Are the accountants making the right judgment
decisions?
!

68. Inves?ga?on&Strategy&

71. $115,000&in&Expenses&for&one&year&

82. 8 Absolute&Trust&
8 No&Review&&
8 No&Details&
8 No&Suppor?ng&Documents&
8 No&control&&&
&

87. Defini4on!of!Fraud!!

89. How Occupational Fraud
is Committed
10
8

90. How Occupational Fraud
is Committed
10
9

91. How Occupational Fraud
is Committed
11
0

92. Duration of Fraud Schemes
111

93. Duration of Fraud Schemes
11
2

94. Initial Detection of
Occupational Frauds
11
3

95. Source of Tips
11
4

96. Impact of Hotlines
11
5

97. Detection Method by Region
11
6

98. Type of Victim Organization
11
7

99. Type of Victim Organization
11
8

100. Size of Victim Organization
11
9

101. Size of Victim Organization
12
0

102. Industry of Victim Organization
12
1

103. Industry of Victim Organization
12
2

104. Schemes by Industry
12
3

105. Corruption Cases by Industry
12
4

106. Anti-Fraud Controls at
the Victim Organization
12
5

107. Anti-Fraud Controls by Region
12
6

108. Anti-Fraud Controls by Region
12
7

109. Control Weaknesses That
Contributed to Fraud
12
8

110. Perpetrator’s Position
12
9

111. Perpetrator’s Position
13
0

112. Perpetrator’s Position
13
1

113. Position of Perpetrator
Based on Region
13
2

114. Position of Perpetrator
Based on Region
13
3

115. Position of Perpetrator
Based on Region
13
4

116. The Impact of Collusion
13
5

117. Methods of Fraud Based on
Number of Perpetrators
13
6

118. Perpetrator’s Age
13
7

119. Perpetrator’s Age
13
8

120. Perpetrator’s Gender
13
9

121. Perpetrator’s Gender
Based on Region
14
0

122. Median Losses Based on
Gender
14
1

123. Position of Perpetrator
Based on Gender
14
2

124. Perpetrator’s Department
14
3

125. Perpetrator’s Department
14
4

126. Behavioral Red Flags
Displayed by Perpetrators
14
5

127. Recovery of Losses
14
6

128. Fraud&Examina?on&&&&&
Fraud&examination&is#a#methodology#developed#by#ACFE#for#
resolving#fraud#allegations#from#inception#to#disposition,#
including#obtaining#evidence,#interviewing,#writing#reports,#
testifying#to#Findings,#and#assisting#in#the#detection#and#
prevention#of#fraud.##

129. Fraud&Examiner&&&&&&&
&&&&&Lawyer&&&&&&&&&&&&&&&&&&&&&&&&&&Accountant&&
&
&
Criminologist&&&&&&&&&&&&&&&&&&Investigator&&
#

130. Cer?fied&Fraud&Examiner&(CFE)&
&&&
! 10&hours&to&complete&the&CFE&Exam.&&
! Each&section&is&allocated&a&maximum&of&2.6&hours&to&complete.&&
! Each&of&the&four&exam&sections&has&125&questions.&
! You&will&have&a&maximum&of&75&seconds&to&answer&each&question.&
! You&have&30&days&to&complete&all&four&sections&of&the&CFE&Exam.&
! You&must&complete&each&section&in&one&sitting.&
&

131. ###
• Fraud Prevention and Deterrence
• Financial Transactions
• Fraud Investigation
• Legal Elements of Fraud
Cer?fied&Fraud&Examiner&(CFE)&

132. 151
OpenThinking&is&an&&
ACFE&Authorized&
Trainer&in&the&&
UAE&and&Qatar&&

133. Cer?fied&Fraud&Examiner&(CFE)&
#Get Certified