INTERNAL AUDIT SERVICES, INC. INTERNATIONAL - PowerPoint Presentation

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INTERNAL AUDIT SERVICES, INC. INTERNATIONAL

BOARD CERTIFIED FORENSIC FRAUD EXAMINERS

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The information provided herein should be used only as a guide and not as the only source of reference.

The author and firm will have neither liability nor responsibility to any person or entity with respect to any loss, damage or injury caused or alleged to be caused directly or indirectly by any information contained or omitted from this publication.

DISCLAIMER

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BY:

JOHN A. CAPIZZI, CFE, FACFE, DABFE

INTERNAL AUDIT SERVICES, INC., INT’L

www.internalauditservices.com

FORENSIC INTERVIEWING FOR

FRAUD & LIABILITY IN THE WORKPLACE

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Internal Audit Services, Inc. (IAS), with offices in Palm Beach, FL and Philadelphia, PA. Is a firm providing International confidential fraud examination and detection of “White Collar Crime” and loss prevention by offering the following services:

Fraud Examinations;

Assistance to Internal Auditors, CPA’s, Insurance Carriers;

Business Management, Corporate Counsel;

Personnel Integrity Reviews;Training; andConfidential Advisory Services.

What We Do:

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Internal Audit Services, Inc. (IAS)

Provides you with the best business solutions to these problems

by specializing in identifying the wrongdoer through Forensic

Interviewing with a high success rate in prosecution or in gaining a

signed confession with restitution

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OBJECTIVE

Assist internal auditors, CPA's, attorneys, human

resources, insurance carriers, business

management and law enforcement in fraud

examination and loss prevention through forensic

auditing and forensic interviewing techniques

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GENERAL PROFILE OF AN EMBEZZLER

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25 to 35 years oldExecutive or Administrator

Takes money to maintain a certain life style

Sometimes may have an accompliceGive as causes:

Marital troubles

Drugs

Gambling habits

GreedJust for the fun of itAverage amount stolen: $10,000 to 25,000Accounts for 60% to 65% of embezzlement arrestsMALE

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19 to 30 yearsBookkeeper ,Teller or Junior Officer

Takes money because: “I’m not paid what I’m worth”

Divorced-husband’s not working to support familyAlmost never with an accomplice

Average amount stolen: $1,000 to $2,500

Accounts for 35% to 40% of embezzlement arrests

FEMALE

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Statistics from the United States Department of Justice indicate that when embezzlers are prosecuted, about 30% of those convicted spend time in jail. Convicted women embezzlers with children are even less likely than men to receive jail sentences.

92% of those persons convicted of financial institution robbery serve time in jail. However, PERSONS WHO EMBEZZLE FROM FINANCIAL INSTITUTIONS, WHETHER MALE OR FEMALE, ARE LESS LIKELY THAN ANY OTHER TYPE OF EMBEZZLER TO RECEIVE JAIL SENTENCES.

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CRIME TRIANGLE

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A.VICTIM (Your Company)

B.DESIRE (Need)

Created by financial problems

Be sensitive to employee needs

1. Bad checks

2. Loan turndown

3. Comments about money problems 4. Calls from creditorsCreated by other problems 1. Drugs 2. Outside business interestsNon-shareable problemsC.OPPORTUNITY ( Reduce Opportunity) 1. Follow procedures 2. Enforce dual control

3. Control and protect keys

4. Surprise audits

CRIME TRIANGLE

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Financial Pressures on Employees

Employee Personality Changes

Poor Money Management by Employees

Employees Living Beyond Means

Employee Outside Business Interests

Poor Internal Controls

Too Much Control in One EmployeeRED FLAGS

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Lax Management

Failure to Pre-Screen Employees

Records Altered-Missing or Destroyed

Chronic Shortages

Signatures on Records Appear to be Forgeries

Employee Drug or Alcohol Abuse

Employee Gambling Problems

Employee Gives Inadequate Answers when Questioned about

Missing Supplies or Property-Funds

Customer or Supplier Complaints about Shortages or Discrepancies

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Psychological Profile

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ESTABLISHED THROUGH PERSONNEL RECORDS:

A) APPLICATION

B) REVIEWS

C) REPRIMANDS

ESTABLISH

:

A) EDUCATION LEVELB) WORK HISTORYC) REASONS FOR BREAKING PRIOR EMPLOYMENTD) REFERENCESE) GEOGRAPHICAL VALUES (NORTH, WEST, MIDWEST, SOUTH)

F) QUESTIONS TO ESTABLISH NORMAL SPEECH PATTERNS

EX: DATE OF BIRTH

SOCIAL SECURITY NUMBER

DATE OF HIRE

G) MARITAL STATUS

H) FINANCIAL SITUATION

PSYCHOLOGICAL PROFILE

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ESTABLISH:

TEMPERAMENT OR SUBJECT

MOODY, STREETWISE, EMOTIONS

RELIGIOUS

FAMILY RELATIONSHIPS

ETC.

THIS INFORMATION IS VITAL TO DEVELOPING EFFECTIVE

RATIONALIZATION DURING THE COURSE OF THE INTERVIEW PROCESS

INTERVIEW WITH DIRECT FAMILY MEMBER,

FRIEND, NEIGHBOR, SUPERVISOR

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ESTABLISH SUBJECT’S NORMAL SPEECH PATTERNS.

REFERENCE PSYCHOLOGICAL PROFILE - ASK: NAME;

ADDRESS; D.O.B.; S.S. #; D.O.H., ETC.

TRUTHFUL SUBJECT:

A) ANSWERS WILL BE DIRECT, TIMELY, UNDERSTANDABLE

B) RESPONSES TO THE INVESTIGATION WILL BE DIRECT

C) SUBJECT WILL TALK EASILY OF EMPLOYMENT, JAIL, POLICE, EMBARRASSMENT, STEALING, EMBEZZLING, FRAUDD) COOPERATIVEE) NO ATTEMPT AT FRIENDSHIP WITH INTERVIEWERF) WILL USUALLY HAVE DIFFICULTY IN REMEMBERING EXACT DATESHOW TO INTERPRET VERBAL CLUES

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A) ANSWERS WILL BE VAGUE, STAMMERING

B) RESPONSES WILL BE TOO QUICK, TOO SHORT, TOO LONG, PAUSING

C) SUBJECT WILL TALK ABOUT “BORROWING MONEY”, “OWED SOMETHING”, “REASSIGNED ACQUISITIONS”

D) WILL HAVE ALIBI AND EXACT DATES MEMORIZED

E) MAY BE OVERLY FRIENDLY - EVEN THANKING YOU FOR INTERVIEWING HIM

F) ANYTHING YOU DO IS ALRIGHT AS LONG AS YOU BELIEVE HE/SHE IS NOT GUILTY

G) BEFORE ASKED, THE SUBJECT WILL GIVE YOU REASONS WHY THEY COULD NOT BE INVOLVED

UNTRUTHFUL SUBJECTS (RED FLAGS):

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UNTRUTHFUL SUBJECTS (RED FLAGS) CONTINUED:

H) WILL TELL YOU THEIR MEDICAL PROBLEMS (I.E. HEART CONDITION, BLOOD PRESSURE)

I) PROVIDE UNCHECKABLE SOURCES TO BACK UP THEIR ALIBIS

J) WILL TRY TO POSTPONE THE INTERVIEW SESSION

K) WILL REPEAT YOUR QUESTIONS OR ASK YOU A QUESTION

L) SUBJECT WILL BE NON-RESPONSIVE - SILENT

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I. PHYSICAL BEHAVIOR

A) BODY POSITION IN RELATION TO INTERVIEWER B) BODY MOVEMENTS DURING THE INTERVIEW

II. INVOLUNTARY RESPONSES

A) RESPONSES TO QUESTIONS BEING ASKED

TWO BASIC TYPES OF BEHAVIOR

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UNDER CONSISTENT INTERVIEW/INTERROGATION,

TRUTHFUL SUBJECTS

WILL BECOME STRONGER IN THEIR DENIALS AND

WILL INTERRUPT THE SESSION MORE FREQUENTLY

AS TIME PASSES.

UNTRUTHFUL/GUILTY SUBJECTS WILL BECOME WEAKER AS THE QUESTIONING CONTINUES. THE LONGER THEY ARE IN THE SESSION, THE MORE DOCILE THEY BECOME.

SUBJECTS

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A) CIVIL RIGHTS VIOLATED OR IGNORED

B) HUMAN RIGHTS VIOLATED OR IGNORED

C) ROOM IS TOO HOT OR TOO COLD

D) INTERVIEW SCHEDULE IS INCONVENIENT

TRUTHFUL SUBJECT

:

WILL USUALLY WAIT FOR YOU TO COMPLETE THE INTERVIEW BEFORE COMPLAININGUNTRUTHFUL SUBJECT: WILL LET YOU KNOW AT THE BEGINNING OF THE INTERVIEW SESSION THAT THEY ARE UNHAPPY, RIGHTS HAVE BEEN VIOLATED, AND THE PROCESS IS TAKING TOO LONGCOMMON FACTOR BETWEENTRUTHFUL/UNTRUTHFUL IS COMPLAINING

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A) NEUTRAL LOCATION

B) IDEAL DIMENSIONS ARE 10' X10'

C) PRIVACY - LACK OF DISTRACTIONS (I.E., PHONE CALLS, INTERRUPTIONS)

D) GOOD LIGHTING

E) GOOD VENTILATION

F) TWO FIXED CHAIRS (PREFERABLY WITHOUT ARMS)

G) DESK CLEAR OF DISTRACTIONS (PENS, PENCILS, PAPERCLIPS, KLEENEX, ASHTRAYS, ETC.)

H) PROPS (I.E., CASE FILE)

I) ROOM CLEAR OF REMINDERS OF PUNISHMENT

J) ONE ON ONE

ROOM SETTING

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The process of identifying and understanding who we are

investigating/examining will help minimize the risk of litigation and increase

the probability of a successful fraud/liability examination for your

company/organization.

A. DO: Homework One on one if possible State purpose clearly - ask to repeat if not understood Thank interviewee for his/her time B. DON’T: Ever go in “cold”

Get discouraged Begin too abruptly

Debate

Let session drag out

CONCLUSION

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INTERNAL AUDIT SERVICES, INC. INT’L

6231 P.G.A. Boulevard Suite 104 #136

Palm Beach Gardens, FL 33418

USA (561) 626-7746; (800) 434-7746

8001 Castor Avenue #386Philadelphia, PA 19152 USA (215) 745-1529; (800) 434-7746E-Mail: jcapizzi@internalauditservices.com Website: www.internalauditservices.com