Deterrence Pam Peters CFE Office of Internal Audit Thanks for Attending The next BCUG meeting will be held on November 12 2013 Happy What is Fraud A knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment ID: 707335
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1
Fraud
Prevention
and
Deterrence
Pam
Peters, CFE
Office of Internal AuditSlide2
Thanks for Attending!The next BCUG meeting will be held on
November 12, 2013
Happy
What is Fraud?
A knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment.
Fraud includes any intentional or deliberate act to deprive another of property or money by deception or unfair means.
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Thanks for Attending!The next BCUG meeting will be held on
November 12, 2013
Happy
Types of Fraud
Internal Fraud
External Fraud
Fraud Against Individuals
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November 12, 2013
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Internal Fraud
Also referred to as occupational
fraud
“The
use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the organization’s resources or assets
.”
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November 12, 2013
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Occupational Fraud
Three Major types of Occupational Fraud:
Corruption
Asset Misappropriation
Financial Statement Fraud
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November 12, 2013
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Occupational Fraud
Corruption:
Conflict of Interest
Purchasing Schemes
Sales Schemes
Bribery
Invoice Kickbacks
Bid Rigging
Illegal Gratuities
Economic Extortion
6Slide7
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November 12, 2013
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Occupational Fraud
Asset Misappropriation:
Cash
Theft
of cash
Theft of cash receipts
Fraudulent
Disbursements
Billings Schemes
Payroll Schemes
Expense Reimbursement Schemes
Check Tampering
Register Disbursements
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Occupational Fraud
Asset Misappropriation Cont’d:
Inventory and All Other Assets
Misuse
Larceny
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November 12, 2013
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Occupational Fraud
Financial Statement Fraud:
Asset/Revenue
-
Overstatements
Timing
Differences
Fictitious Revenues
Concealed Liabilities and Expenses
Improper Asset Valuations
Improper Disclosures
9Slide10
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November 12, 2013
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Occupational Fraud
Financial Statement Fraud Cont’d:
Asset/Revenue
-
Understatements
Timing
Differences
Understated Revenues
Overstated Liabilities and Expenses
Improper Asset Valuations
10Slide11
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November 12, 2013
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Dishonest Vendors
Dishonest customers
Security breaches
Hacking
Theft of proprietary information
External Fraud
11Slide12
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November 12, 2013
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Fraud Against Individuals
Identify Theft
Ponzi
Schemes
Phishing Schemes
12Slide13
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November 12, 2013
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Why Does Fraud Occur?
The Fraud Triangle:
Developed by Dr. Donald
Cressey
– his research focused on embezzlers, people he called “trust violators”
A
model for explaining the factors that cause someone to commit occupational fraud
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Fraud TriangleSlide15
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November 12, 2013
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What Can We Do?
Detect
, Deter, and Prevent fraud before it
occurs
Look for early warning signs:
Accounting records that do not balance or cannot be reconciled
Too much control or ownership of records or processes by one individual
Missing or altered documentation
Employee living beyond their means, lifestyle is inconsistent with known income
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November 12, 2013
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What Can We Do?
Look
for early warning
signs cont’d:
Long-term
or “model” employees, who never take vacation or sick leave
Unexplained changes in an employee’s work behavior
Employees receiving calls at work from creditors or collection agencies
Employees who appear to have unusually close relationships with customers or
vendors
These are just a few examples which may indicate potential fraudulent activity.
16Slide17
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November 12, 2013
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What Can We Do?
Steps
to mitigate risks:
Be
aware of your surroundings and daily activities
Ensure your area has proper internal controls and segregation of duties
Document what you observed
Report your concerns to your immediate supervisor, Dean/Chair, or the Office of Internal Audit
http://
audit.unl.edu
DO NOT INVESTIGATE POSSIBLE FRAUD YOURSELF!
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November 12, 2013
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Questions?
Thank you!
Pam Peters, CFE
Senior Auditor
Office of Internal Audit
ppeters2@unl.edu
Source: ACFE
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