Meeting 2 Fraud

8/11/2019 Meeting 2 Fraud

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Fraud and Forensic Accounting overview

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Types of Fraud

ACFE: fraudulent financial reporting

(pelaporan keuangan yang curang),misappropriation of assets(penggelapanatau penyalahgunaan asset) dan korupsi .


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Albrecht, Albrecht, dan Albrecht 2006, 10-

11)mengklasifikasikan fraud berdasarkanpelakunya: employee embezzlement,management fraud, investment scam, vendor

fraud, customer fraud, danmiscellanousfraud.


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Type of Fraud Victim Perpetrator Explanation

1. Employee

embezzlement oroccupational fraud

Employers Employees Employees directly or

indirectly steal fromemployers

2. Management

fraud

Shareholders, lenders,

& others who rely on

Financial Statements

Top

management

Top management provides

misrepresentations, usually

financial information

3. Investment

scams

Investors Individuals Individuals trick investors into

putting money into fraudulent

investments

4. Vendor fraud Organizations that buy

goods & services

Organizations

or individuals

that buy

goods and

services

Organizations overcharge for

goods & services or non-

shipment of goods even

though payment is made

5. Customer fraud Organizations that sell

goods and services

Customers Customers deceive sellers

into giving customers

something they should not

have

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Employeeembezzlement

Managementfraud

Investmentscams

Vendor fraudCustomerfraud

ACFE

Association of Certified FraudExaminers

Employeestaking employers assets

Overcharge for goods, or shipinferior goods

Selling worthless investments tounsuspecting investors

Manipulation of financial statementsby management

Getting something for nothing, notpaying for goods & services

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Meeting 2 7

FraudPerpetrators

Other Property OffendersUni Students


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Yes

Most pressures involve

financial need

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PerceivedOpportunity

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Rationalisation

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Perceived Opportunity


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Can fraud be prevented by removing one of thethree elements of fraud from the fraud triangle.

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Perceived Opportunity


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Inversely, the higher the personal integrity

the less likely to commit fraud. It will take much more of the three fraud

elements to move them to commit fraud.

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Incentive

Expensive lifestyle to maintain (39%) Dissatisfaction with the company (14%) Career disappointment (14%)

Opportunity

Insufficient controls (41%) External collaboration (36%) Management over-ride (25%) Internal collaboration (22%)

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Self rationalisation

Lacking awareness of wrong-doing (52%)

Low temptation threshold (50%)

Self-denial of consequences to company (26%)

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Motivations


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Year of Employment

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1, 2, 3, 4, 5, 6, ., 35

30% 70%

What is the age of theperson most likely tocommit fraud?

35 - 44


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Per PwC Global Economic Crime Survey 2006(Australia) Male (87%)

Aged 41 50 (53%)

Educated to high school or less (60%)

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Male aged 38 years acting alone Non-management employee Employed for a period of 5 years and held

current position for three years at the time

of detection Motivated by greed, misappropriating funds

to an average value of $219,707 Detected by agencys internal controls 12

months after the commencement of thefraud

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Per BDOs Not-for-profit Survey 2006 Female (54%)

Aged in 40s

Paid non-accounting employee

Only 15% committed by volunteers 89% of reported frauds were under $50,000

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73% of employees who committed fraud actedalone.

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Management & above

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Financial services Non-financial servicesSector

Lending fraud 43% False invoicing 31%

Theft of cash 35% Theft of inventory 21%


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Non-management

Financial Services Non-financial Services

False invoicing 22% Theft of cash 29%

Theft of tangible

assets 20%

Theft of inventory 20%

Theft of cash 18% Unauthorisedmanipulation of

computer data 17%

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1. The Theft Assets Are Taken

2.

Concealment Hide It from Others

3. Conversion Spend or Convert to Cash and

then Spend

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Ability to get around internal controls

Inability to judge performance

Failure to discipline prior frauds Lack of access to information

Ignorance, apathy, incapacity

Lack of an audit trail

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KPMG Fraud Survey 2006 PwC Global Economic Survey 2006

Not-for-profit Survey BDO

Albrecht, et.al Fraud Examination Thomson,2 Ed, 2006

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Your presentation should take approximately 10-15 minutes.And then, 10-15 minutes for answering questions. For Articlepresentations, give a summary of the article(s), theirobjectives and major findings/recommendations. In addition,evaluate strengths/weaknesses and identify any further

issues that could have been considered. For Casepresentations, provide background information on the case,definitions of terms, major factors relevant to the case andanswers to the case questions. Provide a copy of yourPowerPoint slides to class members (30 copies).

Topic for group 1: Plutonium Case

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Documents

Meeting 2 Fraud