3 types of Fraud

Corruption Asset Misappropriation Financial Statement Fraud

Corruption

Using your position to illegally or unfairly benefit yourself or someone else

Asset Misappropriation

Stealing or improperly using company resources for personal benefit

Financial Statement Fraud

Falsifying financial records to make a company look better or worse than it really is

Corruption Fraud Schemes

Conflicts of Interest Bribery Illegal Gratuities Economic Extortion

Financial Statement Fraud Schemes

NI Overstatements/NI Understatements Timing Differences Fictitious/Understanded Revenues Concealed/Overstated Liabilities Improper Asset Valuations Improper Disclosures

Asset Misappropriation Fraud Schemes

Billing Schemes Payroll Schemes Expense Reimbursement Schemes Check & Payment Tampering Register Disbursements Cash Larceny (stealing) Skimming

2 elements of Asset Misappropriation

Tax Evasion Money Laundering

Tax Evasion

Lying or hiding information to avoid paying taxes you legally owe

Money Laundering

Making illegally obtained money look legal

How do Frausters hide fraud?

Created fraudulent physical documents Altered physical documents Created fraudulent electronic documents or files

How are frauds detected?

Tips (43%) Internal audit Management review Documentation examination

Who reports fraud?

Employee Customer Anonymous

Who is fraud report to?

Direct supervision Fraud investigation team executive

Behavioral red flags of frausters

Living beyond means Financial difficulties Unusually close association with vendor/customer Poor performance evaluation Fear of job loss Denied raise or promotion Addiction problems

ACFE Report to the nations - Global cost of fraud

Orgs lose %5 of revenue to Fraud each year More than $3.4B loss More than 20% of cases had losses of $1M