Introduction To Fraud Examination
Introduction To Fraud Examination
Introduction To Fraud Examination
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Auditing vs. Fraud Examination
Issue Auditing Fraud Examination
Timing Recurring Nonrecurring
Scope General Specific
Objective Opinion Affix blame
Relationship Nonadversarial Adversarial
Methodology Audit techniques Fraud examination
techniques
Presumption Professional Proof
skepticism
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Fraud Examination Methodology
• Predication
– Totality of circumstances that would lead a
reasonable, professionally trained, and prudent
individual to believe a fraud has occurred, is
occurring, and/or will occur
– Fraud examinations must be based on
predication.
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Fraud Theory Approach
• Analyze available data
• Create a hypothesis
• Test the hypothesis
• Refine and amend the hypothesis
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Tools Used in Fraud Examination
Observation
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Defining Occupational
Fraud and Abuse
The use of one’s occupation for personal
enrichment through the deliberate misuse or
misapplication of the employing
organization’s resources or assets
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Elements of Fraud
• A material false statement
• Knowledge that the statement was false
when it was uttered
• Reliance on the false statement by the
victim
• Damages resulting from the victim’s
reliance on the false statement
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Occupational Fraud and Abuse
Research
• Edward Sutherland
• Donald Cressey
– Cressey’s Hypothesis
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Opportunity
Fraud
Triangle
Pressure Rationalization
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2010 Report to the Nations on
Occupational Fraud & Abuse
• Global survey
• Measuring the costs of occupational fraud
– 5 percent lost to fraud
– $2.9 trillion worldwide
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Position of Perpetrator
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Median Loss by Position
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Gender of Perpetrator
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Median Loss by Gender
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Department of Perpetrator
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Median Loss by Department
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Criminal History of Perpetrator
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Median Loss per Number of
Employees
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Initial Detection of Frauds
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Occupational Fraud and Abuse
Asset Fraudulent
Corruption
Misappropriations Statements
Conflicts
of Interest Cash Financial
Illegal
Gratuities
Economic
Extortion
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Frequency of Types of
Occupational Fraud and Abuse
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Median Loss of Types of
Occupational Fraud and Abuse
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