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Getting Started with a Fraud Investigation February 27, 2013

Getting Started with a Fraud Investigation February 27, 2013. Allen Brown, CPA, CFE abrown@lla.la.gov. ISLAND SCAM. A joint venture (“JV”) on a beautiful island far away . Total employees 145 .

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Getting Started with a Fraud Investigation February 27, 2013

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  1. Getting Started with a Fraud InvestigationFebruary 27, 2013

    Allen Brown, CPA, CFE abrown@lla.la.gov
  2. ISLAND SCAM A joint venture (“JV”) on a beautiful island far away. Total employees 145. Inconsistencies in financial information being provided by Finance Manager of the JV, “Big Spender”. Tab for losses = over $500,000. *
  3. Profile: Mr. Big Spender Hired as Senior Accountant and quickly promoted to Finance Manager. Authorized signatory on bank accounts and company VISA credit card Credit Card Scam – Personal purchases Duties included accounts payable, bank and payroll preparation and reconciliation Payroll Scam – Salary increases, TDI, 401K Payables Scam – Checks to self, family members, and as payment for personal expenses Luxury Car Scam: $386,000 He was the company Ethics Officer
  4. Four Things Needed to be Successful at Fraud Work Authority Support Skill Courage
  5. Understandable Need Illness Family issues Loss of second income Greed Life style Homes, Boats, Cars, Vacations Self-aggrandizement Why do people commit fraud?
  6. Why do people commit fraud? Personal issues Addiction problems Out of control debt Revenge Challenge Compensation Incentives
  7. Reasons People Do Not Commit Fraud Personal values Fear of getting caught Internal Controls (perception of detection) Fear of punishment Public embarrassment
  8. Getting Started With the Investigation Source of the allegation or initiating information Audit information Analytical procedures Tip Other sources?
  9. Talking with the Tipster What is their motive? Anonymous VS. Known Detail Decision making information
  10. Hot Lines The good Mechanism for reporting Allows anonymous reporting The bad If you don’t respond, you must be part of the problem Prioritizing the information – project selection
  11. Hot Lines Handling Establish a consistent method of project selection Document this process FOLLOW YOUR PROCESS CONSISTENTLY!!!
  12. Going In The Door Knowing as much as possible before you enter From the tipster Other outside sources
  13. Going In The Door Based on your information and assessment of the type of scheme(s) Who Who is “involved”? Who will I need to talk with – Protocol? Who has the records? Who may I need to contact? Prosecutor, Law enforcement, Regulatory Agencies Grantor
  14. Going In The Door What Based on your information what documents and other evidence will you need? Who has custody of the documents? Invoices, PO’s, Requisitions, Bid doc’s, Bank Records Receiving reports, shipping information, payroll data Inventory records, aged payables
  15. Going in the Door What (cont.) What approvals are required to obtain certain documents? HR records - Proprietary information Will I need to take the records?
  16. Going In The Door Where Location(s) of what you need Do you need to take control of several locations at once? Volume of the records that may be needed The location and volume of the records will impact the resources needed to start the investigation
  17. Order of Attack Your attack strategies Documents Interviews Outside experts
  18. Order of Attack Interviews Neutral witnesses Corroborating witnesses Co-Conspirators Special person
  19. To seize or not to seize You must protect the documents May they be left in place Hard copy Electronic records Obtaining the Documents
  20. Obtaining the Documents Chain of custody Who What Where When How Description
  21. The Special Person Are they still there? Do you want them there? Other issues
  22. The Door
  23. Questions & Answers
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