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Fraud Investigation. Fraud Examination Actg 537. Conversion. Concealment. Theft. The CFE gathers evidence of the ELEMENTS of Fraud. Elements Of Fraud. Investigation. Chapter 7 – Theft Chapter 8 – Concealment Chapter 9 – Conversion Chapter 10 – Inquiry Methods.

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Fraud investigation l.jpg

Fraud Investigation

Fraud Examination

Actg 537


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Conversion

Concealment

Theft

The CFE gathers evidence ofthe ELEMENTS of Fraud

Elements

Of

Fraud

Accounting 537


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Investigation

  • Chapter 7 – Theft

  • Chapter 8 – Concealment

  • Chapter 9 – Conversion

  • Chapter 10 – Inquiry Methods

Accounting 537


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When would we actually begin a Fraud Examination?

“Circumstances, Taken as a Whole, that Leads a Reasonable Prudent Professional to Believe a Fraud is Occurring, or Has Occurred, or Will Occur”

When there is PREDICATION of fraud

Accounting 537


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What Are the Considerations in Deciding to Investigate?

  • Perceived strength of the predication

  • Perceived cost of the investigation

  • Exposure or amount that could have been taken

  • Signal that investigating or not investigating will send to others in the organization

  • Risks of investigating or not investigating

  • Public exposure or loss of reputation from investigating or not investigating

  • Nature of the possible fraud

Accounting 537


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Interview Suspect

Accounting 537


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2

1

4

3

The CFE’s Evidence Square

Testimonial Evidence

Documentary Evidence

Physical Evidence

Personal Observation

Accounting 537


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2

1

4

3

The CFE’s Evidence Square

Testimonial

Documentary

Gathered from Individuals, Includes Interviewing, Interrogation & Honesty Tests

Gathered from Papers, Computers & Written & Printed Sources

Personal Observation

Fingerprints, Weapons, Stolen Property Often Involves Forensic Analysis

Collected by the Investigator, includes Invigilation, Surveillance and Covert Operations

Physical

Accounting 537


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Evidence Gathering

  • Surveillance & Undercover Operations

  • Invigilation

  • Physical Evidence

  • Documents – paper and electronic

    • Chain of custody rules

    • Access – subpoena, search warrant, voluntary

    • Forgery or alteration

Accounting 537


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Video Making Crime Pay: Locating Hidden Assets


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Fraud Investigation

Fraud Examination

Actg 537


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Government

Private

Sources

Online

Databases

  • Federal

  • State

  • Local

  • Utility Records

  • Previous Acquaintances

  • Trash Cover

  • Credit Agencies

  • Financial Institutions

  • Subscription

  • Per-Search Fee

  • Free

Sources of Information

Public Records

Internet

Searches

  • Google

  • Altavista

  • Etc.

Accounting 537


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Net Worth Calculation

  • Assets – Liabilities = Net Worth

  • Net Worth – Prior Year’s Net Worth = Net Worth Increase

  • Net Worth Increase + Living Expenses = Income

  • Income – Funds from Known Sources = Funds from Unknown Sources

Accounting 537


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How can information be obtained from a source

  • Pencil & Paper Test

  • Graphology

  • Voice Stress Analysis & Polygraphs

Accounting 537


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Interviewing

  • Most Common Technique

  • Question & Answer Format

  • Structured Has a Purpose

  • Low Cost

  • Effective if Done Well

Accounting 537


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Interviews Obtain

  • Information that Establishes Essential Elements of the Crime

  • Leads for Developing the Case or Gathering Other Evidence

  • Cooperation of Witnesses & Victims

  • Information on Personal Background & Motives of Witnesses

Accounting 537


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About The Offense

Legal Nature

Date, Time, Place

Manner in which Crime was Committed

Possible Motives

All Available Evidence

About The Interviewee

Personal Background

Age

Education

Marital Status

Attitude Toward Investigation

What information do you need to plan the interview?

Accounting 537


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Interviewer’s Demeanor

  • Sit Fairly Close, Stay Seated

  • Don’t Talk Down

  • Be Sensitive & Business Like

  • Do Not Dominate Interview

  • Do Not Use Jargon

  • Do Not Use Paper & Pencil, Keep Out of Sight

  • Express Sincere Appreciation

Accounting 537


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Interview Language

  • Short Questions, Stay on One Topic

  • Seek Narrative Answers

  • No Leading Questions

  • Get the Facts for Opinions

  • Keep Interviewees on Track

  • Stay on Topic

  • Concentrate on Answers

Accounting 537


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List 5 Types of Questions

  • Introductory

  • Information

  • Closing

  • Assessment

  • Admission Seeking

Accounting 537


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What is the reaction sequence?

  • Denial – Acts as a psychological buffer, subject doesn’t acknowledge stress

  • Anger – All directions, result of frustration

  • Rationalization or Bargaining – Justify dishonest actions, “A mistake was made.”

  • Depression – Sad and withdrawn

  • Acceptance – Realistic understanding of what happened, resolve & move on, best time for interviews

Accounting 537


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Why is the reaction sequence important to a fraud examiner?

  • The suspect may go through this sequence in the course of an interview.

  • Other people in the organization may go through this sequence in the course of the investigation.

  • Being aware of these emotional stages will help the fraud examiner to identify them and take the more productive actions.

Accounting 537



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End Fraud Investigation

Fraud Examination

Actg 537