Training Course
Syllabus:
Detecting and Preventing Internal and External
Fraud: 2-day In-person Seminar By: Peter Goldmann, MSc, CFE, Owner, White-Collar Crime 101 LLC
Course Description:
Organizations of all kinds and sizes are increasingly threatened by fraud.
Embezzlement, kickbacks, check fraud, financial statement fraud and vendor
billing schemes are just a few of the countless economic crimes committed by
employees and outsiders.
This two day interactive in-person seminar will provide auditors and other
financial professionals with a strong foundation of practical knowledge about
how common frauds are committed using a combination of lecture, exercise and
group breakout sessions.
Learning Objectives:
- Understanding the fraud problem
- Identify the red flags of fraud
- How to detect and investigate fraud
- Building an anti-fraud control environment
- Internal and external cybercrime threat and latest preventive measures
Course Outline:
Day One (8.30 AM – 4.30 PM)
Registration Process: 8.30 AM – 9.00 AM
Session Start Time: 9.00 AM
SECTION 1: THE FRAUD PROBLEM
Part 1: Introduction
External versus Internal Fraud—short overview (Fraud Matrix) information
security theft and fraud
Who commits fraud -- The Fraud Triangle (Graphic scenario of presence of all
three components)
Lessons from Fraudsters: (Examples of real-life frauds that can and do affect
large not-for-profits (NFP)
Part 2: Common Types of External and Internal Fraud Today
External Fraud:
Vendor fraud (Case studies that show new ways vendor fraud can be committed)
Check fraud (illustrations of forged/altered checks)
The growing threat of cyber-crime (hacking/information theft, system sabotage,
viruses, etc)
Social engineering (Phishing, pretexting, smishing, spear phishing) Q&A and
Interactive Discussion
Note:Each category of fraud will be illustrated by real-life recent fraud
scenarios/case studies
Internal Fraud:
Embezzlement (General definition; 2-3 case studies)
Cash theft (Skimming, lapping)
T&E fraud/Misuse of company credit card or P-card
Collusion w/ domestic or international vendors (kickbacks, bribery)
Identity fraud (Graphic description of ways internal ID theft/fraud is committed
pretexting, using co-worker’s credentials to commit fraud, theft of customer ID)
Theft/falsification of confidential information (donor personal information,
employee data, etc)
Theft of assets (laptops, physical equipment, software piracy)
Payroll Fraud (Manipulating payroll systems; ghost employees)
Procure-to-Pay fraud (Procurement — Receiving—Accounts Payable Cycle)
Financial reporting fraud
Counterfeiting and piracy
Internet/cyber-fraud
SECTION 2: THE ALL-IMPORTANT RED FLAGS OF FRAUD
Part 3: Conducting a Fraud Risk Assessment and Recognizing the Red Flags of
Internal Fraud
Fraud Risk Mitigation Cycle - Implementing a Company-Wide System for Detecting,
Preventing and Investigating Fraud
Steps to Conducting a Successful Fraud Risk Assessment
Embezzlement red flags (Behavioral changes, accounting anomalies)
Cash theft red flags (anomalies in daily reconciliations, check-for-cash
indicators, etc)
T&E fraud red flags (Unusually high expense claims; photocopies of receipts,
etc) frequent switches in vendors; vendor address is a P.O. box)
Collusion/kickback/bribery red flags (long-time vendor suddenly replaced,
pricing anomalies, etc)
Identity fraud red flags (internal) (Employees complain of ID theft problems,
customer complaints)
Theft of confidential information (Example: Scientific fraud/fraudulent
scientific research)
Theft of assets/industrial equipment (laptops, software piracy, construction
materials, equipment, gasoline, confidential/proprietary information)
Payroll fraud (terminated employees still receiving checks; payroll amounts
fluctuate)
P2P fraud red flags (Suddenly higher costs of supplies or services; low quality
of delivered merchandise)
Financial reporting fraud (Unusually high revenues, odd patterns in receivables,
etc)
Counterfeiting and piracy (Graphic samples of red flags)
Internet/cyber-fraud
Day Two (8.30 AM – 4.00 PM)
SECTION 3: FRAUD DETECTION AND INVESTIGATION
Part 4: Fraud Detection
Red Flags are the Key to Fraud Detection and Prevention. Once you know what red
flags to look for you can implement effective detection, investigative and
forensic accounting techniques.
Introduction: How Frauds Are Most Often Detected (General ways: ACFE Chart)
Additional General Detection Methods:
Whistleblower hotlines: How to set them up and manage them (detailed discussion
of do’s and don’ts). Detailed instruction on best practices and mistakes to
avoid
Other important fraud detection procedures:
Monitor Employee Email, other activities
Surprise Internal Audit
Regular internal audits, incorporating fraud audit testing
Ratio analysis
Physical inspection of inventory
Manual review of all vendors (to ensure absence of sham vendors)
Manual review/assessment of payroll sample data (to ensure absence of ghosts)
Data Analytics (is both detective and investigative. IA can use D-M to screen
for red flags) Instruction on basic steps and techniques and how to gather
required data.
Examples of Fraud Audit Measures at Work
Accounts Payable Fraud Auditing (List of fraud-audit/detection measures)
Payroll Fraud Auditing (List of fraud-audit/detection measures)
Part 5: Investigation Techniques
Forensic Accounting Investigation - What it Is
Different from Internal Audit/ When to Call in Forensic Accountant/Auditor/CFE
Forensic accounting/auditing techniques: Data Mining and Analytics (most
powerful forensic accounting investigative tool); ratio analysis;
Gathering evidence – Document retention, chain of custody, preservation,
mistakes to avoid
Securing crime scene
Interviewing/interrogating suspects – Detailed steps with examples
Documenting findings
SECTION 4: ANTI-FRAUD CONTROLS
Part 6: Internal Controls and Other Fraud Prevention Measures:
Who Should Manage Anti Fraud Activities
Internal Controls: Do’s and Don’t’s
Best Practices in Anti-Fraud Controls.
General controls: Segregation of Duties, Delegation of Authority, Background
investigation
Specific operations-level controls for each fraud category.
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