A Blueprint:

the

Strategizing Your
Anti-fraud Approach

2017 Members Only Webinar

Tuesday, May 16, 2017
 Agenda

Five main components of an Anti-Fraud Strategy

COSO supports an Anti-Fraud Strategy

Manage losses due to fraud utilizing a Fraud Risk

Management Process

Best Practices for monitoring, detecting and preventing

fraud
 POLLING QUESTION 1

Do you capture your losses due to fraud in

your general ledger?

A. Yes
B. No
C. I dont know
 Loss Due To Fraud

Source: ACFE Report To The Nations On Occupational Fraud and Abuse 2016 Global Fraud Study
 Loss Due To Fraud

Losses due to fraud,

in any given year,
equate to 5% of revenues.

Source: ACFE Report To The Nations On Occupational Fraud and Abuse 2016 Global Fraud Study
 Loss Due To Fraud

Source: ACFE Report To The Nations On Occupational Fraud and Abuse 2016 Global Fraud Study
 POLLING QUESTION 2

Does your organization currently have any

type of Anti-Fraud Program?

A. Yes
B. No
C. I dont know
Houses & Fraud Strategy
Fraud Strategy

What is covered IIA definition of

Fraud

Leveling the Costs to Manage

Fraud Against Program Costs
Loss of profit
Time commitment to monitor
and investigate productivity
Reputation Risk
Customer Relations
 Fraud Triangle

DETECTION

PREVENTION INVESTIGATION
Fraud Strategy

Internal Controls
Managing movement
Between Departments
Between Accounting
Functions/Activity
Between Management
Levels
Fraud Strategy

Manage what others see

inside and outside of the
organization:

Ethics
Compliance
Whistleblower Hotline
Zero tolerance
Training employees
and vendors
 Fraud Strategy

Protections Straw, Sticks or Bricks

Maturity of Fraud Management

Program
Fraud Risks Mapped to a
Robust controls program
Annual Reviews/Updates
Appropriate Policies in place
Fraud Response Plan
 POLLING QUESTION 3

How many of the following Policies do you currently

have In place:
Zero Fraud Tolerance
Fraud Response Policy
Whistle Blower Policy include not retaliation

1. One
2. Two
3. Three
4. None
Five main components of an Anti-Fraud Strategy

1. Fraud governance process

2. Transparent and sound anti-fraud culture
3. Fraud risk assessment
4. Implement & maintain preventive and detective
fraud control processes and procedures
5. Response is swift to allegations of fraud and
appropriate action against wrong doers
 The IIA Practice Guide:
Internal Auditing And Fraud

Fraud Awareness
Roles & Responsibilities
Fraud Risk Assessment
Fraud Prevention & Detection
Fraud Investigation

Template & Reference Materials

Source: https://na.theiia.org/standards-guidance/recommended-guidance/practice-guides/Pages/Internal-Auditing-and-Fraud-Practice-Guide.aspx
 The IIA COSO Resource Exchange

Source: https://na.theiia.org/standards-guidance/topics/Pages/COSO-Resource-Center.aspx
 COSO Support for Anti-Fraud Strategy

Source: COSO Fraud Risk Management Guide

 COSO Support for Anti-Fraud Strategy

Source: COSO Fraud Risk Management Guide

 COSO Support for Anti-Fraud Strategy

Source: COSO Fraud Risk Management Guide

 COSO Support for Anti-Fraud Strategy

Source: COSO Fraud Risk Management Guide

 COSO Support for Anti-Fraud Strategy

Source: COSO Fraud Risk Management Guide

 POLLING QUESTION 4

Has your Organization completed a Risk

Assessment within the past 2 years?

A. Yes
B. No
C. I dont know
 Anti-Fraud Best Practices

Know Your Risk Universe

Source: COSO Fraud Risk Management Guide

 Anti-Fraud Best Practices

Have a Strategy - Framework

 Anti-Fraud Best Practices

Utilize All Lines of Defense

Change management activities should be examined to determine that the findings of
the Anti-Fraud Program are implemented.

Organizations can accomplish the changes identified to improve the entity through
various methods. These include:
A project management office
A program management function (related to findings or changes in the programs)
Organizational change and the implications on the programs, assessments, and
results.
 Best Practices
Fraud Monitoring, Detecting & Preventing

The median duration of a fraud scheme is 18 months.

The most crucial moment in the fraud examination process is the

initial detection, as it can open or close several options for an
organization.

Tips continue to be the most common method of initial fraud

detection (across all fraud types).
Over half of useful tips came from employees, but customer and
vendor tips are also sources.

Smaller organizations often lack segregation of duties, the

availability of resources for anti-fraud controls, and pressure from
regulators or internal auditors.
 Fraud Detection Be Proactive!

Less-proactive detection methods were linked to higher median

fraud losses:
Police notification
External audit
Confession
Accident

Proactive methods were associated with lower median fraud losses:

Internal audit
IT controls
Management review
Account reconciliation
 Detection Recommendations

Anonymous tip hotline for employees, customers,

and vendors
Internal audit function
Audit committee
IT controls
Develop and monitor an internal control dashboard
Account reconciliations
Surprise physical inspections of inventory and
petty cash audits
External audits
Data analytics
QUESTIONS
 Thank You

The Institute of Internal Auditors

Name Brenda Buetow
Title Regulatory Compliance Risk Sr. Manager
Email Brenda.Buetow@crowehorwath.com
Website www.crowehorwath.com
Twitter @BRBCFE
LinkedIn https://www.linkedin.com/in/bbuetow