Professional Documents
Culture Documents
An Introduction
AJAY
Forensic accounting is the practice of utilizing accounting, auditing, and investigative skills to determine whether fraud has occurred.
Litigation Support
damages sustained by parties involved in legal disputes and assists in resolving disputes, even before they reach the courtroom.
Litigation Support
Arbitration assistance
disputes Computation of damages resulting from personal injuries, wrongful death, breach of contract, casualty, and fidelity losses Determination of lost profits due to business interruption Testifying as an expert witness Financial review of contractual obligations Investigative services related to fraud and
Investigation
Is the act of determining whether criminal
matters such as employee theft, securities fraud (including falsification of financial statements), and insurance fraud have occurred.
Also includes searching for irregularities
associated with civil matters, such as a search for hidden assets in divorce cases.
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Types of Fraud
Occupational
Financial statement schemes
Asset misappropriation : cash theft,
Types of Fraud
Other Frauds
Financial institution Check and credit card fraud Insurance fraud Health care fraud Bankruptcy fraud Tax fraud Securities fraud Money laundering Consumer fraud Computer and Internet fraud Governmental fraud
Examples of Fraud
Financial Statement Schemes
A publicly-traded company engaged
in sham transactions for more than seven years by using several shell companies. The money transferred to the shell companies as payments for assets were returned as payments on accounts receivable. The companys assets were inflated by as much as $80 million.
Examples of Fraud
Asset Misappropriation
building to a company owned by the CEOs employer. The building was sold for $1.2 million more than it had been purchased by the former employee. All transactions occurred on the same day. Pune BPO scam was claimed to be the first scam in India. In April 2005, five employees of MsourcE in Pune were arrested for allegedly pulling off a fraud worth nearly $425,000 from the Citibank accounts of four New York-based account holders.
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Examples of Fraud
Health Care Fraud
Dr. X billed a patients insurance for the following activities: Knee arthroscopy with debridement $1,650 Diagnostic knee arthroscopy $ 1,625 Total billed $3,275
The second procedure listed above is
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included in the first procedure. Therefore, the correct amount of the bill is $1,650.
Examples of Fraud
Fraudulent Disbursements
An employee created over 1,000 false
refunds, all under the review limit of $15. He was caught because be began processing refunds before store hours and another employee noticed this. Before the scheme was detected, he made off with over $11,000.
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High school (33%, M = $100,000) College (55%, M = $200,000) Postgraduate (12%, M = 425,000)
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Charged but not convicted Had prior convictions Never charged or convicted
4% 8% 88%
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Rationalization
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Perceived Pressure
Employees, managers, and owners can feel
Perceived Opportunities
Opportunities to commit fraud exist when
Rationalization
Individuals usually dont commit
fraud unless they can justify their actions in relation to their own code of ethics.
Feeling underpaid or overworked
Desire to seek revenge Belief that taking the assets is a loan Belief they are helping others (family,
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employees)
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Inductive approaches Use of Data-mining software Digital analysis of company data Deductive approach Determine what kinds of frauds can occur. Search for symptoms of these frauds.
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Data-mining Software
Excel
ACL IDEA
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Deductive Approach
TO Detect Fraud
Involves a 5-step process:
Understanding the business environment
Understanding the kinds of fraud that can occur Determining the most likely symptoms Using databases and systems to search for the fraud
symptoms
Following up on discoveries to determine likelihood
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fraud exists
after someone in the entity suspects that fraud has been committed.
Evidence Categories
Testimonial Evidence Documentary Evidence
Physical Evidence
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Personal Observation
Testimonial Evidence
Interviewing Interrogatories
Graphology, polygraph
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Documentary Evidence
Audits
Computer searches
Physical Evidence
Fingerprints
Tire marks
Weapons
Stolen property Identification numbers or
Personal Observation
Invigilation
Surveillance Covert operations
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tracks
One of the sizzling career areas in
accounting
25,000 50,000 new professionals
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Obviously, a combination of at least two of these approaches will lead to optimal preparation.
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course that helps candidates prepare for the Certified Fraud Examiner examination.
Other organizations, such as those involved
in business valuation and the American Institute of Certified Public Accountants (AICPA), offer courses at the elementary, intermediate, and advanced levels.
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working for the government : Division of Insurance Fraud, IRS For a CPA firm that has a forensic practice or a firm that specializes in a forensic area, such as business valuation Colleges and universities are beginning to offer courses in forensic accounting and fraud examination
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THANK YOU
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