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Overview
Statistical Information
The statistical information in this presentation was taken from the 2012 Report to the Nation as published by the Association of Certified Fraud Examiners
Tax Commissioner
Cancer Society
Health Department
Trusted Employee
Employee has been with the company for a while Employee is well known and often well liked
Trusted Employee
Employee is trusted
Trust
Losses by Level
Level Owner/Executive
Manager Employee
18 Months
Where?
Type
Asset Misappropriation
Financial Statement Fraud Corruption
Percent
87% 8% 33%
Median Loss
$120,000 $1,000,000 $250,000
Where?
Type Billing Corruption Expense Reimbursement Skimming Percent 26% 25% 17% 16%
Where?
Type
Non-cash Check tampering
Percent
15% 15%
Payroll
Cash on hand
11%
11%
Size of Organization
Number of Employees <100
100-999 1,000-9,999 Percent of Cases 32% 20% 28%
10,000+
20%
Control Weaknesses
Control Weakness Lack of controls Override of controls Lack of review Percent of Cases 35% 19% 19%
9%
Fraud Detection
Implement a hotline
Implement data mining to monitor operations
Fraud Detection
Segregate duties
Educate your employees about fraud
Initial Detection
Detection
Tip
Percent
43%
Management review
Internal audit
15%
14%
By accident
7%
Tips
Source of Tips
Source
Employee Customer
Percent
51% 22%
Anonymous
Vendor
12%
9%
Internal Controls
Segregation of duties
Data mining
IDEA
ACL Topcaats
Active Data
Big brother?
Oops...
Where did $53 million go?
An ounce of prevention...
Balance
Prevention Steps
Create a heat map Implement controls to prevent
or detect theft
Monitor your controls
Prevention Steps
Perform surprise audits
Prosecute when fraud is
Conclusion
McNair, McLemore, Middlebrooks & Co., LLC Office number: 478-746-6277 Contact: Charles Hall at chall@mmmcpa.com
cpa-scribo.com (accounting and auditing blog)