acfe fraud prevention check-up - BKD

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APPENDIX E: FRAUD RISK EXPOSURES 42NOTE: This appendix is a sample from another entity. As such, no adjustment has been made to this material. Theinformation may or may not agree with all the concepts noted within this paper. The material is being provided as anexample that may be a used as a tool, reference, or starting point.The following illustrates the types of frauds an organization might encounter. This listing is not meant to be allinclusivebut to provide a starting point for an organization to identify which areas are vulnerable to fraud. Moreattention will be needed to identify specific industry, location, and cultural factors that can influence fraudulentbehavior. Once identified, the fraud risk assessment framework shown in Appendix D could be used 43 .1) Intentional manipulation of financial statements can lead to:a) Inappropriately reported revenues(1) Fictitious revenues(2) Premature revenue recognition(3) Contract revenue and expense recognitionb) Inappropriately reported expenses(1) Period recognition of expensesc) Inappropriately reflected balance sheet amounts, including reserves(1) Improper asset valuation(a) Inventory(b) Accounts receivable(c) Mergers and acquisitions(d) Capitalization of intangible items(2) Misclassification of assets(3) Inappropriate depreciation methods(4) Concealed liabilities and expenses(a) Omission(b) Sales returns and allowances and warranties(c) Capitalization of expenses(d) Tax liabilityd) Inappropriately improved and/or masked disclosures(1) Liabilities omissions(2) Subsequent events(3) Related-party transactions(4) Accounting changes(5) Management frauds uncovered(6) Backdating transactionse) Concealing misappropriation of assetsf) Concealing unauthorized receipts and expendituresg) Concealing unauthorized acquisition, disposition, and use of assets42The Fraud Risk Manual issued by the ACFE, 2007.43For a sample list of fraud schemes and potential controls to be installed to combat the fraud, see Appendix 8 of Managing the Risk of Fraud:A Guide for Managers by HM Treasury, in Appendix A of this paper.57
2) Misappropriation of:a) Tangible assets by(1) Cash theft(a) Sales register manipulation(b) Skimming(c) Collection procedures(d) Understated sales(e) Theft of checks received(f) Check for currency substitution(g) Lapping accounts(h) False entries to sales account(i) Inventory padding(j) Theft of cash from register(k) Deposit lapping(l) Deposits in transit(2) Fraudulent disbursements(a) False refunds(b) False voids(c) Small disbursements(d) Check tampering(e) Billing schemes(f) Personal purchases with company funds(g) Returning merchandise for cash(3) Payroll fraud(a) Ghost employees(b) Falsified hours and salary(c) Commission sales(4) Expense reimbursement(a) Mischaracterized expenses(b) Overstated expenses(c) Fictitious expenses(d) Multiple reimbursements(5) Loans(a) Loans to nonexistent borrowers(b) Double pledged collateral(c) False application information(d) Construction loans(6) Real estate(a) Appraisal value(b) Fraudulent appraisal(7) Wire transfer(a) System password compromise(b) Forged authorizations(c) Unauthorized transfer account(d) ATM58
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ACFE FRAUD PREVENTIONCHECK-UP
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ACFE FRAUD PREVENTIONCHECK-UPThe Be
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ACFE FRAUD PREVENTIONCHECK-UPACFE F
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Sponsored by:The Institute of Inter
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Team Members:Toby J.F. Bishop, CPA,
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Managing the Business Risk of Fraud
Page 19 and 20: establish their own fraud risk mana
Page 21 and 22: Fraud risk identification may inclu
Page 23 and 24: Thus, to properly address fraud ris
Page 25 and 26: The board also has the responsibili
Page 27 and 28: • Implementing adequate internal
Page 29 and 30: Fraud Risk Management Program Compo
Page 31 and 32: ecently been hired in the purchasin
Page 33 and 34: Organizations can identify and asse
Page 35 and 36: The Risk Assessment TeamA good risk
Page 37 and 38: This also involves understanding th
Page 39 and 40: - Invoices for goods not received o
Page 41 and 42: Other RisksRegulatory and Legal Mis
Page 43 and 44: SECTION 3: FRAUD PREVENTIONPrincipl
Page 45 and 46: An organization’s HR group is oft
Page 47 and 48: SECTION 4: FRAUD DETECTIONPrinciple
Page 49 and 50: Process ControlsProcess controls sp
Page 51 and 52: keep such information confidential.
Page 53 and 54: will vary depending on the nature,
Page 55 and 56: Conducting the InvestigationPlannin
Page 57 and 58: • Extended investigation — Cond
Page 59 and 60: Fraud ControlsDeloitte Forensic Cen
Page 61 and 62: APPENDIX B: SAMPLE FRAMEWORK FOR A
Page 63 and 64: APPENDIX C: SAMPLE FRAUD POLICY 41N
Page 65 and 66: CONFIDENTIALITYThe ______________ U
Page 67 and 68: Sample Fraud Policy Decision Matrix
Page 69: Identified Fraud Risksand Schemes (
Page 73 and 74: ) Embezzlement(1) False accounting
Page 75 and 76: Fraud Prevention Area, Factor, or C
Page 83 and 84: O-Organization / PersonnelO1-Leader
Page 85 and 86: O4.3 Enhance Operational Skills & C
Page 87 and 88: PR-Prevent, Protect & PreparePR1-Ge
Page 89 and 90: E-Periodic EvaluationE1-Evaluation
Page 91 and 92: I2-CommunicationI2.1 Develop Commun
Page 93 and 94: CriminologyFraud Prevention Program
Page 117 and 118: Sample Fraud PolicyAssociation of C
Page 119 and 120: Sample Fraud PolicyCONFIDENTIALITYT
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Sample Fraud PolicyFraud Policy Dec
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Fraud’s Worst Enemyhttp://www.fra
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ACFE Insights - ACFE Insightshttp:/
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ACFE Insights - ACFE Insightshttp:/
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