ACCT 499696Advanced Fraud Examination

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ACCT 499696Advanced Fraud Examination

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Learned from intimate personal groups. 6. Donald R. Cressey ... Older tend to occupy higher ranking positions. Greater access to revenues, assets, resources ... – PowerPoint PPT presentation

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Title: ACCT 499696Advanced Fraud Examination

1
ACCT 499/696Advanced Fraud Examination

A course developed taught by
Thomas Buckhoff, Ph.D., CFE, CPA
Chapter 1 Introduction

2
Defining Fraud

The use of ones occupation for personal gain
through the deliberate misuse or theft of the
employing organizations resources or assets.

3
Defining Abuse

A deceitful act
A corrupt practice/custom
Examples
Borrow company equipment
Use sick leave when not sick
Slow or sloppy work
Surf the Net at work
Work under influence of drugs/alcohol

4
Research in Occupational Fraud and Abuse

Sutherland
Cressey
Albrecht
Hollinger
Wells Report

5
Edwin H. Sutherland

First defined white-collar crime
Criminal acts of corporations and individuals
acting in their corporate capacity
Theory of differential association
Crime is learned
Not genetic
Learned from intimate personal groups

6
Donald R. Cressey

His idea of a corporate cop was the catalyst
for the ACFE.
Research focused on the offenders rather than the
victims.
Created a theory for explaining white collar
criminal behavior.

7
Cresseys Hypothesis (1953)

Trusted persons become trust violators when they
conceive of themselves as having a financial
problem which is nonsharable, are aware this
problem can be secretly resolved by violation of
the position of financial trust, and are able to
apply to their own conduct verbalizations which
enable them to adjust their conceptions of
themselves as trusted persons with their
conceptions of themselves as users of the
entrusted funds or property.

8
The Fraud Triangle
PRESSURE
RATIONALIZATION
PERCEIVED OPPORTUNITY
9
Nonsharable Problems

Violation of ascribed obligations (i.e.
inability to pay ones debts)
Personal failures (i.e. vices)
Business reversals (cant walk away)
Physical isolation (no one to help)
Status gaining/maintenance
Strained employer-employee relations

10
Cresseys Offender Types

Independent businessmen
Borrowing
Funds really theirs
Long-term violators
Borrowing
Protect family from shame or poverty
Company cheating them
Company generally dishonest

11
Cresseys Offender Types

Absconders
Take the money and run
Usually unmarried, loners
Blame outside influences or personal defects

12
W. Steve Albrecht

Nine motivators of fraud
Living beyond means
Overwhelming desire for personal gain
High personal debt
Close association with customers
Inadequate compensation

13
W. Steve Albrecht

Nine motivators of fraud
Wheeler-dealer
Strong challenge to beat system
Excessive gambling
Family/peer pressure

14
The Fraud Scale

Situational pressures
Immediate problems with environment
Usually debts/losses
Perceived opportunities
Poor controls
Personal integrity
Individual code of behavior

15
The Fraud Scale
16
Richard C. Hollinger

Hollinger-Clark study (1983)
Surveyed 10,000 workers
Theft caused by job dissatisfaction
True costs vastly understated

17
Hollingers Conclusions

Employee perception of controls is important
Increased security may hurt, not help
Employee-thieves exhibit other deviance
Sloppy work, sick leave abuses, etc.
Hydraulic effect
Management should be sensitive to employees
Pay special attention to young employees

18
Hollingers Conclusions

Four key aspects of policy development
Understand theft behavior
Spread positive info on company policies
Enforce sanctions
Publicize sanctions

19
The Report to the Nation on Occupational Fraud
and Abuse(a.k.a. The Wells Report)

Largest fraud study ever
Study of 2,608 fraud cases
Reported by CFEs
Total 15 billion in losses
22 to 2.5 billion
Cases from text come from this study

20
Position in the Organization - Cases
21
Position in the Organization Median Loss
22
Median Loss by Gender
23
Median Loss by Age

Direct and linear correlation between age and
median loss
Older tend to occupy higher ranking positions
Greater access to revenues, assets, resources

5
24
Median Loss by Age
25
Median Loss by Marital Status
26
Median Loss by Education
27
Median Loss Per Number of Employees
28
Classifying Occupational Fraud and Abuse
29
Number of Casesby Scheme Type
30
Median Loss by Scheme Type
31
Fraudwise

Specializing in fraud detection, investigation,
and prevention consulting services
Senior Consultant
Thomas Buckhoff, Ph.D., CFE, CPA
2974 Southgate Drive
Fargo, ND 58103-3524
701-231-8512
www.fraud-wise.com

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