Title: FORENSIC ACCOUNTING - BA124 - 2009Slide 12-1
1Todays Topics
- Organizational Fraud
- Shenanigan 4
- Consumer Fraud
2Todays Topics
3Occupational Fraud
- What is it?
- Fraud against companies other than financial
statement fraud - Asset misappropriations
- Corruption
- Know the graphics on pps. 520 529
4Asset Misappropriations
- Stealing receipts
- Employees, customers, collusion
- Stealing assets on hand
- Employees
- Stealing through disbursements
- Employees, vendors, collusion
5Thefts of Cash
- Larceny
- Skimming
- Fraudulent disbursements
6Larceny
- Theft of recorded cash w/o consent
- Cash shortages
- 2.9 of all frauds
- Easy to detect
7Skimming
- Sharing cash receipts
- Sales not recorded
- Fraudulent discounts
- Customer payments and write-offs
- Lapping
- Collusion with customers
8Fraudulent Disbursements
- 67 of all asset-related frauds
- Check tampering
- Check modification, check forgery
- Register schemes
- False refunds, false voids
- Inventory problems
- Billing schemes
- Dummy cos., 2X paying, personal use
9 Fraudulent Disbursements, continued
- Expense schemes
- Cheating on your expense report
- Payroll schemes
- Only 1.9 of all losses
- Ghost employees, false hours rates, commission
scams and false worker compensation claims
10Thefts of Assets
- Borrowing for personal use
- Personal business on company time
- Outright theft of assets
- Larceny involving inventory
- Unauthorized transfer of assets with forged
requisitions - Diversion of assets in receiving function
11Corruption
- Bribery
- Payoffs, kickbacks, bid rigging
- Conflicts of interest
- Purchase and sales schemes involving related
parties - Economic extortion
- Illegal gratuities
12Shenanigan 4-Expense Shifting with
AssetsThink WorldCom
- Technique 1
- Capitalizing normal operating costs-AOL
- Technique 2
- Shift of expenses to earlier period due to
accounting change-Snapple - Technique 3
- Slow amortization (somewhat subjective)-Orion
Pictures - Technique 4
- Failing to write-down impaired assets-Lockheed
- Technique 5
- Reducing asset reserves-Lucent
13Shenanigan 4Red Flags
- Changes in capitalization policy pre-IPO
- Late accounting change announcements
14Once AgainIts All AboutTransparency
15Consumer Fraud
- Fraud against individuals
- Number one consumer fraud Identity Theft
16Identity Theft
- Involves over 42 of reported frauds
- Use of name, address, SSN, band or credit card
PINs to commit fraud - Prevention is the key
17Identity Theft Conversion
- Purchase of large-ticket items
- False car or real estate loans
- Creation of phone or cell accounts
- Counterfeit checks or debit cards
- Creation of new bank accounts
- False filing of bankruptcy
- False filing of police information
- Creation of new credit card accounts
- Change of mailing address
18Identity Theft Cycle
- Stage 1 Discovery
- Gain information
- Verify information
- Stage 2 Action
- Document accumulation
- Action cover-up
- Stage 3 Trial
- 1st 3rd dimensions (gas station, store, new
account)
19How to Steal Someones Identity
- Obtaining info falsely
- Going through the trash
- Skimming credit cards
- Hacking
- Stealing wallets
- Outright theft from the home
- Stealing mail
- False change of address form
- Shoulder surfing
- Phishing or Pharming
20How to Protect Yourself
- Guard your mail
- Do not use pre-approved credit cards
- Guard SSN and PINs
- Guard all personal information
- Guard your trash
- Protect your wallet
- Protect and change your passwords
- Protect your home
- Protect your personal computers
- Use the Gramm-Leach-Bliley Act to opt out of
having your information sold
21 Post Event Activity
- Report event promptly
- Collect evidential matter
- Contact FTC regarding identity theft
- Homeland security implications
22Other Forms of Consumer Fraud
- Foreign Advance-Fee Scams
- Work at Home Schemes (MLMs)
- Bogus Mystery Shopping Scams
- Telemarketing Scams
- Investment Scams (Ponzi Scams)