Prevent Fraud in Your Organization - Webinar Slides

1 © ArmaninoLLP | amllp.com © ArmaninoLLP | amllp.com
ArmaninoLLPWelcomes You To Today’s Webinar: Prevent Fraud in Your OrganizationThe presentation will begin in a few moments
Participants will receive an email within 3 business days with access to their certificate of completion.

2 © ArmaninoLLP | amllp.com
About the Presenters
Jeff Stegner, CPA/ABV, CFEPartner, Forensic & Valuation Services
Jeff has nearly 25 years experience in public accounting, the last 15 of which have been focused on valuation and litigation support services. Jeff is Accredited in Business Valuation (ABV) and also a Certified Fraud Examiner (CFE).
He has been qualified as the Court’s expert in various civil litigation matters on over 100 occasions and been retained in over 650 such matters including: accounting fraud, economic damages, lost profits, tracing of funds or property, spousal support, community vs. separate property claims and business valuation.

About the Presenters
Natalie McFarlin, CPA/ABVManager, Forensic & Valuation Services
Natalie has more than five years of experience preparing business valuations and working on hundreds of litigated matters. She is Accredited in Business Valuation (ABV) and a member of both the American Institute of Certified Public Accountants and California Society of Certified Public Accountants.

During today’s webinar, participants will:
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Discuss the characteristics of fraud and those who commit fraud
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Identify key prevention techniques recommended by our firm as well as the ACFE
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Review case studies of actual engagements we have been involved with
Learning Objectives

Presentation Overview
Types of Fraud
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The Fraud Triangle
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Three types of fraud
Discovering Fraud
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Detection of Fraud
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Targeted businesses
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Employee red flags
Prevention of Fraud
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Prevention techniques
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Fraud prevention checklist

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Consequential Damages
o
Protect your job
o
Protect your co-workers
o
Protect your employer
Why Me? / Why Now?

Fraud Risk Triangle

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Fraudulent Financial Reporting
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Asset Misappropriation
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Employee steals or misuses organizations’ resources
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Corruption
o
Employee misuses influence in a transaction that violates their duty
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Financial Statement Fraud
o
Employee intentionally causes a misstatement of material information in financial reports
Three Types of Fraud

Types of Fraud by Frequency
85% 37% 9% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Asset MisappropriationCorruptionFinancial Statement Fraud

Type of Fraud by Median Loss
$130,000 $200,000 $1,000,000 $0$200,000$400,000$600,000$800,000$1,000,000$1,200,000Asset MisappropriationCorruptionFinancial Statement Fraud

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Profile of the average perpetrator
o
Level of authority
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Higher authority figures commit fraud with higher median losses
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Lower level employees committed fraud more frequently with lower median losses
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Length of time employed
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Longer employment associated with higher median losses
Employee Red Flags

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Profile of the average perpetrator (continued)
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Department
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A majority of fraud was committed in the following departments:
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Accounting
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Operations
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Sales
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Executive/Upper Management
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Customer Service
o
Purchasing
Employee Red Flags (continued)

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Behavior of the average perpetrator
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Living beyond their means
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Experiencing financial difficulty
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Unusually close association with vendors or customers
o
Excessive control issues
Employee Red Flags (continued)

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Implement an anonymous outside fraud hotline
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Segregation of duties
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Job rotation
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Management review
Prevention Techniques

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Set proper “tone at the top”
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Fraud assessments
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Surprise audits
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Do not rely on external audits as a primary detection method
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Implement fraud awareness training for all
Prevention Techniques(continued)

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Stated consequences of committing fraud
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Communicate instances of discipline (no-name basis)
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Effective deterrent
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Enforce environment of high ethical standards
Communicate Highly Ethical Culture

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Tips are most common method
o
42.2% of detected fraud was from tips in 2014
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Most common method since 2002
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Management review and internal audit are the next two most common methods
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Combined these make up 30.1%
o
A slight increase from 29.0% in 2012
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External audit is far less effective
o
Only discovers 3.0% of fraud cases
Detection of Fraud

Found How?
42%
16%
14%
7%
7%
4%
3%
3%
2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Tips
Management review
Internal Audit
By Accident
Account Reconciliation
Document Examination
External Audit
Surveillance/Monitoring
Notified by Law Enforcement
IT Controls
Confession
Other

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Most common way to detect fraud
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More effective with anonymity
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Hotlines increase likelihood of receiving tips
Fraud Detected by Tips

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Overall
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Estimated 5% of revenue lost to fraud. This equates to $3.7 trillion internationally per year.
o
Same report -median loss per fraud occurrence investigated by its members was $145,000 (over 1/5 exceeded $1,000,000).
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Organizations with Hotlines:
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Frauds were 41% less costly
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Frauds were detected 50% more quickly
The Facts

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100% anonymous unless you choose otherwise
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Toll free number
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Live 24/7 coverage
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Immediate reporting
Key benefits:
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#1 way to detect fraud -communications
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#1 way to prevent fraud –strong tone at the top
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Reduces damages from fraud by 60%.
Taking Action
www.RedFlagReporting.com
1-877-64-RedFlag (1-877-647-3335)

Taking Action

Sign up for the hotline!
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Presentation for your Company
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Easy to set up and go live
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Inexpensive
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$1,500 annually (one time $1,500 set up fee)
Now What?

During this webinar, we’ve covered:
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Types of fraud committed and the impact each has on an organization
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The common signs of fraud and the individuals who commit it
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How to be an organization that prevents fraud
In Conclusion…

27 © ArmaninoLLP | amllp.com © ArmaninoLLP | amllp.com
ArmaninoLLPCertified Public Accountants & Consultants
Jeff Stegner phone: 925.790.2692 email: Jeff.Stegner@amllp.com
Natalie McFarlinphone: 925.790.2885 email: Natalie.McFarlin@amllp.com
Participants will receive an email within 3 business days with access to their certificate of completion.

Prevent Fraud in Your Organization - Webinar Slides

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