The Fraud Culture: Organization, People and our Society.

The Fraud Culture:Organization, People and our

Society

The Fraud Culture

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• What is Fraud?

• What is the Fraud Culture?

• The Red Flags of a Fraud Culture

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Fraud

• any artifice or deception practiced to cheat, deceive or

circumvent another to detriment.

• involves the use of dishonest or deceitful words/conduct in

order to obtain an unjust advantage over someone else.

• commonly known as white-collar crimes.

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What the fraudsters say:

• “I am just borrowing the funds”.

• “I am not hurting anyone the

organization/government can afford it.”

• “I am underpaid so it is my bonus.”

• “Everyone else is doing it so why not.”

• “The company is insured and would not lose.”

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Occupational fraud

• Defined as internal fraud, or fraud committed by

a person against the organization for which he or

she works.

• The use of one’s occupation for personal

enrichment through the deliberate misuse or

misapplication of the employing organization’s

resources or assets.

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Examples Occupational Fraud

• Larceny by clerks;

• Embezzlement (Skimming cash);

• False Accounting;

• Payroll padding;

• Billing Schemes;

• Switching of genuine currency for counterfeit

• Stealing of confidential data to facilitate identity theft or

industrial fraud;

• Forgery of authorization documents; and

• Uttering of forged medical certificates;

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The Culture

• Management does not directly tell employees to commit

fraud

• Management can unwittingly create an environment

where fraud breeds.

• Management is responsible for setting the tone for

behavior and ethics in an organization and managers are

the role models.

• If these role models fail to show good judgment and ethics

then the staff has no direction to follow.

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High and Low fraud risk environmentsVariable High Fraud

PotentialLow Fraud potential

Management Style Autocratic Participative

Management Orientation

Low trust

Power driven

High trust

Achievement driven

Distribution of authority

Centralised, reserved by top management

Decentralised, dispersed to all levels

Planning Centralised

Short range

Decentralised

Long range

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PROFILE OF A FRAUDSTER

• Missing documents (Board minutes, invoices, files, contracts, and other source

documents)

• Long-term employee, who knows how the company operates.

• Individual is in a position of trust/authority (as individuals have signing/

procurement authority).

• Individual works excessive overtime (often unnecessary) and does not claim

for it.

• Individual hardly wants to take a vacation;

• has to be forced and or encouraged to take a vacation.

• Comes to work early stays late.

• Visits by suspicious persons

• Regular audit exception reports

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Fraud Schemes in Trinidad and Tobago

(i) Forged identification

(ii) Forged certification

(iii) False supporting documents

(iv) Photocopied or faxed receipts

(v) Investment scams

(vi) Money Laundering schemes

(vii) Forged currency

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2014 Trinidad and Tobago Global Forensic Insttute Ltd 18

2014 Trinidad and TobagoGlobal Forensic Insttute Ltd 19

Fraud: Trends and Culture in Australia

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FEDERAL AGENT ADAM MARSDENFRAUD & ANTI-CORRUPTION

CULTURE• Australians awareness of fraud has been increasing

• Fraud Awareness Weeks

• Increase media reporting

• Close collaboration of dedicated fraud departments in both private and public

sectors.

•

• Australian Federal Police, in conjunction with partner agencies have created a

Fraud and Anti-Corruption Centre enabling efficient and thorough

correspondence between partner agencies.

•

• The bank and finance industry, a forum known as the Inter-Bank Fraud

Network was created for the purpose of sharing current trends and offering

solutions through experience gained through previous investigations.

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Trends

• Australia sees cycles of trends

• The production of fraudulent cheques to purchase good

at department stores

• Short term issues and often cease after the

methodology has been reported in media

• A re-emergence of these same offences after about 2-3

years of no activity.

• Australia usually sees two types of attacks in relation to

fraud; cyber, and physical

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Physical fraud

•  Local

• The offenders and syndicate members are more often

than not of Asian decent – most likely due to the close

proximity Australia is to Asia.

• Once Asian offenders have served their time in gaol, and

if they are deported to their country of origin, they will

usually change their names, gain a new passport and

return to Australia to continue their criminal activities.

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Foreign

• Foreigners, such as the Romanians, will travel to Australia

with the purpose of criminal activity.

• E.g. the increase in credit card skimmers used on ATM’s

and retail outlets to gather credit card identification

• The offenders then use these details to purchase high

value items such as electronic goods and perfumes.

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