Into to Fraud Examination

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Investigation

LOGOFraud Risk

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The Institute of Internal Auditors

"Any illegal act characterized by deceit, concealment, or violation of trust. These acts are not dependent upon threat of violence or physical force. Frauds are perpetrated by parties and organizations to obtain money, property, or services; to avoid payment or loss of services; or to secure personal or business advantage”

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Association of Certified Fraud Examiners

"The use of one's occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization's resources or assets.”

LOGOLegal Elements of Fraud

1. A material false statement 2. Knowledge that the statement was false when

it was spoken3. Reliance on the false statement by the victim 4. Damages resulting from the victim’s reliance

on the false statement

LOGOMajor Categories of Fraud

- Asset misappropriations Skimming revenues, stealing inventory, and payroll fraud.

- Corruption Accepting kickbacks and engaging in conflicts of interest.

- Financial statement fraud and other fraudulent statements

Overstating revenues, understating liabilities or expenses, or making false promises regarding the safety and prospects of an investment.

LOGODefinition of Fraud

LOGOFinancial Statement Fraud

The Association of Certified Fraud Examiners

“The intentional, deliberate misstatement or omission of material facts or accounting data that is misleading and, when considered with all the information made available, that would cause the reader to change or alter his or her judgment or decision.”

LOGOFinancial Statement Fraud

Major Areas:

1. Fictitious revenue (and related assets) 2. Improper timing of revenue and expense recognition 3. Concealed liabilities 4. Inadequate and misleading disclosures 5. Improper asset valuation 6. Improper and inappropriate capitalization of expenses

LOGOFinancial Statement Fraud

The essential characteristics:

(1) The misstatement is material and intentional.(2) Users of the financial statements have been misled.

LOGO Management's Role

Managing Fraud Risk:

Establishing a Fraud-related policy and procedures.

Assessing Fraud Risk Assessment

Establishing Preventive Techniques

Establishing Detective Techniques

Establishing a Reporting Process

LOGOInternal Auditor's Role

Consider fraud risks

Have sufficient knowledge of fraud to identify

red flags

Be alert to opportunities that could allow fraud

Evaluate the indicators of fraud

Notify the appropriate authorities

LOGOInternal Auditor's Role

Proficiency 1210.A2 – Internal auditors must have sufficient knowledge to evaluate the risk of fraud and the manner in which it is managed by the organization, but are not expected to have the expertise of a person whose primary responsibility is detecting and investigating fraud.

Due Professional Care 1220.A1 – Internal auditors must exercise due professional care by considering the Probability of significant errors, fraud, or noncompliance;

Risk Management 2120.A2 – The internal audit activity must evaluate the potential for the occurrence of fraud and how the organization manages fraud risk.

  Engagement Objectives 2210.A2 – Internal auditors must

consider the probability of significant errors, fraud, noncompliance, and other exposures when developing the engagement objectives.

  2060 – Reporting to Senior Management and the Board The chief audit executive must report periodically to senior

management and the board on the internal audit activity’s purpose, authority, responsibility, and performance relative to its plan. Reporting must also include significant risk exposures and control issues, including fraud risks, governance issues, and other matters needed or requested by senior management and the board.

LOGOInternal Auditor's Role

  Engagement Objectives 2210.A2 – Internal auditors must

consider the probability of significant errors, fraud, noncompliance, and other exposures when developing the engagement objectives.

  Reporting to Senior Management and the Board 2060

The chief audit executive must report periodically to senior management and the board on the internal audit activity’s purpose, authority, responsibility, and performance relative to its plan. Reporting must also include significant risk exposures and control issues, including fraud risks, governance issues, and other matters needed or requested by senior management and the board.

LOGOFraud Examination

Fraud examination is a methodology developed by ACFE for resolving fraud allegations from inception to disposition, including obtaining evidence, interviewing, writing reports, testifying to findings, and assisting in the detection and prevention of fraud.

LOGOFraud Examiner

Lawyer Accountant

Criminologist Investigator

LOGOAuditing vs. Fraud Examination

LOGOAuditing vs. Fraud Examination

LOGODefinition of Fraud

LOGOCertified Fraud Examiner (CFE)

1. Be an Associate member of the ACFE in good standing.

2. Submit the CFE Exam application with proof of education and

professional recommendations.

3. Prepare for the CFE Exam

4. Pass the CFE Exam.

5. Gain final approval from the certification

committee and become a CFE.

LOGOCertified Fraud Examiner (CFE)

10 hours to complete the CFE Exam.

Each section is allocated a maximum of 2.6 hours to complete.

Each of the four exam sections has 125 questions.

You will have a maximum of 75 seconds to answer each question.

You have 30 days to complete all four sections of the CFE Exam.

You must complete each section in one sitting.

LOGOCertified Fraud Examiner (CFE)

• Fraud Prevention and

Deterrence

• Financial Transactions

• Fraud Investigation

• Legal Elements of Fraud 

LOGOCertified Fraud Examiner (CFE)

Get Certified 

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Questions