Fraud Auditing, Detection, and Prevention Blog

Leonard W. Vona

Leonard W. Vona has more than 40 years of diversified fraud auditing and forensic accounting experience. His firm, Fraud Auditing, Inc., advises clients in areas of fraud risk assessment, fraud data analytics, fraud auditing, fraud prevention and litigation support.
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Recent Posts

How to Write the Fraud Action Statement of the Fraud Risk Statement

Nov 14, 2022 7:15:21 PM / by Leonard W. Vona posted in Fraud Risk Statements, Fraud Auditing, ...

In this blog, we're going to talk about the Fraud Action Statement, the "what" part of the Fraud Risk Statement, but first the answers to the fraud trivia from the last blog:

What was the first recorded financial collapse? Medici Bank went insolvent in 1494 due to extensive spending. Check out Business Insider’s List of the worst company collapses in history.

Who coined the phrase “White Collar Crime”? Criminologist Edwin Sutherland created the phrase in the 1930s

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Understanding the People in a Fraud Risk Statement

Oct 17, 2022 7:22:28 PM / by Leonard W. Vona posted in Fraud Risk Statements, Fraud Schemes, ...

The answers to last month's trivia and the setup to this month's topic on the people behind the fraud

What industry was Equity Funding in? Insurance.

What fraud risk statement occurred in Equity Funding? False Revenue to a false customer.

How did the fraud become known? A whistleblower, who most likely was part of the cover-up at one time.

How many employees participated in the cover-up? Over 100!

Is it true that the auditors went to jail? Yes. Apparently, the jurors thought that negligence in performing an audit is as serious as participation in fraud.

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What is an Entity in Fraud Risk Auditing and Why Does it Matter?

Sep 14, 2022 11:44:41 AM / by Leonard W. Vona ...

The answers to last blog's trivia:

Nick worked in the Singapore office: Internally what was the slang term for the Singapore office? Fortress Singapore. FYI, this is not a reflection on Singapore the country but the management in the Singapore office.

What was the name of the account Nick used to process his unauthorized trades? 88888

Why did the auditors fail to detect the unauthorized trades? The illicit stock trades were recorded in the 88888 account. The IT department was told that the 88888 account was an error-clearing account, therefore no need to print the 88888 account on the stock trading register.

What event caused Nick’s fraud scheme to become visible? An earthquake in Japan caused the market to go in a different direction than his expectation causing the losses to become larger than he could conceal.

Why is this important to the auditing profession? My guess, since the auditors were auditing around the computer, they did not know about the 88888 account. Fraud data analytics would have had the opportunity to detect these trades. At least, I hope.

Studying historical cases of fraud provides great learning opportunities.

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The Science of Identifying Fraud Risks in Your Business

Aug 26, 2022 8:43:15 AM / by Leonard W. Vona posted in Fraud Risk Statements, Fraud Risk Identification, ...

Who caused the failure of a bank via illicit stock trades? Nick Leeson

Who almost caused the failure of a bank due to illicit stock trades? Jérôme Kerviel 

What carpet cleaner was listed on Forbes? Barry Minkow

Which was the first widely publicized case of computer crime to conceal a financial statement fraud? Equity Funding. I remember when this case was first publicized, and I must admit, it started with my fascination with fraud as an auditor.

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Using the Science of Fraud to Improve Fraud Auditing

Jul 18, 2022 10:30:41 AM / by Leonard W. Vona ...

Fraud Trivia: Famous Scammers - answers to the last blog

What is the name of the first “confidence man”? William Thompson

What is the name of the first “confidence queen”? Bertha Heyman

Who sold an imaginary country? Gregor MacGregor

Who sold the Eiffel tower? Victor Lustig

Lastly, who is famous for selling Brooklyn Bridge, Madison Square Garden, Metropolitan Museum of Art, Grant’s Tomb, and the Statue of Liberty? George Parker

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A Vulnerability Assessment Approach to Fraud Auditing

Jun 12, 2022 7:43:27 PM / by Leonard W. Vona posted in Fraud Auditing, Fraud Detection, ...

Last Month's Trivia answers

What are the 10 most common sources of food fraud? Hint: Identify the food item.

According to scientists, the most common sources of food fraud are olive oil, milk, honey, saffron, orange juice, apple juice, grape wine, vanilla extract, and fish. Think about that the next time you go to the grocery store!

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A Different Way to Think About Fraud Risk Management

May 23, 2022 8:24:28 AM / by Leonard W. Vona posted in Fraud Auditing, Concealment Strategies, ...

On which day of the year are online dates most vulnerable to fraud schemes?

Valentine’s day -- the heart wants what the heart wants! Does this make us vulnerable?

In the USA alone, romance swindles cost how many millions of dollars in one year?

Romance frauds resulted in losses of over $300 million in the US in 2021.

How does the sophistication of fraud concealment, apply to online dating fraud?

The romance scammer uses techniques to make you believe that their love for you is real. Fraudsters, also use techniques to make fraudulent transactions look real!

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Forensic Auditing Vs. Forensic Investigation of Fraud

Apr 20, 2022 5:17:42 PM / by Leonard W. Vona posted in Litigation, Fraud Auditing, ...

Check out the answers to last month's Trivia Quiz and why it matters for making our profession the number one reason for fraud detection:

How much more money is laundered in fiat currencies than in cryptocurrency?

400 times more money is laundered in fiat currencies than in cryptocurrency.

What percentage of system-generated alerts against money laundering resulted in false positives?

95% of system-generated alerts against money laundering resulted in false positives.

According to money laundering statistics of 2020, what percent of laundered money goes undetected?

90% of laundered money remains undetected, according to money laundering statistics of 2020. 

Source: Legal Jobs Blog

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Applying Knowledge to a Fraud Audit

Mar 17, 2022 6:03:55 PM / by Leonard W. Vona posted in Fraud Data Analytics, Fraud Risk Identification, ...

Last month’s trivia questions and answers

Besides the fraud triangle, what other shapes are used to describe the theory of why people commit fraud.

 The fraud diamond and the fraud pentagon.

 In what year did Dr. Cressy publish the fraud triangle?

This is an interesting question because there seem to be conflicting thoughts on this subject. With that said, I will say the study was never published by Dr. Cressey, based on what I believe is a reliable source. This does not diminish the importance of the fraud triangle, it is just interesting trivia.

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How to Use the Red Flag Concept in Fraud Auditing

Feb 21, 2022 8:00:33 AM / by Leonard W. Vona posted in Fraud Risk Statements, Fraud Schemes, ...

Last month’s trivia questions and answers

Which country offers an on-line fraud quiz to test their citizen's awareness to fraud?

Canada: If your country offers such a quiz, please let me know.

What was the first recorded fraud?

The first recorded fraud scheme is from 300 B.C. in Greece.

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