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
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.
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.
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!
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!
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:
400 times more money is laundered in fiat currencies than in cryptocurrency.
95% of system-generated alerts against money laundering resulted in false positives.
90% of laundered money remains undetected, according to money laundering statistics of 2020.
Source: Legal Jobs Blog
Last month’s trivia questions and answers
The fraud diamond and the fraud pentagon.
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.
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.
What is the full name of the person who first perpetrated the Ponzi scheme?
Despite the notoriety of Charles Ponzi, the scheme that carries his name, it was first perpetrated by Sarah Howe in Boston in 1879.
In the movie “The Accountant”, as the protagonist solves the financial statement fraud scheme, what real life financial statement fraud did the Accountant sketch out on the glass walls of the conference room?
