Fraud Auditing, Detection, and Prevention Blog

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.

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.

Last month’s trivia questions and answers

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?

Before we start this month’s blog, last month’s fraud trivia questions and answers.

What was the original name of the ACFE? NACFE

What was the original name of the ACFE monthly newsletter? White Paper

Is there a designation, Life Time CFE? Yes, it was issued once in the early years

What is your favorite Fraud Movie? This is always a tough question, but here is a few: Catch Me if You Can; The Wolf of Wall Street; Wizard of Lies, and of course, The Accountant.

After a series of thought-provoking blogs, I thought it was time to write a practice blog. I hope you find it helpful in your next audit.

So, you want to be a fraud auditor?

I have been practicing as a fraud auditor for over forty years. To be honest, for the first twenty, I did not know I was a fraud auditor. I spent the next twenty refining the practice of fraud auditing. So, this blog is intended to provide you the necessary skill set to become a fraud auditor.

Professional Skepticism: The Power of Fraud Knowledge

In June 2021, I will be speaking at the ACFE virtual conference on the Power of Fraud Knowledge. When I speak at a conference, my process is to select a topic, prepare the presentation, and then prepare to communicate the presentation. To do a good presentation, one should never simply read the slides but rather explain them, illustrate the concepts, explain practical applications, and maintain the audience’s interest. So, why am I telling you this?

In our fraud risk registers, we have identified over 100 procurement fraud schemes and over 100 overbilling fraud schemes. When these kinds of numbers are involved the idea of finding complex fraud schemes in your core business systems may seem overwhelming. However, fraud data analytics can simplify and improve the process.

In this blog we have selected a complex corruption scheme and a complex overbilling scheme to illustrate how fraud auditing can detect even the most complex schemes. The starting point is to identify the fraud risk statement and then understand how and where the scheme can occur in your organization.

Ghost employee schemes are a common fraud scheme during which there are people on the payroll who don’t work for the company in question but do collect a salary or remuneration.

Let’s take a closer look at how you can use fraud data analytics when creating an executing an audit program for ghost employees: