Before I start, let me explain that in this blog I will not provide any answers to the phrase “Deeper Understanding of Fraud Schemes.” Rather, I will only raise questions regarding the phrase. To be honest, If I was a CAE, I am not sure what the profession wants me to do.
With that said, I praise the profession in recognizing the importance of gaining a deeper understanding of fraud schemes facing our companies. Maybe, I am talking out of both sides of my mouth. Remember, my blogs are designed to make you think.
So, think about this: Fraud is not predictable as to when it will occur but is fairly straight forward as to how it will occur.
We're continuing with my thought process of looking behind curtains in fraud risk, but with a slight change. This time, we're looking behind a new curtain.
This month, we're pulling back the curtain again to take a look at a look at what could be going on even when everything seems to be fine on the surface. We'll consider what can happen despite the appearance of effective internal controls and how to uncover it.
My last series of blogs discussed strategies for detecting shell companies. I know they work because I have refined the strategies throughout my career. Now we will discuss what causes those strategies to fail.
What are the inhibitors to the successful use of artificial intelligence in fraud detection? Humans.
In this series of blogs, we are looking at the practice of using a fraud audit to detect shell company schemes occurring in an accounts payable file. Because the practice of effective fraud auditing is grounded in knowledge, we will start with a knowledge section and then delve into a demonstration of the fraud audit process.
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.
