Forensic Accounting Chapter 5

5 forensic accounting 87 how is bid rigging caught

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Unformatted text preview: orensic Accounting 89 Policies – “The Good” Policies Ethics Policy Ethics Rules of Conduct Risk Assessment Fraud /Ethics Hotline Security & Threat Assessments Pre-Employment Background Pre-Employment Investigations Chapter 5 Forensic Accounting 90 Initial Detection of Occupational 40.2% Frauds Frauds 15.4% Source Tips / Hotline Source : Management Review 13.9% Internal Audit 8.3% By Accident Document Examination 2010 ACFE Report To The Nation 6.1% Account Reconciliation 6.15.2% External Audit 4.6% Surveillance 2.6% Notified by Police Confession IT Controls 0% Chapter 5 1.8% 1.0% 0.8% 5% 15% 25% Forensic Accounting 35% 45% 91 Policies – “The Bad & The Ugly” Ugly Only use the code as a foundation for disciplinary Only use the code as a foundation for disciplinary action action Never review or revise the code for any reason Revise the code, with input only from corporate Revise counsel counsel and never solicit input from those working under its mandates Tell employees they don't ever need to review the code because either it's just common sense anyhow 92 Chapter 5 Forensic Accounting Preventing Employee Fraud Fraud Hotline. Mandatory Vacation Policy. Rotate Employees That Handle: Rotate Cash Cash Payables Receivables Receivables Observe, Listen, Investigate Observe, Employee Employee Lifestyle Changes. Chapter 5 Forensic Accounting (continued on next slide) 93 Preventing Employee Fraud Proactive Internal Audits Proactive Count cash at irregular intervals Perform unannounced inventory counts Compare Policy & Procedures to the functions actually performed. The “Small Business Owner” should The receive the monthly bank statements unopened. unopened. Reconcile All Bank Accounts Prepare A Fraud Risk Assessment Test for Related Parties Chapter 5 Forensic Accounting 94 Fraud Fraud & Company’s Risk Assessment Note: Reference Textbook Section 5071 Chapter 5 Forensic Accounting 95 Fraud Risk Assessment Is a comprehensive review and analysis to Is determine where the risks are and the type of corrective action needed. of A Fraud Risk Assessment Key Elements: Identify Inherent Fraud Risk Assess Likelihood & Significance Of Inherent Fraud Risk Respond To Reasonably Likely and Significant Respond Inherent and Residual Fraud Risks Inherent Chapter 5 Forensic Accounting 96 Definitions of Risk Definitions Ris Ris k The possibility of The an event occurring that will have an impact on the achievement of objectives. Risk is measured in terms of impact and likelihood. likelihood. 97 Definitions of Risk Definitions Risk Appetite Appetite The level of The risk that an Organizatio Organizatio n is willing to accept. to 98 Definitions of Risk Definitions esidual Risk Risk The risk remaining The after management takes action to reduce the impact and likelihood of an adverse event, including control activities in responding to a risk. responding 99 Fraud Risk Assessment Fraud Identify Risk Perform Risk Assessment Execute Risk Management Step 1 Step...
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