Forensic Accounting Chapter 5

Of risk definitions risk appetite appetite the level

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Unformatted text preview: 2 Step 3 100 Not-For-Profits Not-For-Profits & Governments Special Fraud Special Targets Targets Note: Reference Textbook Section 5091 Chapter 5 Forensic Accounting 101 Why Are Not-For-Profits Fraud Targets ? Targets According to SAS Number 99 - “Not-For-Profit Organizations face Not-For-Profit incentives and pressures to achieve a given level of financial performance to satisfy its: satisfy •Governing Boards •Contributors •Government Agencies or •To Meet Internal Targets.” Chapter 5 Forensic Accounting 102 Some Reasons Why Some Not-For-Profits Are Easy Fraud Not-For-Profits Targets Not-For-Profits just don’t have the personnel size required for a real segregation of duties. segregation They have weak disbursement approval They requirements. When a fraud is discovered, they frequently do not prosecute it aggressively because of the perceived negative publicity. publicity. Chapter 5 Forensic Accounting 103 Not-For-Profits Red Flags Unqualified Accounting Staff or Treasurer Unqualified No Written Policies and Procedures Significant Turnover - Employees / Significant Volunteers Volunteers Liquidity Problems Inadequate Financial Performance Inadequate Information Information Deterioration of Key Ratios No Independent Audit Chapter 5 Forensic Accounting 104 Governmental Red Flags Operating Deficit - Current Fiscal Year Operating Current Deficit is larger than Previous Current Year’s Deficit Year’s General Fund borrowing from Enterprise General Funds Funds Unfunded Pension Obligations Large Increase in Short Term Debt Note: Reference Textbook Section 5111 Table 5.1 PIndicators ofTax Collections less than 92% of roperty Property Financial Condition for Municipal Governments Tax Levy Tax Chapter 5 Forensic Accounting 105 FRAUD ! NOW FF WHAT ? ? Note: Reference Textbook Sections 5121 - 5128 Note: Chapter 5 Forensic Accounting 106 Once Fraud Is Detected 1. 2. 3. 4. Call Legal Counsel. Call Call Law Enforcement Call Secure the Crime Scene Secure Take immediate action to safeguard existing existing assets from further damage assets 5. Notify Only The Manage That Need To Notify Know Know 6. Notify The Insurance Carrier 7. Call In Professionals to assist in the crisis 7. 8. Take action to identify and eliminate 8. Chapter 5 Forensic Accounting 107 Forensic Accountant’s Techniques 1. Fraud Risk 1. Fraud Assessment Assessment 2. Continuous Continuous Monitoring Monitoring 3. Time Line Time Analysis Analysis 4. Link Analysis 5. Invigilation Invigilation Chapter 5 6. Genogram 7. Entity Chart 8. Full –and – Full False Inclusion Tests Tests 9. Net Worth Net Analysis Analysis 10. Proof of Cash Cash Forensic Accounting 108 Questions Questions Chapter 5 Forensic Accounting Chapter 5 Is Very Important ! 109...
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