BKD Forensics Institute Fall 2018

Transcription

1 BKD Forensics Institute Fall 2018 BKD Forensics Institute 2018 Report to the Nations: Trends to Watch October 31,

2 To Receive CPE Credit Individuals Participate in entire webinar Answer polls when they are provided Groups Group leader is the person who registered & logged on to the webinar Answer polls when they are provided Complete group attendance form Group leader sign bottom of form Submit group attendance form to within 24 hours of webinar If all eligibility requirements are met, each participant will be ed their CPE certificate within 15 business days of webinar Presenters Julia Mast, CPA, CFE, ABV, CFF Director Forensics & Valuation Services Douglas Manhart, CFE Director Forensics & Valuation Services 2

3 Agenda Recent Trends in Fraud: 2018 Report to the Nations Recognizing Red Flags Ways to Mitigate the Risk 3

4 . 4

5 5

6 Recognizing Red Flags 6

7 7

8 Industry Fig. 15 How does occupational fraud affect organization in different industries? Banking and Financial Services Manufacturing Government and Public Administration Health Care Retail Insurance Education Energy Construction Other Transportation and Warehousing Food Service and Hospitality Technology Religious, Charitable, or Social Services Services (Professional) Arts, Entertainment, and Recreation Telecommunications Real Estate Agriculture, Forestry, Fishing, and Hunting Utilities Services (Other) Mining Communications and Publishing Wholesale Trade 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 8

9 9

10 Ways to Mitigate Risk 10

11 Impact of a Hotline 11

12 Fig. 19 How does the presence of anti-fraud controls relate to the duration of fraud? Anonymous hotlines are most effective & fax Can anonymity be guaranteed? 12

13 Fig. 18 How does the presence of anti-fraud controls relate to median loss? Fig. 19 How does the presence of anti-fraud controls relate to the duration of fraud? 13

14 Big Data Information of extreme size, diversity & complexity Gartner, Inc. Source: Data Analytics processes & activities designed to obtain & evaluate data to extract useful information & answer strategic questions... Key Analytics Focus Areas Accounts Payable Payroll General Ledger Purchasing Cards 14

15 Risk Ranking Transactions at Merchants of Interest Round Hundred Dollar Transactions Total Transaction Categorical Holiday Transactions Potential Split Transactions Weekend Job Transactions Count Hits Transactions with Keywords Transactions on PTO Transactions Sales Representative 1,239, , ,463 Vice President Sales 564, , Technical Sales Rep 524, , Business Unit Manager 495, , Customer Service Rep 270, , Executive Vice President 263, , Regional Vice President 223, , VP Operations 194, , Print Production Manager 190, , General Manager 156, , Plant Manager 101, , Production Manager 87, n/a 406, , Sales Division Manager 297, , Operations Manager 106, , IT Manager 100, Finance Manager 79, Chief Financial Officer 77, CEO & President 72, Business Development Mgr 64, Quality Control Manager 50, Weekend Purchases/Holiday Purchases Transaction Date Transaction Amount Merchant Name Original Address City Name State Province 7/7/ SHERIDAN NURSERIES EST MISSISSAUGA ON 10/5/ VALUE VILLAGE #2027 MISSISSAUGA ON 10/12/ HOMESENSE 013 ETOBICOKE ON 1/11/ CLOVERDALE HOME HARDWA ETOBICOKE ON 1/11/ KITCHEN STUFF PLUS #7 ETOBICOKE ON 1/11/ HOME OUTFITTERS #5116 TORONTO ON 1/11/ TARGET CANADA T3715 TORONTO ON 1/11/ HOMESENSE 013 ETOBICOKE ON 2/2/ HOUSE WARMINGS INC OAKVILLE ON 2/23/ LULULEMON 262 ETOBICOKE ON Expense Description 15

16 Text Searches Transaction Date Transaction Amount Merchant Name Original City Name Expense Description 9/7/ ALBERTSONS #4132 DALLAS personal expense to be reimbursed by Amy 8/11/ STARBUCKS #02240 WOODR WOODRIDGE Card used in error - will send check 12/5/ NOODLES CO 611 LAGRANGE Check Included - personal mistake 11/2/2013 2, PTI MARKETING TECH This was billed by mistake and was credited on January 2014 statement 3/26/ FRONT STREET CAFE NEW RICHMOND Personal Expense Check Inclosed 6/29/ LILYDALE BP QPS LILYDALE gas for personal vehicle 7/3/ HOLIDAY STNSTORE 0336 BROOKLYN PARK gas for personal vehicle 7/9/ LILYDALE BP QPS LILYDALE gas for personal vehicle 7/13/ LILYDALE BP QPS LILYDALE gas for personal vehicle 7/17/ HOLIDAY STNSTORE 0336 BROOKLYN PARK gas for personal vehicle 7/19/ HOLIDAY STNSTORE 0336 BROOKLYN PARK gas for personal vehicle 7/21/ LILYDALE BP QPS LILYDALE gas for personal vehicle Vendor Employee Matching 16

17 Fictitious Company Cross-reference against Mail drops (mailbox services) Correctional facilities High-risk ZIP codes The UPS Store 1221 East Kearney Springfield, MO Address Mining Proximity 17

18 AP Manager Geocoding Vinny s Salvage Yard Employee- Vendor Proximity 18

19 High-Risk Merchants Split Transaction 19

20 Vendor Trending Analysis Acceleration Abrupt termination One-time large spikes Acceleration as confidence builds Getting Greedy Test phase Fig. 17 What anti-fraud controls are most common? Code of Conduct Internal Audit Department Management Certification of Financial Statements External Audit of Internal Controls over Financial Reporting Management Review Hotline Independent Audit Committee Employee Support Programs Anti-Fraud Policy Fraud Training for Employees Fraud Training for Managers/Executives Dedicated Fraud Department, Function, or Team Formal Fraud Risk Assessments Surprise Audits Proactive Data Monitoring/Analysis Job Rotation/Mandatory Vacation Rewards for Whistleblowers 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Percent of Cases 20

21 QUESTIONS? Continuing Professional Education (CPE) Credit BKD, LLP is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: The information contained in these slides is presented by professionals for your information only & is not to be considered as legal advice. Applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor or legal counsel before acting on any matters covered 21

22 CPE Credit CPE credit may be awarded upon verification of participant attendance For questions, concerns or comments regarding CPE credit, please the BKD Learning & Development Department at THANK YOU! For more information Julia Mast Doug Manhart 22