Detecting and Preventing Internal and External Fraud


Organizations of all kinds and sizes are increasingly threatened by fraud. Embezzlement, kickbacks, check fraud, financial statement fraud and vendor billing schemes are just a few of the countless economic crimes committed by employees and outsiders.

This seminar will provide auditors, controllers, compliance managers, accountants and other financial professionals with a strong foundation of practical knowledge about how common frauds are committed using a combination of lecture, exercises and group breakout sessions

Why should you attend:

  • Common and Uncommon Internal and External Fraud Schemes Threatening Organizations Today
  • Who Commits Internal and External (and collusive) Fraud
  • Why Employees Commit Fraud
  • How to Detect The Red Flags of Common Schemes
  • Essential fraud detection tools and techniques
  • Software Tools For Auditing For Fraud
  • Best Practices For Developing And Implementing Anti-Fraud Controls

Who will benefit:

  • Accountants
  • Auditors (internal AND external)
  • Commpliance Managers
  • Financial Professionals
  • Controllers
  • Treasurers
  • Accounts Payable Managers
  • General Counsel/Corporate Attorneys


Day One

INTRODUCTION: The Fraud Problem
  • Statistical overview of the fraud problem
  • External versus Internal Fraud-short overview of differences
  • Who commits fraud -- (ACFE data on women versus men, age groups, etc)
  • Why employees commit fraud (The Fraud Triangle)
  • Lessons from fraudsters: (Examples of real-life frauds that can and do affect organizations across industries)
PART 1: Common Types of External and Internal Fraud Today 
Lesson 1: External Fraud
  • Vendor fraud (Case studies that show ways vendor/billing/sham corporation fraud can be committed)
  • ACH fraud - latest external cyber-schemes
  • Cyber-crime (hacking/information theft, system sabotage, viruses, etc)
  • Social engineering to commit fraud (Phishing, spear-phishing, smishing, pretexting)
  • Bid-pooling
Lesson 2: Internal Fraud
  • Embezzlement (General definition; Koss Corp. embezzlement case)
  • T&E; fraud/Misuse of company credit cards/P-cards
  • Collusion w/ domestic or international vendors (kickbacks, bribery)
  • Collusion: Bid-rigging
  • Theft/falsification of confidential information (Example: Heartland breach or other case)
  • Identity fraud (Graphic description of ways internal ID theft/fraud is committed; pretexting, using co-worker's credentials to commit fraud; theft of customer ID)
  • Theft of assets (laptops, physical equipment, software piracy)
  • Payroll Fraud (Manipulating payroll systems; ghost employees
  • Procure-to-Pay fraud (Procurement - Receiving-Accounts Payable Cycle)
  • Financial reporting fraud (Case study: TBA, depending on latest developments)
  • Internal risk of cyber/information theft and crime
PART 2: Common Types of External and Internal Fraud TodayExternal Fraud:
  • Vendor fraud (Case studies that show new ways vendor fraud can be committed)
  • Check fraud (illustrations of forged/altered checks)
  • The growing threat of cyber-crime in Africa (hacking/information theft, system sabotage, viruses, etc)
  • Social engineering (Phishing, pretexting, smishing, spear phishing)
Q&A; and Interactive Discussion
Note: Each category of fraud will be illustrated by real-life recent fraud scenarios/case studies affecting NFP's
Internal Fraud:
  • Embezzlement (General definition; 2-3 case studies involving NFP's)
  • Cash theft (Skimming, lapping)
  • T&E; fraud/Misuse of company credit card or P-card
  • Collusion w/ domestic or international vendors (kickbacks, bribery)
  • Identity fraud (Graphic description of ways internal ID theft/fraud is committed pretexting, using co-worker's credentials to commit fraud, theft of customer ID)
  • Theft/falsification of confidential information (donor personal information, WVI employee data, etc)
  • Theft of assets (laptops, physical equipment, software piracy)
  • Payroll Fraud (Manipulating payroll systems; ghost employees)
  • Procure-to-Pay fraud (Procurement - Receiving-Accounts Payable Cycle)
  • Financial reporting fraud (Case study TBD)
  • Counterfeiting and piracy (Case TBD)
  • Internet/cyber-fraud (Case TBD)
Q&A; and Interactive Discussion

Day Two

PART 3: Conducting a Fraud Risk Assessment and Recognizing the Red Flags of Internal Fraud
Fraud Risk Mitigation Cycle - Implementing a Company-Wide System for Detecting, Preventing and Investigating Fraud
Lesson 2: Fraud Detection
  • SAS 99 and Current IIA Practice Guides re: Fraud responsibility
  • AICPA and GAO "Yellow Book" audit standards/requirements for detecting fraud
  • How frauds are most often detected (General ways: ACFE Chart)
  • Additional general detection methods
  • Whistleblower hotlines: How to set them up and manage them (detailed discussion of do's and don'ts). Detailed instruction on best practices and mistakes to avoid
  • Monitor Employee Email, other activities
  • Surprise Internal Audit
  • Regular internal audits, incorporating fraud audit testing
  • Ratio analysis
  • Manual review of all vendors (to ensure absence of sham vendors)
  • Data Mining/Analytics (is both detective and investigative. I/A can use D-M to screen for red flags) Basic steps and techniques and how to gather required data.
  • Specific operational fraud detection A: Procure-to-Pay Auditing (List of Procurement and AP fraud-audit/detection measures)
  • Specific operational fraud detection B: Payroll Fraud Auditing (List of payroll fraud-audit/detection measures)
  • Digging deeper where red flags are detected: Data mining & analytics
  • Reporting findings to management
Lesson 3: Basic Fraud Investigation Techniques
  • Investigative "Toolbox" (each case requires investigative adjustment)
  • Forensic Accounting Investigation-What it Is (Different from Internal Audit/ When to Call in Forensic Accountant/Auditor)
  • Forensic accounting/auditing techniques: Data Mining and Analytics (as with detection, it is the most powerful forensic accounting investigative tool); ratio analysis
  • Gathering evidence - Document retention, chain of custody, preservation, mistakes to avoid
  • Securing crime scene
  • Interviewing/interrogating suspects
  • Documenting findings
Lesson 1: The Fraud Risk Mitigation Cycle-Implementing a organization-wide system for detecting, preventing and investigating fraud
  • Conducting a Fraud Risk Assessment and Recognizing the Red Flags of Internal Fraud
  • Steps to conducting a successful fraud risk assessment (FRA)
Lesson 2: Red Flags of Fraud
  • Embezzlement red flags (Behavioral changes, accounting anomalies)
  • Cash theft red flags (anomalies in daily reconciliations, check-for-cash indicators, etc)
  • Internal billing fraud red flags (frequent switches in vendors; vendor address is a P.O. box)
  • Collusion/kickback/bribery red flags (long-time vendor suddenly replaced, pricing anomalies, etc)
  • Identity fraud red flags (internal) (Employees complain of ID theft problems, customer complaints)
  • Theft of confidential information and intellectual property (Examples: Theft of customer credit card data and other PII; Scientific fraud/fraudulent scientific research)
  • Theft of assets/industrial equipment (laptops, software piracy, confidential/proprietary information)
  • Payroll fraud (terminated employees still receiving checks; payroll amounts fluctuate)
  • P2P fraud red flags (Suddenly higher costs of supplies or services; low quality of delivered merchandise; inventory anomalies)
  • Financial reporting fraud (Unusually high revenues, odd patterns in receivables, etc)
  • Internet/cyber-fraud
  • Internal Controls and Other Fraud Prevention Measures:
  • Who Should Manage Anti Fraud Activities
  • Internal Controls: Do's and Don't's
  • Best Practices in Anti-Fraud Controls
  • General controls: Segregation of Duties, Delegation of Authority, Background investigation
  • Specific operations-level controls for each fraud category
  • Controls Self Assessment (CSA)
  • Continuous controls monitoring/Continuous Auditing (CCM/CA)


San Diego, CA    |    February 5th & 6t, 2015$795.00   (Seminar for One Delegate)

Register now and save $200. (Early Bird)
Until December 31, Early Bird Price: $795.00    From January 01 to February 03, Regular Price: $995.00

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