Fraud and Investigations

Fraud and Investigations

Fraud and Investigations Presented by Deron Rossi, CFS President, DJR Consulting January 2019

Agenda Introduction Wake Up Case / Fraud Introduction ACFE 2018 Report to the Nations Fraud at All Levels - Current Stories Investigation Tips

Deron Rossi Background Certified Fraud Specialist (CFS) Retired from Dow 30 Company June 2018 35+ years experience in Corporate Accounting,

Management, ERP/Accounting Systems Installations, Internal Audit and Business Controls Last 11 years as Fraud and Business Conduct Investigator Involved in hundreds of cases, including experience in North America and Europe

Vice-Chair - Coastal Credit Union Board of Directors IIA Raleigh-Durham Chapter Board of Directors Founded DJR Consulting in December 2018 Wake up example

Changing Audit Landscape AI Blockchain

Robotic Process Automation One Constant FRAUD

Dr. Cresseys Fraud Triangle Dr. Cresseys Fraud Triangle

Three Core Concepts that taken together, create a situation ripe for fraud Pressure This is the motive of the fraud triangle. Most times it is financial pressure, could be caused by personal vices or other pressures. (68%) Rationalization Important component of most frauds, people need

to reconcile their behavior. (ex. - I am underpaid, I deserve this.) (14%) Opportunity Open door for solving a non-shareable problem in secret by violating a trust relationship. Accomplished by generally weak or no controls. (18%) Each element must co-exist with the other

Recent update: Fraud Diamond Introduction Fraud in general poses a

tremendous threat to organizations of all types and sizes, in all parts of the world. Key Findings

HOW OCCUPATIONAL FRAUD IS COMMITTED

What anti-fraud controls are the most common in the United States? How does the perpetrators level of authority relate to occupational fraud in the United States?

Fraud Can Happen at ALL Levels 'Mastermind' of opioid scheme bought island, stashed millions overseas

Fraud Can Happen at ALL Levels https://www.detroitnews.com/story/news/local/detroit-city/2018/12/07/dr-raj-bothra-boughtisland-amassed-millions-amid-opioid-scheme/2239091002/

Fraud Investigation Tips ALLEGATIONS Common Process for Reviewing/Vetting CONDUCTING INVESTIGATIONS Ideally an Independent/Trained Investigator Assigned to

Lead/Conduct Using a Defined Process Involve Legal Upfront Secure Storage of All Investigation Materials Maintain Strict Need to Know Skilled in Interviewing Process (Interview is Key, More to Come on This!!!)

Were any Laws Broken? How and to Whom Will the Investigation Results be Documented? Consider a Standardized Process to Deal with any Investigation Discipline Fraud Investigation Tips - Interviewing

INTERVIEWS ARE KEY

MUST HAVE OPEN MIND, TWO SIDES TO EVERY STORY Chance to learn more, maybe only shot with interviewee Independence Confirm facts/evidence, thus interview peripheral players BEFORE you interview the accused

Two investigators at all key interviews, second person takes notes so investigation lead can focus on Interviewees behavior and reactions to questions/evidence Have list of key questions documented BEFORE the interview, share in advance with secondary investigator so that they are prepared and may have some additional input to consider

Quiet, small interview space outside of the interviewees normal work area if possible, 4 walls with NO cell phones Taping allowed? Quick post-interview meeting between investigators immediately after interview to summarize Document interview notes timely

Questions? Deron Rossi DJR Consulting [email protected]

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