HON 322C Fraud Seminar

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HON 322C Fraud Seminar

• Prof Bill Dilla
• Jan. 21, 2003

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(No Transcript)
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Incentives / Pressure

• GREED
• Management opportunity for huge gains
• Employee opportunity to share in those gains
• Personal financial trouble
• Living beyond means
• Vice
• Financial emergencies
• Work-related pressure
• Pressure to perform
• Under-compensated employees

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Opportunity

• Poor controls / control override
• Failure to discipline perpetrators
• Ignorance / apathy / capacity (available victims)

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Internal Control Overview

• Control Environment
• Accounting System
• Control Activities
• Monitoring

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Control Environment

• Tone at the top Management attitude and
  example
• Communication about ethics
• Appropriate hiring (competence and honesty)
• Clear organizational structure

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Control Activities

• Segregation of duties
• System of authorization
• Independent checks
• Physical safeguards
• Documents and records

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Attitude / Rationalization

• Lack of ethical values
• Otherwise ethical individual rationalizes actions

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Note from a fraud detection perspective

• Opportunities easiest to assess
• Incentives / pressure can be assessed if
  work-related
• Personal incentives, attitudes difficult to assess