Presented by : Susanto Salim,SE,MM,Ak,CPA,CA,CPMA,ASEAN CPA

1. Egyptians : eye and ears of King

Pharaoh
2. First major corporate fraud: South Sea
Bubble 1720 (England)
3. 1920 : Charles Ponzi
4. 2000s : Waste Management; Worldcom;
Enron and many others
 Begins with plans of the fraudster leading
up to the committing of the fraud act.
 Once committed, the fraudster converts
the asset to cash and conceals the fraud
 An accountant especially skilled in auditing
who is generally engaged in auditing with a
view toward fraud discovery, documentation,
and prevention
 Fraud auditors must know what a fraud is from a
legal and audit perspective, an environment
perspective, a perpetrator’s perspective and
acultural perspective
 IRS
 FBI
 Goverment Auditing Office
 SEC
 Private Sectors
 Creating an environment that encourages the
detection, prevention and correction of intended fraud
 Know the aspects of the common body of knowledge
regarding fraud
 Self confidence, persistence, commitment to honesty
and fair play, creativity, curiosity, an instinct for what is
out of place, independence, objectivity, clear
communication, common sense, and an ability to fit
pieces of a puzzle together
 A forensic accountant may take on fraud
auditing engagements and may be a fraud
auditor, but he or she will also use other
accounting, consulting, and legal skills in
broader engagements. In addition to
accounting skills, he or she will need a working
knowledge of the legal system and excellent
communication skills to carry out expert
testimony in the courtroom and to aid in other
litigation support engagements
 Appear on the crime scene a little later
than fraud auditor
 Translating complex financial
transactions and numerical data into
simple term
 Always reactive
 Has skills, abilities and knowledge
related to the fraud cycle, including legal
resolution
 Corporate Investigations
 Litigation Support
 Criminal Matters
 Insurance Claims
 Goverment/Regulation/Compliance
 Ability to identify frauds with minimal initial
information
 Interviewing
 Mind-set
 Knowledge of evidence
 Presentation of Findings
 Knowledge of investigation techniques, skills
and mentality
 Identification of Financial Issues
 Interpretation of Financial Information
Backgrounds:
 Recent corporate accounting and financial
scandals have led to increased legal and regulatory
requirements, such as the Sarbanes–Oxley Act of
2002 and the Emergency Economic Stabilization Act
of 2008 (EESA).
 There is also a growing demand for forensic and
litigation advisory services.
 The demand for students who have specialized
qualifications in fraud and financial forensics has
grown significantly and is likely to continue to
grow.
 ProfessionalServices Firms
 Public and Private Companies
 Regulatory Agencies
 Government and Nonprofits
 Law Enforcement Agencies
 Law Firms
 Association of Certified Fraud Examiners (ACFE) -
The ACFE is the world’s premier provider of antifraud
training and education : founded 1988 by Joe Wells
 Certified Fraud Examiner (CFE) - The CFE
credential denotes expertise in fraud prevention,
detection, and deterrence
 American Institute of Certified Public Accountants
(AICPA) - The CPA is still one of the most recognized
and valued professional certifications of any
profession and is the standard bearer for accountants
working in the United States
 Accredited in Business Valuation (ABV) - The ABV
credential program allows credential holders to brand
or position themselves as CPAs who are premier
business valuation service providers.
 Certified Information Technology Professional
(CITP) - A Certified Information Technology
Professional (CITP) is a certified public accountant
recognized for technology expertise
 Certified in Financial Forensics (CFF) – this
credential combines specialized forensic accounting
expertise with the core knowledge and skills that
make CPAs among the most trusted business advisers.
 Forensic Certified Public Accountant (FCPA) - An
individual must be a licensed CPA, CA (Chartered
Accountant) or another country’s CPA equivalent to be
eligible to take the five-part certification test and
receive the FCPA designation.
 Information Systems Audit and Control Association
(ISACA) - ISACA has become a pace-setting global
organization for information governance, control,
security, and audit professionals
 Certified Information Systems Analyst (CISA)
 Certified Information Security Manager (CISM).
 Institute of Internal Auditors (IIA) – sponsors the
Certified Internal Auditor.
 National Association of Certified Valuation
Analysts (NACVA)
 Society of Financial Examiners (SOFE)
Black’s Law Dictionary:
“An intentional perversion of truth for the
purpose of inducing another in reliance upon it
to part with some valuable thing belonging to
him or to surrender a legal right; a false
representation of a matter of fact, whether by
words or by conduct, by false or misleading
allegations, or by concealment of that which
should have been disclosed, which deceives
and is intended to deceive another so that he
shall act upon it to his legal injury.”
ACFE’s definition
1. Occupational Fraud :
The use of one’s occupation for personal gain through
the deliberate misuse or theft of the employing
organization’s resources or assets
2. Financial Statement Fraud :
The deliberate misrepresentation of the financial
condition of an enterprise accomplished through the
intentional misstatement or omission of amounts or
disclosure in the financial statements in order to
deceive financial statement users
 Act
 Intent
 Deception
 Dishonesty
 Concealment
 Loss and benefit
 Fraud
• An intentional misstatement involving the use of
deception to obtain an unjust or illegal
advantage

 Error
• An unintentional misstatement
• A mistake
Fraud Triangle

Pressure
 Pressure

• Habitual criminal who steals for the

sake of stealing
• Personal prestige, goal achievement
• Morally superior, justified in making
others victims
• Desperate need for money
• Vices gambling/drugs
 Weak internal controls
 Circumvention of internal
controls
 The greater the position, the
greater the trust and exposure to
unprotected assets
 “Most Trusted Employee”
 I need it more than the other person
 I’m borrowing and will pay it back later
 Everybody does it
 The University is big enough that it won’t
miss it
 Nobody will get hurt
 I deserve it
 It is for the greater good
 I’m not paid enough
 It’s just part of the job
 I’m not gaining personally
 It’s legal
 Managers not caring
about honesty
 Inadequate Pay
 Low Loyalty
 Crisis Management
 Rigid Rules
 Repression of Differences
 Poor Promotion
Opportunities
 Lack of Recognition
 Unreasonable Budget
Expectations
 Short-Term Focus
 Reactive vs. Proactive
 Hostile Work Environment
 Poor Training
 Pressure to Perform
 Inadequate staff/resources
What Actions Constitute Fraud
The person next to you !!!!
Profile:
 Older (30 + years)  Good psychological
 55% male, 45% female
health
 An appearance of a
 Position of trust
stable family situation  Detailed knowledge of
 Above-average (post-
accounting systems and
graduate) education their weaknesses
 Less likely to have
 Prior accounting
criminal record experience
 Consumer and Investor Fraud
 Criminal and Civil Fraud
 Fraud for and against the Company
 Internal and External Fraud
 Management and Non Management
Fraud
 ACFE
FRAUD
TREE