PSYCHOLOGY & OCCUPATIONAL

FRAUD
1
THE WORKFORCE

Baby Boomers Gen X Gen Y Gen Z

Born: 1946 - 1964 Born: 1965 - 1979 Born: 1980 - 1994 Born: 1995 - 2015
Age: 56 - 74 Age: 39 - 55 Age: 26 - 40 Age: 5 - 25
RETIRED EXECUTIVES/SENIOR MANAGEMENT NEW (14.4MM IN
VN)

2
3
CURRENT WORKFORCE BEHAVIOR – THE OLD
LEARNING
BABY BOOMER GEN X GEN Y

• Prefer face-to-face.
Communication • Use Facebook to keep contact • Prefer face-to-face. • Face-to-face and online.
with family and acquaintances.

• Traditional mainly
• Traditional (television, radio (television, radio station,
Media • Digital and television
station, newspaper) newspaper)
• Digital

Life point of view • Family-oriented • Family-oriented • Career-oriented

Payment • Cash • Cash (mainly) and card • Cash, card and electronic wallet

• Low
Brand loyalty • High • High • Prefer famous and high-quality
brands

4
GEN Z
Low Brand Loyalty
Characteristics

Prefer brands doing CSR and

Eager to learn Make decision Afraid to be Vietnamese culture related activities
criticized

Communication Payment

Online communication Cash Card E-wallet

Channel Reference

Internet, Watch more

Social Media video content KOL
5
 4.0 LIFESTYLE
“Internet là chân lý. Mạng xã hội là quyền năng”

6
 MY LIFE. MY SHOW
Gen Z expected TRANSPARENCY AT WORK
more than ever.

7
 TALENTED BUT VULNERABLE
Gen Z could handle multi-task and different skill set. However,
they are vulnerable

8
How the Behavior &
Psychography of Gen
Z affects the business?

9
HOW DO GEN X, Y AND Z AFFECT BUSINESS CULTURE?

X Y
Collectivism in work & Family-
oriented
● Collectivism.
● Does not like being under strict
supervision.
● Have not yet caught up with new
trends and innovation.
● Family-oriented. Pay school fees for
their children and take care of their
parents at the present.
Own their life
● Individualism
● Appreciate company’s work
environment and human factors.
● Catch up news and trends easily.
● Desire to make impact, be recognized
and rewarded.
● Maintain work-life balance.
Z
Own their career
● Willing to work overtime for higher
income.
● Catch up news and trends easily.
● Expect flexible and modernized work
environment.
● Request clarity in duty and policy
● Strongly believe in opinion but fear
of criticism.
● Career is a big concern.

● Encourage interaction ● Apply technology in operation ● Apply technology in operation

● Build supportive working ● Focus on the policy of reward and ● Improve transparency
environment (training course about promotion ● More feedback and support
technology, …) ● Employee empowerment ● Flexible in working (working hour,
● Have policies for their families process, method, …)

10
 Fraud financial reporting
(“cooking the books”)

Intentional Misstatements

Misappropriation of assets
(theft or defalcation)

Unintentional Misstatements
Error

11
THE FRAUD
TRIANGLE
Three conditions usually are present when
a fraud occurs.
Posses an attitude,
character, or set of
ethical values that allow
them to knowingly or
intentionally commit a
dishonest act

Incentive or are Absence of controls,

under pressure, ineffective controls,
which provide a or ability of
reason to management to
commit fraud override controls

12
 EMPLOYEE FRAUDULENT

Cash on hand
Check Expense
Billing Schemes Payroll Register misappropriatio
Tampering Reimbursement
ns

Employee submits Employee or other Employee makes a Employee has the Employee makes Employee
invoices for payment perpetrator converts false claim for victim organization false entries on a fraudulently voids a
by the organization an organization's reimbursement of issue payment for cash register to sale on the cash
that are for fictitious funds by forging or fictitious or inflated false compensation conceal the register and steals
goods or services, altering a check on business expenses. or to a fictitious fraudulent removal cash.
inflated amounts, or one of the employee . of currency.
for personal organization’s bank
purchases. accounts, or by
stealing a check that
was issued to another
payee.

13
THE CASE STUDY - EMPLOYEE FRAUD
A real case study from meat/seafood distribution company
A food distribution
BACKGROUND
company with
shareholders who are
expat and have barriers
to the local language and
the culture.
Small company with
about 10 employees who
are sales, delivery, and
office manager cum.
cashier.
Due to the nature of the The company has around
THE STORY
THE INCIDENTS
business, they have COD 1 bn of cash miscounted
with the delivery vs. book.
collecting the cash. The company has
The inventory in this hundred of millions of
case is meat and seafood food disposal
such as oyster, lobster, The company has issue
etc. high net worth value with one of the staff
that will be disposal if using the company seal
not sold within short on his “fake labor
period of time. contract” for a loan with
the bank
14
FRAUDULENT
REPORTING
Fraudulent financial reporting involves the intentional misstatements or omissions of amounts or disclosures financial
statements designed to deceive financial statement users were the effects causes the financial statements not to be
presented in accordance with GAAP (or an other comprehensive basis of accounting, if used).

Fraudulent financial reporting is accomplished in several ways:

Manipulation, falsification, or alteration of accounting records or supporting documents from which financial
statements are prepared.
Misrepresentation in or intentional omission from the financial statements of events. transactions, or other significant
information, and

15
CASE STUDY

The Story The Incidents

Background
The startup run by 3 co-founders The Legal Rep disappear
A Foreign investor who are IT, Sale and Ops.
looking to invest in a and left the company
startup in Vietnam that with a big loan from
The investors facing a challenge individuals with no
own a platform with with the management of the
good traffic record of company
company and required a big cash receiving the cash flow.
inflows to the company for the
first year invest

16
 WHY GOOD
PEOPLE DOING
BAD
often THINGS?
Bounded Ethicality: is the idea that our ability to make ethical choices is
limited or restricted because of internal and external pressures.

https://www.npr.org/2012/05/01/151764534/psychology-of-fraud-why-good-people-do-bad-things 17
 Bernard
Lawrence
Madoff
Bernie Madoff

18
 Born April 29, 1938 (age 82)
New York City
Alma mater Hofstra University
Occupation Stock broker, investment adviser, financier

Employer Bernard L. Madoff Investment Securities

(founder)
Known for Being the chairman of NASDAQ and the 
Madoff investment scandal
Criminal status Incarcerated at 
Federal Correctional Complex, Butner
FBP Register #61727-054
Pseudo-release: January 4, 2137
Spouse(s) Ruth Madoff
 ​(m. 1959)​
Children Mark Madoff (1964–2010)
Andrew Madoff (1966–2014)
Conviction(s) March 12, 2009 (pleaded guilty)
Criminal charge Securities fraud, investment advisor fraud,
mail fraud, wire fraud, money laundering,
false statements, perjury, making false filings
with the SEC, theft from an employee benefit
plan
Penalty 150-year prison term and forfeiture of US$ https://www.hbs.edu/faculty/Publication
17.179 billion %20Files/Reducing+Bounded+Ethicality_5b40ee77-71a9-4444-a8ca-
f5043bf022ef.pdf 19
COVID-19 causes every single of us
a “great pressure”
20
 HOW DO WE ADDRESS THIS LEARNT
BEHAVIOR UNDER PRESSURE TO OVERCOME
THE IMPACT…..

21
The Myths The facts

22
VICTIM ORGANIZATIONS

1 2 3 4 5
Asia is the region Big businesses face In a company, the Occupational fraud Duration of
has the most different frauds than most common affects organizations Fraud Schemes is
fraud case smaller occupational fraud in Banking, about 1-3 year
organizations schemes are in Government & public
Sales and administration
Manufacturing

23
PERPETRATORS

6 7 8 9 10
Employees are The median loss Red flags isn’t Red flags isn’t Background
the most common caused by mid- varied by varied by (conditions of
fraudster range management perpetrator’s perpetrator’s age. employment, basic
is larger than high- gender demographics, etc.)
level management might be one of the
or low-level warning signs of
personnel. fraudulent activity.

24
DETECTION

11 12 13 14 15
Occupational Fraud is detected Camera will help People will report Organizations will not
fraud is committed most of the time detect fraud fraud when they are report fraud to
by: Steal Asset by doing audit aware of it. Unless, regulatories
(money, perpetrators have
merchandise) and close relationship with
tax high-level
management board

25
#TheFacts

26
 FRAUD….
TIP OF THE ICEBERG

Source: 2018 Report to the Nation by Association of

Certified Fraud Examiners

27
 FRAUD OVERVIEW WORLDWIDE

• Asia Pacific is the region has the highest median loss: $236.000
• United States is the region has the most fraud case: 1000 cases (48%)

220(11%) 1000(48%) 267 (13%) 130 (6%) 110 (5%) 101 (5%)

Ca
Ca

Ca

Ca

Ca

Ca
se
se

se

se

se
s
s

se
s

s
Median Loss
$90,000 $193,000 $200,000
$236,000 $108,000 $200,000
Asia Pacific United States Sub-Saharan Western Europe Latin America Middle East
Africa and the Caribbean and North Africa

28
CATEGORIES OF OCCUPATIONAL FRAUD

Fina
Asset misappropriations are fraud
n
me n
t
t
state cial Asse prop
a p
m is on
by far the most common (10% ti
) -ria 4,000)
($11
(89%), but they are also the
least costly ($114.000) Cor
rup n
(38% tion r rup t io
) Co 0,000
$25
The least common and most
costly form of occupational Ass
fraud is financial statement mis t
e
a n cial ud
app
(89% ropr Fin ent fra
)
tem 0,000
fraud. TH
) iat ion st a
($8
0
E S
CA PER
SES L OS
CE N
NT DIA
OF ME

29
OWNERS/EXECUTIVES - THE FINDINGS
ENGAGED IN NON-FRAUD-RELATED
COLLUDE WITH OTHERS MISCONDUCT MORE OFTEN

66% Owners/Executives 62% Owners/Executives

45% Non-Owners/Executives 41% Non-Owners/Executives

FRAUDS DETECTED BY A THIRD-PARTY

AUDITOR OR LAW ENFORCEMENT

Non-Owners/Executives 1/25

1/8 Owners/Executives

30
AND FRAUD COMMITTED BY THEM ARE THE MOST
COSTLY

Financial
MEDIAN LOSS statement fraud

$850,000 65% 27%

OWNERS/EXECUTIVES OWNERS/EXECUTIVES OWNERS/EXECUTIVES

$100,000 NON- 34% 6%

OWNERS/ NON-OWNERS/ NON-OWNERS/
EXECUTIVES EXCUTIVES EXCUTIVES

CORRUPTION

31
RECENT YEARS, TOP BEHAVIOR EFFECT ON FRAUD
ARE ‘LIVING BEYOND MEANS, ‘FINANCIAL
DIFFICULTIES’ (MORE THAN 30%)

85% OF CASES

One Behavioral Red Flags

Living beyond means

Financial difficulties

Unusually close association with vendor/customer

50% OF CASES 6 Control issues, unwillingness to share duties
BEHAVIORAL
Multiple Red Flags RED FLAGS Divorce/ family problems
“Wheeler-dealer” attitude

32
PERPETRATORS’ BEHAVIOR

Fraudsters who had

been with their company
longer stole

TWICE as
much

85% of cases
PERPETRATO
Only 4%
One Behavioral Red Flags of perpetrators had a
RS prior Fraud conviection

Majority of victims
recovered

NOTHING

33
SMALL BUSINESSES LOSE ALMOST TWICE AS MUCH PER
SCHEME TO OCCUPATIONAL FRAUD
SMALL BUSINESSES TYPICALLY HAVE FEWER ANTI-FRAUD CONTROLS THAN LARGER ORGANIZATIONS, LEAVING
THEM MORE VULNERABLE TO FRAUD

SMALL ...
BUSINESSES
(<100 employees) Payroll Noncash
$200,000

Billing
Cash
on hand
BIG BUSINESSES
Expense
(>100 employees)
$104,000 reimbursements Corruption

Skimming

Corruption poses a significant risk to several industries, with the most common occurrence of
corruption schemes in the energy, manufacturing, and government and public administration
sectors 34
PRIMARY INTERNAL CONTROL WEAKNESSES THAT
CONTRIBUTE TO OCCUPATIONAL FRAUD

Lack of internal controls has highest rate with 30%

The second was ‘Override of existing controls’ with 19% 35
THANK YOU
Ms. Linh Le
+849-3888-90030
linh.le@mediainsider.vn