Focus on Fraud: 2018

Protecting Your Data Against Cyber Criminals

The saying goes that “cash is king,” and when it comes to risk management and fraud, it often is. A fundamental risk management technique is to prioritize the protection of assets that either are cash or can easily be converted to cash. As a result, inventory or equipment with “street value” are frequent targets for theft because they have a readily available market. And, while many of the things found on a balance sheet do need to be safeguarded, some of the company’s most valuable assets won’t show up on the balance sheet. Your company’s data can be one of the richest targets for cyber criminals.

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Beyond the Triangle: The Other Shapes of Fraud

The fraud triangle is the cornerstone to occupational fraud theory and illustrates the three elements that need to be in place for a perpetrator to successfully execute a fraud scheme. This concept, and its three major tenets, have been at the heart of fraud theory for over 40 years. Those three tenets are pressure, opportunity, and rationalization.

The Association of Certified Fraud Examiners has a very effective graphic that provides additional detail into the definition of these three areas. While the fraud triangle is well-recognized by fraud investigators, some argue that additional focal points are essential to this analysis and other shapes have emerged that merit further discussion.

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When it comes to fraud and theft, manufacturers are inherently at risk because of the nature of their operations. Not only do manufacturers have traditional fraud risks associated with cash management processes as well as cyber-security risks facing everyone today, they also have non-cash assets that can be valuable.

In this article, a manufacturer carried inventory that is enjoyed by consumers far and wide – chocolate bars. A risk assessment for this company would highlight several issues, but without a formal assessment it would be easy to miss some of the key risks featured in this case.

Several prevention techniques unique to a manufacturing operation are discussed in the article,

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COSO Series, Part 3 of 6: The following article is part three of a six-part series exploring the high-level basics of the COSO Integrated Internal Control Framework.1 The following article provides a high-level overview of the second component of the framework: Risk Assessment.

There are numerous types of business risk that can impair an organization’s ability to reach its objectives.  Some of these risks include financial, liquidity, exchange-rate, strategic or systematic risk.  But how does a business assess what risks they face and, more importantly, how do those risks get managed?

To answer these questions, the organization must perform a risk assessment process from which they can lay the groundwork for risk response and management. 

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Tax Scam Alert: Fake Refunds

It’s that time of year again, where unscrupulous “entrepreneurs” (i.e., scammers) are extremely active trying to defraud the U.S. government and its taxpayers out of billions of dollars of tax money. From phone calls to phishing, scammers will go to any lengths to get at your money.

And now, with the massive Experian data breach, scammers have so much more information to work with.  One of the new scams involves the filing of a false return and having the money actually deposited into the taxpayer’s bank account.  Because they have the information necessary to track the refund on the IRS Where’s My Refund website,

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Integrity and Tone at the Top

This article by Marcel Schwantes references a statement by Warren Buffet about hiring practices. Mr. Buffet states that you should generally be looking for three things in job candidates: intelligence, energy, and integrity. However, if candidates don’t have integrity, you needn’t bother with the first two qualities.

The concept of integrity also plays a major role in creating a culture of fraud prevention.

In the vernacular used by fraud prevention professionals, integrity translates to tone at the top.  Tone at the top is critical in the hiring function of a business.  The article goes on to point out how a person with strong integrity is trusted by co-workers,

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COSO Series Articles Part 2 of 6: The following article is part two of a six-part series exploring the high-level basics of the COSO Integrated Internal Control Framework.1 In this installment, we will address the Control Environment, which is the foundation of an effective organizational internal control system.

COSO defines the Control Environment as the “set of standards, processes and structures that provide the basis for carrying out internal control across the organization.” This component comprises the tone at the top, communication about ethical behavior and internal control with all levels of staff, and the overall integrity and values of the organization.

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