Forensic Accounting and Fraud in the Modern World
Linda Niffenegger
June 15, 2016
10:30 AM – 12:00 PM
25072
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FORENSIC ACCOUNTING AND FRAUD IN THE
MODERN WORLD
Linda Niffenegger
Anchor Packaging, Inc.
314-394-3737 Direct
314-681-9969 Cell
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THE BLOODHOUNDS OF ACCOUNTING
THINKERS
INTUITIVE
TENACIOUS
CURIOUS
FORENSIC ACCOUNTING VS AUDITING
FORENSIC
EXPERT WITNESS
AUDITING
LITIGATION SUPPORT
INVESTIGATION
SUSPECTED FRAUD
FOLLOWS STANDARDS
MATERIALITY
JUDGEMENT
OUTSIDE ACCOUNTING FIRM
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M G A R C A D E . C O M
6 20142014 Report of the Nations
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COMMON ACCOUNTING FRAUD
Revenue Recognition
Reserves
Inventory Inventory
SPV/E Others
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Analytical
Techniques used to
Examine
Relationships
among
Financial statement
items
ANALYTICAL TECHNIQUES
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Dollar and percentage
changes on statements
Common-size
statements
Ratios
Current ratio—Current assets/current
liabilities
Acid-test ratio—Quick assets/current
liabilities
Receivable turnover –Net sales on
account/average receivables
Number of days in receivables—
Receivables end of year/average daily
sales
Inventory turnover—Cost of goods
sold/average inventory
Number of days’ sales in inventory—
Inventory end of year/average CGS
Net fixed assets/long term liabilities
Debt to equity – Total
debt/stockholders equity
Cash flow/total debt
Total liabilities/total assets
Return on assets—Income/average
total assets
Sales Ratio—Sales/assets
Earnings before interest and taxes
(EBIT) assets
Profit margin or efficiency ratio—
Income/sales
Equity/assets
INDUSTRY
Gross Margin vs Industry
Days sales in inventory vs Industry
Days in receivables vs Industry
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POTENTIAL RATIOS USED TO PREDICT FINANCIAL STATEMENT FRAUD
ARE YOU AND YOUR CUSTOMERS PROTECTED
E-COMMERCE/M-COMMERCE
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M-COMMERCE
Subscriber fraud
Cell Phone Cloning
*72 Prison Scam
Election Scam
Utility Scam
Granny Scam
Text Message Rip Off
E-COMMERCE
Stolen Cards
Stolen Machines
Overlaid Skimming Devices
Internal skimming devices
Hijacked terminals
Ghost ATMs and fake front
Buying Data
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PAYMENT CARD INDUSTRY DATA SECURITY STANDARDS (PCI-DSS)
A set of industry
regulations
containing rules
for credit card
security.
Failure to comply with credit card security standards can result in penalties
and increased transaction costs. In addition, stolen credit cards are often
used to fund other criminal activity.
CVV2 numbers Expiration dates
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E-MAIL SECURITY
Encrypt emails and password protect
attachments
Change passwords to webmail applications
every 3 months
Unless requested via a secure mail system,
caution against sending sensitive
information via e-mail
Inform your manager or designated
employees if sensitive information is being
requested
Information Security
Risk Assessment
Ensure safeguards to control identified risks
Oversee retention/selection of service providers
Evaluate
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INFORMATION SECURITY PROGRAM
https://advocacy.mozilla.org/encrypt/social/2
ENCRYPTION
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Malware
Phishing
Spear-Phishing
Ransomware
Shoulder surfing
Dumpster diving
SOCIAL ENGINEERING CORPORATE ACCOUNT TAKEOVER
Always:
Review your statements.
Be on the alert
Take Note
Anti-virus
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FOUR ELEMENTS OF THE FRAUD DETERRENCE CYCLE