Financial Fraud Investigators Course

• Understand common financial statement fraud schemes that are employed by management and/or others
• Become familiar with red flags which may indicate the presence of financial statement fraud
• Learn the investigative techniques and skills utilized in the investigation of financial statement fraud
• Gain a better understanding of major financial statement fraud schemes – what happened, how did it happen and how were such cases discovered and investigated?

CONTENT

Introduction

• Financial statement fraud versus asset misappropriation fraud
• Overview of financial statement fraud
• Recent studies and related materials regarding fraudulent accounting
• Prevention, detection, investigation, resolution

Recent studies regarding financial statement fraud

• Treadway Commission (historical context)
• ACFE Report to the Nations
• Large accounting firm studies

Who commits financial statement fraud and why?

• The face of fraud
• Personality and other traits
• The fraud triangle: incentives to commit fraud, opportunity, and rationalization
• Roles of the CEO and CFO in many financial statement frauds

Common financial statement fraud schemes

• Revenue recognition: fictitious revenues, round trip transactions, bill and hold, contract backdating and premature recognition (cutoffs), channel stuffing, topside journal entries, capitalizing associated expenses, side letter agreements
• Accounts receivable and billing
• Inventory frauds: purchasing, inventory counts, and raw materials schemes
• Frauds associated with estimates, fair values, and impairments
• PP&E frauds: misclassification and manipulation

Fraud risk assessments

• SAS 99 risk factors; PCAOB audit standards No. 8 through 15 on fraud risks
• Assessing the company and its environment
• Brainstorming sessions: internal and external auditors
• Significant accounts, transactions, and processes, including the financial statement closing process
• Preventive and detective controls
• Risks of management override and circumvention
• Testing and monitoring controls
• Internal responses to assessed fraud risks

Red flags for financial statement fraud

• Material deviations from past performance
• Deteriorating business conditions
• Unusual, complex and related party transactions
• Business structure complexity
• Other red flags

Preventive and detective controls and techniques

• Anti-fraud training
• Whistleblower hotlines and rewards
• Surprise audits
• Mandatory vacation policies
• Preventive controls
• Inquiries within the organization
• Analysis of the financial statements and significant accounts
• Trend analysis
• Analytics
• Tests of processes
• Document examination
• Auditing procedures
• Investigating background and educational claims
• Computer forensics

TRAINING METHODOLOGY

The training methodology combines lectures, discussions, group exercises and illustrations. Participants will gain both theoretical and practical knowledge of the topics. The emphasis is on the practical application of the topics and as a result participant will go back to the workplace with both the ability and the confidence to apply the techniques learned to their duties.