© 2017 ACFE

NABCA 23rd Annual Administrators Conference

The Forensics of Fraud: Conducting Financial Investigations

Allan Bachman, CFE

Retired Education Manager ACFE

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Agenda

The ACFE & Mission ACFE 2016 Report to the Nations Who are Certified Fraud Examiners (CFEs)? CFE Value Added Becoming a CFE Resources

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About the ACFE

ACFE - Association of Certified Fraud Examiners Largest global anti-fraud organization Founded in 1988 More than 80,000 members worldwide (160 countries)

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About the ACFE

Headquartered in Austin, Texas (over 180 local chapters worldwide)

Premier provider of anti-fraud training worldwide Globally recognized professional designation:

Certified Fraud Examiner (CFE)

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ACFE Mission

The mission of the Association of Certified Fraud Examiners is to reduce the incidence of fraud and white-collar crime and to assist the Membership in fraud detection and deterrence.

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2016 Report to the Nations

Organizations lose 5% of revenues to fraud each year. Median losses by a single case of occupational fraud

$145,000. Median losses by scheme:

• Asset misappropriation: $130,000 • Corruption: $200,000

Financial statement fraud: $1,000,000

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2016 Report to the Nations

Organizations with less than 100 employees realize 28% higher median fraud losses.

When collusion occurs, median losses increase substantially: • $80,000 one perpetrator • $300,000 two or more perpetrators

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Who Are CFEs?

Certified Fraud Examiners (CFEs) posses expertise in all aspects of the antifraud profession and have the proven ability to detect, prevent, and investigate a wide range of fraud.

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CFE Core Competencies

Understand the ways in which fraud is committed and how these schemes can be prevented and detected

Understand the underlying factors that motivate individuals to commit fraud

Examine documents and records to detect and trace fraudulent transactions

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CFE Core Competencies

Interview suspects to obtain information and confessions.

Write investigation reports, advise clients as to their findings, and testify at trial.

Understand the law as it relates to fraud and fraud examinations.

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Professional Fields for CFEs

Accounting and Forensic Accounting

Auditing (External and Internal)

Law Enforcement Government Agencies (i.e

OIG) Investigation

Loss Prevention Computer Forensics Risk Management Corporate Compliance Law Firms Higher Education Consulting

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Certified Fraud Examiners

Cynthia Cooper • Uncovered a $3.8 Billion

accounting fraud at one of the world’s largest telecomm companies, WorldCom.

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Certified Fraud Examiners

Harry Markopolos • Identified that Bernie

Madoff was running one of the largest frauds and Ponzi schemes in modern history.

• Reported his concerns to the SEC on numerous occasions but no one listened.

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CFE Value Added

CFEs possess expertise in preventing, detecting and investigating fraud, and this proactive approach reduces the duration and median loss of a fraud.

ACFE research shows that organizations with CFEs on staff uncover frauds 50 percent sooner and suffer losses 62 percent lower than organizations without CFEs

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Becoming Certified: The CFE Exam

Exam contains 500 questions and consists of four parts: Fraud Prevention and Deterrence Financial Transactions and Fraud Schemes Investigation Law

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Fraud Prevention and Deterrence

Tests your understanding of why people commit fraud and ways to prevent it.

Topics covered in this section include crime causation, white-collar crime, occupational fraud, fraud prevention, fraud risk assessment, and the ACFE Code of Professional Ethics.

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Financial Transactions and Fraud Schemes

Tests your comprehension of the types of fraudulent financial transactions incurred in accounting records.

This section requires you to demonstrate knowledge of the following concepts: basic accounting and auditing theory, fraud schemes, internal controls to deter fraud and other auditing and accounting matters.

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Investigation

This section includes questions about interviewing, taking statements, obtaining information from public records, tracing illicit transactions, evaluating deception and report writing.

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Law

This section ensures your familiarity with the many legal ramifications of conducting fraud examinations, including criminal and civil law, rules of evidence, rights of the accused and accuser, and expert witness matters.

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Compensation by Job Function

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ACFE Educational Opportunities

Seminars, webinars, self-studies, onsite-specialized training

Conferences Chapter events Discussion forums Fraud Magazine ACFE Bookstore

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Resources

ACFE.com Report to the Nations FraudConference.com Fraud Magazine

© 2017 ACFE

Questions?

Allan Bachman, CFE Education Manager [retired]

ACFE 512-934-4018

ABachmanCFE@gmail.com