Rudi Phadmanto

ACFE Fraud Tree

DescriptorsFinancial FraudAsset MisappropriationCorruptionFraudsterExecutive ManagementEmployees2 PartiesSizes of FraudLargestSmallestMediumFreq of Fraud7,9%92,7%30%MotivationStock Prices, BonusesPersonal PressuresChallenge, BusinessMaterialityLikelyUnlikelyDependsBenefactorsCompany and fraudsterFraudster (against company)FraudsterSize of victim companyLargeSmallDepends

IT Auditing & Assurance, 2e, Hall & SingletonFRAUD TREEAsset misappropriation fraudStealing something of value usually cash or inventory (i.e., asset theft)Converting asset to usable formConcealing the crime to avoid detectionUsually, perpetrator is an employeeFinancial fraudDoes not involve direct theft of assetsOften objective is to obtain higher stock price (i.e., financial fraud) Typically involves misstating financial data to gain additional compensation, promotion, or escape penalty for poor performance Often escapes detection until irreparable harm has been done Usually, perpetrator is executive managementCorruption fraudBribery, etc.

FINANCIAL STATEMENT SCHEMETiming DifferenceFictitious RevenuesConcealed LiabilitiesIn adequate disclosureImproper Assets Valuation

Timing Differences (Improper Treatment of Sales)Channel Stuffing: Memindahkan inventory kepada cabang atau Sales People dan dicatat sebagai penjualan.Early revenue recognition : Kontrak penjualan jasa selama 3 tahun dianggap sebagai sales tahun berjalan.

Fictitious RevenuesRecording sales that never ocurred.Sebuah perusahaan reasuransi, membuat polis asuransi aspal, dan dicatat sebagai penerimaan perusahaan.

Concelaed Labilities (Improper Recording of Liabilities)Menunda mencatat Utang Dagang.Memindahkan Utang Dagang ke perusahaan anak.Sengaja tidka mencatat adanya Utang Dagang.

Inadequate DisclosureTidak mengungkapkan seluruh informasi yang sesuai standar akuntansi harus diungkapkan. Standar mengatakan bahwa perusahaan harus mengungkapkan apabila ada aktiva tetap atau piutang yang dijaminkan dll.

Improper Assets ValuationInflating the value of receivables, inventory, and long lived assets.Caranya dengan mendebet rekening asset dan mengkredit rekening equity.WorldCom: Meyakinkan biaya sewa telpon yang jumlahnya Milyaran dolar menjadi aktiva. Sehingga daftar R/L menjadi tampak lebih baik.

CORRUPTION SCHEMEConflict of InterestBriberyIllegal GratuitiesEconomic Extortion

Conflict of InterestIf employee, manager, or executive has undisclosed economic or personal interest in transaction that adversely affects the company.Purchases SchemeSales SchemeOther Schemes

BriberyOffering, giving, receiving, or solisiting anything of value to influence an official act or business decision.

Illegal GratuitiesSimilar to Bribes but not necessarily there is an intent to influence a busnisess decision.Menerima hadiah setelah suatu keputusan terjadi. Termasuk ilegal karena menerima hadiah di atas jumlah tertentu pada entity tertentu dilarang.

Economic ExtortionEconomic extortion is the opposite of bribery fraud.Instead of a vendor offering a bribe, the employee demands payment from a vendor in order to favor the vendor.

ASSET MISAPPROPRIATION SCHEMESDEFINITIONThe act of misappropriating or turning to a wrongful purpose ; wrong appropriation, a term that does not necessarily mean peculation, although it mean that. The term may also embrace the taking and using of anothers property for sole purpose of capitalizing unfairly on good will and reputation ov propertu owner. (Blacks Law Dictionary) to appropriate wrongly (as by theft of embezzlement) (Websters Dictionary)

ASSET MISAPPROPRIATION SCHEMESDEFINITIONMisappropriation includes more than teheft or embezzelment. It involves the misuse of any company asset for personal use. (Joe Wells).

ASSET MISAPPROPRIATION SCHEMESCASHLarceny: intentional taking of an employers cash.Fraudulent Disbursement: a distribution of funds is made from some company account in what appears to be normal manner.Billing Scheme: using companys accounting system to steal funds by submitting bogus claims to pay the vendor.Payroll Scheme: using companys accounting system to steal funds by submitting bogus claim to pay the employee.

ASSET MISAPPROPRIATION SCHEMESCASHExpense Reimbursement Scheme: taking funds from the company by submitting falsified business expense and gain fraudulent reimbursement check from the victim.Check Tempering Scheme: Fraudster preparing fraudulent check.Register Disbursement Scheme: removing moey from a register, where the removal is recorded on the register system. Skimming: Stealing funds before booking entry is made.Receivables: Lapping Scheme

ASSET MISAPPROPRIATION SCHEMESINVENTORY AND OTHER ASSETSMisuse: usually involves equipment.Larceny

****Source: ACFE****************