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

linda.niffenegger@anchorpac.com

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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