Common Frauds and Internal Controls for Prevention & Detection

Learning Objectives

• To analyze how to identify relevant fraud schemes.
• To discuss the conditions necessary for a fraud scheme to be successful.
• To identify the different types of fraud perpetrators and their motivations.
• To establish approaches for dealing with each type of fraud perpetrator.
• To analyze how to perform an effective risk assessment.
• To explain how to design effective internal controls for fraud prevention.
• To analyze techniques to improve effectiveness in detecting financial statement fraud.

Course Description

“Fraud is committed by desperate people” and desperate individuals are not likely to be deterred by conventional internal controls. It is assumed by many that almost every entity is a victim of fraud and it is due purely to luck when they are not seriously hurt. Yet management is charged with the responsibility for effective and efficient operations, and for reliable financial reporting, neither of which will occur when an entity is affected by fraud.

An audit, meanwhile, is not designed to detect fraud and, unless it is particularly material, or the auditor is lucky and “trips” across it, a fraudulent act is not likely to be detected. Even Generally Accepted Auditing Standards indicate that an auditor has a very limited ability to detect fraud. One of the main reasons CPAs and other accountants often fail to detect fraud is that they are too honest. They find it difficult to think like a criminal. 

This CPE course on Auditing is designed for individuals who would like to refresh their understanding of fraud schemes and to learn how to recognize the red flags for detecting fraud. Understanding how criminals commit fraud is the first step in preventing fraud.

Properly designed controls, however, can be effective fraud deterrents. An entity with a healthy “tone at the top”, combined with meaningful hiring policies and responsible management that is observant and that maintains a positive relationship with employees will often avoid becoming a victim to fraud and is likely, as a minimum, to avoid being adversely affected in a significant way.

Similarly, auditors that obtain a meaningful understanding of a client’s internal controls, perform an effective and well-designed assessment of the risk of material misstatement due to fraud, and conducts the engagement with an appropriate level of professional skepticism is more likely to detect a material misstatement to a client’s financial statements due to fraud.

Attendees in this CPE course will explore the different profiles of fraud perpetrators, the reasons they may commit fraud, and the most likely means of preventing it.

In a 2018 PwC survey, 49% of 7,228 organizations reported that they had experienced economic crime and fraud in the prior year—up from 30% of organizations in a 2009 survey—and that more than half the perpetrators were “internal actors.”

The topic of fraud —whether it relates to awareness and prevention techniques, fraud auditing, recent fraud in corporate, or the criminal mind is continually on the radar of investors, shareholders, and regulators. Yet the execution of holistic fraud risk assessments can often be a very difficult task.

This compelling CPE/CPD webinar on auditing will focus attention on the dynamics behind what makes a fraudster tick and how to use that knowledge to recognize fraudulent behavior.

Overview

• How is it committed?

  9 mins
• Using the knowledge narrowing focus

  19 mins
• Applied to accounts receivable lapping

  27 mins
• The characteristics of fraud

  43 mins
• How do perpetrators rationalize their frauds?

  67 mins
• Addressing specific fraud schemes

  100 mins
• Applied to the sales process

  125 mins
• Controls to prevent fraud

  152 mins
• Detection of fraud

  166 mins