Diana Hill Julie Earls, CPA, CIA 1

2  Review definitions  Describe the 3 types of fraud  Discuss fraud prevention & detection  Learn how you can help

Name Department What brought you to this class? 3

4 Cato Hall 3 rd Floor Your Internal Audit Team Raheel Qureshi Diana Hill Tara Pritchett Tom York Julie Earls

5 Vice Chancellor for Business Affairs Chair, Audit, Compliance and ERM Committee

Occupational Fraud – using one’s job for personal enrichment by intentionally misusing or misapplying their employer’s resources or assets.

What are some examples of fraud?

Embezzlement of sorority funds ($80,000) Skimming from deposits ($25,000) Secondary employment/fraudulent timesheets Scheme with outside contractor to approve false invoices ($800,000) Purchase of personal items with University funds

Source: Association of Certified Fraud Examiners – 2014 Report to the Nation

Note: The Association of Certified Fraud Examiners – 2014 Report to the Nation is the source of the charts and graphs in this section of the presentation.

It is estimated that fraud in the typical organization translates to 5% of annual revenue. Using the University’s audited financial statements for FY2015, this would be almost $28 million

Worldwide

FRAUD Rationalization Justification of dishonest actions Opportunity Ability to carry out misappropriation of cash or assets Pressure Motivation or incentive to commit fraud

What do I look for? How do I know it’s fraud? This looks weird. Wonder if I should say something?

Behaviors or characteristics often displayed by fraudsters Warning signs Most common red flag displayed by fraudsters: living beyond one’s means

Illegible receipt Altered receipt Substitute receipt Summary receipt “When I get time” “Will request new receipt” “Have requested credit” “Will look into” Patterns of “honest errors” Blames vendor Blames system Changes subject Missing documents Lost receipts Credit card slip only Order form only Shipped off campus Avoid Oversight Deflect Issue Delay Oversight Hide Nature of Transaction Source: Association of Certified Fraud Examiners – 2014 Report to the Nation

There is no “generic fraud profile”generic fraud profile

Bernie Madoff Charles Ponzi Frank Abagnale Jr. Kenneth Lay Rita Crundwell

Embezzlement of sorority funds ($80,000) Skimming from deposits ($25,000) Secondary employment/fraudulent timesheets Scheme with outside contractor to approve false invoices ($800,000) Purchase of personal items with University funds

Source: Association of Certified Fraud Examiners – 2014 Report to the Nation

Control Conscious Environment Segregation of Duties Authorizations, Approvals, & Verifications Control over Assets Monitoring

State Employees have a responsibility to report Whistleblower protection – UP 803 Standards of Conduct – UP 804

Options for Reporting Fraud: 1.Supervisor 2.Internal Audit – (704) University’s third party anonymous hotline – (844) Office of the State Auditor – anonymous – TIPS

Internal Audit

Source: Association of Certified Fraud Examiners – 2014 Report to the Nation