Fraud Profile Pertemuan XIV Matakuliah: F0184/Audit atas Kecurangan Tahun: 2007

Bina Nusantara Mahasiswa diharapkan mengetahui ciri-ciri umum atau keadaan dari seorang pelaku kecurangan Mahasiswa diharapkan mengetahui langkah-kangkah pengendalian internal untuk melakukan pencegahan terhadap timbulnya kasus kecurangan Learning Outcomes 3

Bina Nusantara Internal Environment Red Flag Detected Fraud in the Internal Environment Management and Corporate Fraud Top Management Fraud Lower Level of Fraud Outline Materi 4

Lower Level Profile Their superiors exert great pressure to achieve high performance Bonuses are tied to short term performance levels and do not take into consideration economic or competitive realities Internal controls are absent or loosely enforced Management controls consist mainly of pressures for performance Business ethics are subordinated to economic self interest Bina Nusantara

Lower Level Profile Vendors and suppliers are squeezed for the last ounce of profitability There is a great deal of confusion about duties and responsibilities among subordinates A high level of hostility exist among subordinates and between lower level manager and their lone and staff superiors They believe the present level of responsibility exceeds the original job description Bina Nusantara

Characteristic of a fraudster CFE Association report that:  Men committed nearly 75% of the case  Losses caused by managers were four times those caused by employees  Typical perpetrator was a college educated male  Fraudster may feel challenged by ‘secure’ systems  The individual is willing to bend the rules and take chances Bina Nusantara

Common Profile Intelligent Risk Taker Rule Breaker Hard Worker Too Friendly Fraudster may feel challenged by ‘secure’ system The individual is willing to bend the rule and take chances They take shortcuts caused by self justifies infractions of laws First to arrive and last to leave Close relationship with vendors Bina Nusantara

Common Profile (Con’t) Greedy Financial need Complainer Big Spender They don’t satisfy with the resources available for them The result of financial loss caused by drug, alcohol, illness They feels neglected by the employer and want to gets even They live beyond their means. Lifestyle exceeds their pay Bina Nusantara

Detecting the Case Through the conventional control concepts and audit trails Through periodic financial and operational audits By gathering intelligence on the life styles and personal habits of employees By logging exceptions to prescribed controls and procedures By reviewing variances in operating performance expectations Through the intuition of the fraudster’s superior Through generalized suspicion Bina Nusantara

Control Considerations Ensure the goals, objective, and control standards are realistic. They should be challenging but attainable with ordinary effort Involve in the control setting process the employees who will be bound by the standards Install controls only where the control are necessary for prudent management, and evaluate periodically Tight controls are good as long as their administration and monitoring are placed as far down in the organization as possible Bina Nusantara

Control Considerations (Con’t) Give output controls a slight edge over behavior controls as methodologies New and better controls do not of themselves solve problems. But together with enlightened management, good administration, and intelligent interpretation, controls lead to efficient and effective operations Controls can be of two types: before the fact and after the fact. Before the fact controls are intended to prevent problems from occurring. After the fact controls are intended to detect the problems and need immediate remedies People will comply with rules when they are fair, rational, and needed for orderly procedure Bina Nusantara

Approach to Reduce the Case Directive Approach Prevention Approach Detection Approach Observation Approach Investigation Approach Insurance Approach Bina Nusantara