1. Fraud and Investigations
Presented by Deron Rossi, CFS
President, DJR Consulting
January 2019

2. Agenda Introduction Wake Up Case / Fraud Introduction
ACFE “2018 Report to the Nations”
Fraud at All Levels - Current Stories
Investigation Tips

3. Deron Rossi Background
Certified Fraud Specialist (CFS)
Retired from Dow 30 Company June 2018
35+ years experience in Corporate Accounting, Management, ERP/Accounting Systems Installations, Internal Audit and Business Controls
Last 11 years as Fraud and Business Conduct Investigator
Involved in hundreds of cases, including experience in North America and Europe
Vice-Chair - Coastal Credit Union Board of Directors
IIA Raleigh-Durham Chapter Board of Directors
Founded DJR Consulting in December 2018

4. Wake up example…

5. Changing Audit Landscape
Robotic Process Automation AI
Blockchain

6. FRAUD
One Constant…

7. Dr. Cressey’s Fraud Triangle

8. Dr. Cressey’s Fraud Triangle
Three Core Concepts that taken together, create a situation ripe for fraud
Pressure – This is the motive of the fraud triangle. Most times it is financial pressure, could be caused by personal vices or other pressures. (68%)
Rationalization – Important component of most frauds, people need to reconcile their behavior. (ex. - I am underpaid, I deserve this.) (14%)
Opportunity – Open door for solving a non-shareable problem in secret by violating a trust relationship. Accomplished by generally weak or no controls. (18%)
Each element must co-exist with the other

9. Recent update: Fraud Diamond

10. Introduction
Fraud in general poses a tremendous threat to organizations of all types and sizes, in all parts of the world.

11. Key Findings

12. HOW
OCCUPATIONAL
FRAUD IS
COMMITTED

19. What anti-fraud controls are the most common in
the United States?
How does the perpetrator’s level of authority
relate to occupational fraud in the United States?

23. Fraud Can Happen at
ALL Levels

24. Fraud Can Happen at ALL Levels
'Mastermind' of opioid scheme bought island, stashed millions overseas
Fraud Can Happen at
ALL Levels

25. Fraud Investigation Tips
ALLEGATIONS
Common Process for Reviewing/Vetting
CONDUCTING INVESTIGATIONS
Ideally an Independent/Trained Investigator Assigned to Lead/Conduct Using a Defined Process
Involve Legal Upfront
Secure Storage of All Investigation Materials
Maintain Strict “Need to Know”
Skilled in Interviewing Process (Interview is Key, More to Come on This!!!)
Were any Laws Broken?
How and to Whom Will the Investigation Results be Documented?
Consider a Standardized Process to Deal with any Investigation Discipline

26. Fraud Investigation Tips - Interviewing
INTERVIEWS ARE KEY
MUST HAVE OPEN MIND, TWO SIDES TO EVERY STORY
Chance to learn more, maybe only shot with interviewee
Independence
Confirm facts/evidence, thus interview peripheral players BEFORE you interview the accused
Two investigators at all key interviews, second person takes notes so investigation lead can focus on Interviewee’s behavior and reactions to questions/evidence
Have list of key questions documented BEFORE the interview, share in advance with secondary investigator so that they are prepared and may have some additional input to consider
Quiet, small interview space outside of the interviewee’s normal work area if possible, 4 walls with NO cell phones
Taping allowed?
Quick post-interview meeting between investigators immediately after interview to summarize
Document interview notes timely

27. Deron Rossi
DJR Consulting
Questions?