1. O C C U P A T I O N A L F R A U D a n d A B U S E C L A S S I F I C A T I O N S Y S T E M

3. Finally, most fraudulent disbursements fall into one of the above five categories.

7. 5 Types of Check Tampering 1.Forged Maker 2.Authorized Maker 3.Altered Payee 4.Forged Endorsement 5.Concealed Check

11. Keys to Forged Maker Scheme: 1.obtain the check 2.determine who to make it payable to 3.forge the signature 4.convert the check 5.conceal your crime (record the check in the books, or?)

12. Keys to Authorized Maker Schemes: Probably already has access to check stock No need to forge signature Still needs to convert the check Still a problem with concealment

13. Concealment Methods: Alter the bank statement Re-alter checks after bank statement Enter false info. into CDJ Code checks to false debits Re-issue checks to vendors expecting payment

14. Audit Program Steps for CH5: See pages 195-196 – these red flags should be added to our audit programs (if not already there) Controls on 196-199 are controls that the client should have. We should inquire of these during our internal control work.

15. In other words, to determine if a significant risk of fraud exists, we should: 1.identify the type of fraud that could occur and, 2.evaluate the risk factors that relate to that fraud type, grouped by: a)pressure or incentive b)opportunity c)rationalization

16. To carry this a step further, SAS #99 identifies 4 facets to the risk of MM due to fraud: 1.type 2.significance ($ magnitude) 3.likelihood (that it will be material) 4.pervasiveness