w4 - 6 discussions
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W4.docxDiscussion #1
Based on authoritative sources (including peer reviewed articles from the library, Fraud Examiners Manual, etc), give some examples and discuss current ways in which you could obtain information from public and private sources if you were asked to investigate an employee in accounts receivable that is believed to be embezzling funds from your company. Do you think the data you obtained is reliable from these public and private sources, why or why not?
Comment (FG)
The investigation's study element includes specialists in publicly sourced data obtaining appropriate data about people and organizations suspected of fraud participation (PWC, 2008). This is one of the first measures taken when a suspect was recognized in an inquiry. Most of the information and paperwork used in an inquiry are produced internally – it comes from within the organization or is otherwise easily accessible within the organization (in the event of invoices from the seller). However, sometimes it becomes vital to have information or paperwork that is only accessible from external sources. Public data and documents are typically accessible to the general government either by visiting a website or facility or on request from the record holder. In most instances, government agencies maintain public records. There are two wide categories of external information sources, public and non-public. For instance, if an employee posts pictures or makes statements on social media, this data could be easily accessible to all spectators. “Investigators should always use caution when accessing this information, especially if the information is only available to ‘friends’ or other contacts that the individual has granted special access to.” (Pomerantz & Zack, 2017)
Non-public documents are confidential and private. Holders of such documents are under no obligation to generate such documents unless they have given their permission or are required to do so as a consequence of legal proceedings, such as a court order or summons. This category includes records such as private bank statements from people who may be the topic of an inquiry. Researchers do not normally have ready access to these records. Non-public records include information about a private and confidential person or business. Must get from 1) Consent, 2) Legal process 3) Search warrant.
An employer who uses a third party to conduct a workplace investigation no longer has to obtain the prior consent of an employee if the investigation involves suspected: 1) Misconduct, 2) Violation of law or regulations, 3) Violation of any preexisting policy of the employer (ACFE, 201
Discussion #2
Play the video titled 5 Steps to Reduce Small Business Fraud located on the ACFE website http://www.acfe.com/Video-Library.aspx
What did you learn from this video that you could relate to your current, past or future job in accounting? Be sure to use authoritative sources (including peer reviewed articles from the library, Fraud Examiners Manual, etc) to back up your opinion and give specific examples of how this video is related to your job.
Comment (nz)
Fraud can occur in different areas of our lives in many possible ways. “Wherever there is money, there is a potential fraud” (ACFE, 2019). Fraud prevention tools and technique can help to fight the fraud.
In the banking industry, internal control is strong enough to prevent fraud or catch fraudsters right away. There is cybersecurity, surprise audit, strong internal procedures, surveillance, etc. If one person would like to commit the fraud, more likely it will be detected quick. But if fraud occurred by collusion between employees, or between employee and client, or, the worst case, between employee and management, it will take more time to detect the fraud. Just because employees and management know about internal control and would do everything to hide traces.
In a non-profit organization, I had the experience to deal with fraud in business credit card transactions. Basically, this fraud occurred externally but still, we were able to identify it with the internal procedure. For example, employee, the cardholder, is responsible to provide all receipts as confirmation of purchases according to transactions on the bank credit card statement. If an employee does not recognize the transaction, we contact the bank regarding the fraud. Monitoring credit card transactions is crucial not only in the business environment but also in personal life for timely fraud detection.
No business has an immune from fraud, some companies just have greater risks than another. Of course, a large company has more financial and human resources and might be more capable of separating tasks. In small companies, employees perform multiple duties due to the lack of staff. But internal control could be design or “customize” to any type of businesses. The companies where management is modeling the highest degree of integrity, have less risks for internal fraud, and vice versa. Businesses should consider hiring a CPA with audit and fraud-related experience. CPA will “review the business and uncover potential problems through an assessment of internal controls” (Rossi, 2012, para. 9). After identifying areas with the biggest risk, the next step will be to implement internal control. The companies must educate employees that internal controls are a priority.
Discussion # 3
Locate the video titled The Rise and Fall of a Convicted Money Launderer on the ACFE website at http://www.acfe.com/vid.aspx?id=4294988458 and post your comments regarding how the person's actions fell into the fraud risk assessment model discussed this week? Discuss your ideas with at least 1 other classmate.
Lets start by stating what is fraud risk; Cressey's Fraud Triangle teaches that there is associated elements that allow an individual (s) to commit fraud. The first one is the motive or pressure that push an individual to commit the fraud, second will be to justify the fraudulent behavior and third is the opportunity to commit the fraud (FEM, 2019). Fraud risk can come from internal or external sources and it is one of many types of risk managed by any organization.
The Video titled "The Rise and Fall of a Convicted Money Launderer" presented by the ACFE where Humberto Aguila a former criminal justice lawyer was presented with an opportunity that justify his motive of making money out of an illegal drug operation. He moved illegal monies from drug dealers by creating offshore companies and depositing them on out of the USA banks that had less regulations (ACFE,2015).
Through the research it came to light that illegal drug monies equal $400 billion dollars a year or 8% of all international trade. For them to invest their profits from their illegal proceeds and avoid the government to seize their monies they need to laundry them. There three general stages which compares with Humberto Aguila testimony in the video.
The first stage is placement which involves depositing the illegal proceeds into domestic and foreign financial institutions. The second stage is layering which involves creating layer between the persons placing the proceeds and the persons involved in the intermediary stages to hide the sources. The third stage is integration in which proceeds had being washed and a legitimate explanation of the monies is created (Institute for Policy Studies, 2005).
These stages directly compare with the risk assessment model and what was depicted by Humberto Aguila in the ACFE video. Aguila placed the monies on foreign financial institutions through foreign companies creating the necessary layer to cover the proceeds originator and developing legitimates explanations for the monies.
In conclusion, since the risk assessment is the overall process or method where will identify hazards and risk factors that have the potential to cause harm. Analyze and evaluate the risk associated with the hazard and determine to appropriate ways to eliminate the hazard or control the risk when it cannot be eliminated. Aguilar should off not pursue the relationship with former defendant, nor give in to the opportunity. His colleagues and his organization didn't had significant fraud assessment process in place to avoid the money laundrey.
