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Audit & Investigations

Audit & Investigations. Nick Blake Audit & Investigations June 2012. Fraud. Why is fraud important now? What is fraud? Examples of fraud Requirements for fraud to take place Who is responsible for preventing fraud? How is fraud discovered? BIG’s response.

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Audit & Investigations

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  1. Audit & Investigations Nick Blake Audit & Investigations June 2012

  2. Fraud • Why is fraud important now? • What is fraud? • Examples of fraud • Requirements for fraud to take place • Who is responsible for preventing fraud? • How is fraud discovered? • BIG’s response

  3. Why is fraud important now? • It always was – denies money to good causes • Fraud more prevalent in difficult financial times • Fraud at record levels • £73 billion Fraud loss • £20.3 billion Public Sector • £1.1 billion Charity Sector • Source: National Fraud Authority Annual Fraud Indicator 2012

  4. What is fraud? What words come to mind when you think of fraud?

  5. What is fraud? • In England there is a statutory offence – Fraud Act 2006 • Three Offences • Fraud by false representation (Section 2) • Somebody: • makes a false representation • dishonestly • knowing that the representation was or might be untrue or misleading • with the intent to make a gain from himself or another, to cause to another or to expose another to the risk of loss

  6. What is fraud? • In England there is a statutory offence – Fraud Act 2006 • Fraud by failing to disclose information (Section 3) • Somebody: • failed to disclose information to another person • when they were under a legal obligation to disclose that information • dishonestly intending, by that failure, to make a gain or cause a loss

  7. What is fraud? • In England there is a statutory offence – Fraud Act 2006 • Fraud by abuse of position (Section 4) • Somebody: • occupies a position in which they were expected to safeguard, or not to act against, the financial interests of another person • abused that position • dishonestly • intending by that abuse to make a gain/cause a loss • For all three offences, no gain or loss need actually to have been made.

  8. Examples of fraud? • Over-claiming on insurance policy • Using Blue Badge without Blue Badge holder in the car • A parent naming as the main driver to reduce premiums for son or daughter who really uses the car • Claiming benefits when working • Not telling the local authority when a person has moved into a property when claiming a single person council tax discount • Failing to declare endorsements on insurance renewal • Declaring you are the descendent of an African Prince and declaring you have $50 million dollars to transfer to a random e-mail account (419 fraud)

  9. Requirements for fraud to take place? Opportunity Pressure Rationalisation

  10. Who is responsible for preventing fraud? • Internal Audit • Risk Management, Management and Supervision • Systems processes and procedures • 3rd line of defence • 2nd line of defence • 1st line of defence

  11. How is fraud discovered? Source: Association of Fraud Examiners - Report to the Nations on Occupational Fraud and Abuse 2010

  12. Questions?

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