The Nuts and Bolts of Fraud Training: How to establish a manageable fraud training program at your agency. New York S

1. “The Nuts and Bolts of Fraud Training: How to establish a manageable fraud training program at your agency.”New York State Internal Control Association Fall CPE Seminar  October 27, 2009 Edward T. Dominelli, CFE, MPA BST Forensic Accounting and Litigation Services Offices: New York - Albany

2. Goals and Objectives This session will discuss suggested steps you can consider with management to develop and implement a meaningful and manageable fraud training program at your agency.

3. What is fraud?  Fraud is any intentional act or omission designed to deceive others, resulting in the victim suffering a loss and/or the perpetrator achieving a gain. Managing the Business Risk of Fraud: A Practical Guide, prepared by IIA, AICPA, and ACFE

4. Why is fraud training important?  Fraud happens in all organizations Fiduciary duty to protect public assets Mitigate risk Limit liability

5. Why is fraud training important?  Protect organizational reputation Promote transparency in operations – public perception Improve capacity to prevent, detect and investigate fraudulent activity

6. Key Components for Successful Fraud Training Implementation  Management Acceptance/Commitment Perform Risk Assessment Identify Relevant Schemes/Red Flags Develop Training Content Training Delivery Feedback Loops

7. Management Acceptance/Commitment“Tone at the top.” Accept reality that fraud exists Discuss at senior management level Establish as agency priority Articulate clearly, internally and externally

8. Management Acceptance/Commitment“Tone at the top.” Develop/Revise Code of Conduct agency level business partners embody in documents Set the example

9. Conduct Risk Assessment  Where are we most vulnerable? Generic Administrative Functions Unique Program/Operations Functions Agency-wide participation

10. Identify Relevant Schemes  Review agency history Review professional literature Consult with “experts” internal external

11. Identify Relevant Schemes (continued)  Focus on high risk areas Identify “Red Flags” Modify Code of Conduct, processes

12. Training Content Training goals and objectives facilitate fraud prevention, detection and reporting deterrence – soft vs. hard approach keep good people from making bad decisions weed out bad actors create safe working environment Importance to employees and agency “What does it mean to me?” agency impact Fraud statistics – studies, i.e. ACFE

13. Training Content (continued) Types of fraud fraudulent financial reporting misappropriation of assets corruption Fraud Triangle pressure opportunity rationalization

14. Training Content (continued) Compliance framework Code of Conduct procedural regulatory statutory Types/consequences of violations administrative criminal case examples

15. Training Content (continued)  “Red Flags” (fraud indicators) What are they? how to identify them Reporting requirements mandated reporting anonymous reporting whistleblower protection internal and external resources “When in doubt, report it.”

16. Training Content (continued) Investigative Response Process who to contact investigative process consistent timely impartial professional Q&A Evaluation

17. Training Delivery Training Delivery Options mandatory for all or select employees live group sessions – mixed vs. functional groups Webinar video tape – group or internet

18. Training Delivery (continued) Assign Training Responsibility Training Unit, Ethics Officer, HR, Counsel, SIU external agency staff consultant Obtain record of employee attendance individual receipt of attendance/place in personnel file group sign-in sheets

19. Training Delivery (continued) Video-record sessions Periodic refresher training New employee training Regular reinforcement - emails, staff meetings, posters, trinkets, intranet

20. Training Delivery (continued)  Vendor awareness prepare vendor literature incorporate in contract language discuss in bidders meetings/vendor interviews reinforce in routine communications posters

21. Feedback Loops  Measure training effectiveness internal audits investigations periodic risk assessments employee evaluation process employee/vendor/client surveys employee suggestion program open door policy Modify Training Program as necessary

23.  Edward T. Dominelli, CFE, MPA BST Valuation and Litigation Advisors Forensic Accounting and Financial Investigations 26 Computer Drive West Albany, NY 12205 1-800-724-6700, ext 133 edominelli@bstco.com