1 / 16

City of Roseville Finance Department

City of Roseville Finance Department. Workplace Fraud… How to Spot It And How to Stop It. What is Fraud?. Fraud encompasses an array of irregularities and illegal acts characterized by intentional deception . The elements of fraud are: A false representation about a material fact

weston
Télécharger la présentation

City of Roseville Finance Department

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. City of RosevilleFinance Department Workplace Fraud… How to Spot It And How to Stop It

  2. What is Fraud? Fraud encompasses an array of irregularities and illegal acts characterized by intentional deception. The elements of fraud are: • A false representation about a material fact • Made intentionally, knowingly, or recklessly • Which is believed and acted upon by the victim to the victim’s damage

  3. The Fraud Triangle The phases of fraud can best be illustrated by The Fraud Triangle. Employees who commit fraud generally are able to do so because there is opportunity, pressure, and a rationalization. Opportunity Rationalization Pressure

  4. The Fraud Triangle Opportunity is generally provided through weaknesses in internal controls. Some examples include: • Lack of supervision and review • No separation of duties • No management approval • Inadequate system controls Pressure can be imposed due to: • Personal financial problems • Personal vices such as gambling, drugs, extensive debt, etc. • Unrealistic deadlines and performance goals

  5. The Fraud Triangle Rationalization occurs when the individual develops a justification for their fraudulent activities. The rationalization varies by case and individual. Some examples include: • “I really need this money and I’ll put it back when I get my paycheck” • “I’d rather have the company on my back than the IRS” • “I just can’t afford to lose everything – my home, car, everything” THE EMBEZZLERS – “After investigating hundreds of fraud scenarios, I realized they all had one thing in common: The embezzler was ALWAYS the person the organization would LEAST expect to be a thief!”

  6. Deterring and Detecting Fraud Deterring Fraud • Deterrence consists of actions taken to discourage fraud and limit financial losses. The principal mechanism for deterring fraud is strong internal controls. Detecting Fraud • Detecting fraud is a group effort and all employees are encouraged to look for and report fraud. Employees suspecting fraud can report it to there supervisor or Human Resource Department.

  7. Red Flags of Fraud - Employee • Lifestyle changes: expensive cars, jewelry, homes, clothes. • Significant debt/credit problems. • Behavioral changes: drugs, alcohol, gambling. • Refusal to take vacation/sick leave. • Lack of segregation of duties.

  8. Red Flags of Fraud - Mgmt • Reluctance to provide information to auditors or frequent disputes with auditors. • Mgmt decisions are dominated by an individual or small group. • Weak internal controls environment. • Excessive number of checking accounts. • Excessive number of year end transactions. • Service Contracts that result in no product. • Photocopied or missing documents.

  9. Reporting Fraud Who is responsible for reporting suspected or actual fraud? • Anyone who has reasonable suspicions of an alleged fraud or actual evidence of a fraud. All employees have an obligation to ensure the City is a well controlled environment free from wrongdoing or criminal activities. Who should I call about an alleged fraud? • Contact your supervisor or the Human Resource Department. If the fraud involves stolen or misappropriated assets (e.g., cash, property, equipment, etc.), you should also call Police Department and file an incident report.

  10. What to Report… • Theft of City resources (e.g., cash, equipment, supplies or materials). • Record falsification. • Payroll fraud or time abuse. • Kickback or bribes. • Intentional misuse of City equipment or property. • Contractor fraud. • Gross mismanagement of resources, including careless expenditures. • Gross disregard of policy and procedural controls.

  11. Fraud Investigation How is a fraud investigation conducted? - Fraud investigations may be conducted by or involve the participation of the Human Resources, City Attorney’s Office, Police and Finance Departments. These departments will assess the facts known relative to all fraud investigations in order to: • Determine if controls need to be implemented or strengthened • Conduct inquiries to obtain an understanding of the situation • Review supporting documentation • Request or confirm information with outside parties such as banks • Review policies and procedures • Make recommendations to management to changes areas of noncompliance or strengthen controls • Contact Police Department if a crime has been committed

  12. Fraud Hurts Everyone… Together we can stop Fraud

  13. Red Flags of Fraud • The following is a partial list of the factors contributing to fraud. It is not intended to list all possible situations. • Ineffective internal controls: • Not separating functional responsibilities of authorization, custodianship, and record keeping. No one should be responsible for all aspects of a function from the beginning to the end of the process. • Unrestricted access to assets or sensitive data (e.g., cash, personnel records, etc.). • Not recording transactions resulting in lack of accountability. • Not reconciling assets with the appropriate records • Unauthorized transactions.

  14. Red Flags of Embezzlement • Borrowing money from co-workers • Creditors or collectors appearing at the workplace • Gambling beyond the ability to stand the loss • Excessive drinking or other negative personal vices • Easily annoyed at reasonable questioning • Providing unreasonable responses to questions • Refusing vacations or promotions for fear of detection • Bragging about significant new purchases • Carrying unusually large sums of money • Rewriting records under the guise of neatness in presentation

  15. Other Common Forms of Fraud • Falsifying timesheets for a higher amount of pay • Stealing of any kind (e.g., cash, petty cash, supplies, equipment, tools, data, records, etc.) • Not depositing all cash receipts • Creating fictitious employees and collecting the paychecks • Paying for personal expenses with City funds • Increasing vendor invoices through collusion • Billing for services not rendered and collecting the cash • Recording fictitious transactions on the books to cover up theft

More Related