FEI Canada. Fraud Prevention. Presented by: Matthew McGuire and Leigh Beijer. Date:

Transcription

1 FEI Canada Fraud Prevention Presented by: Date: Matthew McGuire and Leigh Beijer June 11, 2015

2 Agenda Presenter Introductions Overview Elements of a fraud program Investigating Fraud Page 2

3 Presenter Introductions Matthew McGuire, CPA, CA, CFF, DIFA, CAMS, AMLP Leigh Beijer, CPA, CA, DIFA, CFF, CFE, CAMS Page 3

4 Methods of Fraud 3 primary categories of fraud Financial statement fraud (9%) Corruption (37%) Asset misappropriation (85%) Why does this not add up to 100% Approximately 30% of fraud combines 2 or more of the above Page 4

5 Impact of Fraud 5% of revenues each year to fraud Average timeframe of fraud 18 months Decreased morale Disruption in service Page 5

6 Current Fraud Trends Cybercrime Data Security Regulatory Compliance AML Bribery and Corruption Data analytics for fraud detection Page 6

7 5 Key Principles There are 5 key principles for establishing an environment to effectively manage an organizations fraud risk: 1. A Fraud Risk Management Program 2. An assessment of risk 3. Prevention techniques 4. Detection techniques 5. Reporting Process a) Whistleblower b) Investigation and Corrective Action Page 7

8 Fraud Risk Management Program Foundation of fraud risk management Tone at the top Combination of the following: Policies Procedures Communication documents Evaluation process Page 8

9 Fraud Risk Management Program Board of Directors Implement independent governance practices Tone at the top starts with the Board of Directors Ensure Senior Management implements proper and adequate policies Monitor organizations fraud risk management effectiveness Page 9

10 Fraud Risk Management Program Roles and responsibilities Commitment Fraud awareness Affirmation process Conflict disclosure Fraud risk assessment Reporting procedures and whistleblower protections Investigation process Corrective action Quality assurance Continuous monitoring Page 10

11 Fraud Risk Assessment In order to prevent or detect, you need to first identify the risks What are the risks? What is the likelihood and significance? What is the inherent risk? What is mitigating the risk? What is the risk tolerance? Not a one time event Page 11

12 Prevention Techniques 1 st line of defense in decreasing the risk Policies, procedures, training and communication Preventive controls: Segregation of duties Access controls Page 12

13 Detection Techniques One of the strongest deterrents Confirm preventive techniques are effective Identifying when controls fail Identify when fraud is occurring Whistleblower program Page 13

14 Reporting Process Investigation and Corrective Action Predetermine the process that will be followed when allegations are received or instances are identified Process should be developed by the Board and include the role of the Board Prompt, competent and confidential Consider both the investigation and the corrective action Page 14

15 How to manage a fraud investigation Working with legal counsel Establishing context and objectives Recovery Civil Insurance Deterrence Civil Criminal Internal or external investigation Page 15

16 How to manage a fraud investigation Establishing context and objectives Minimizing reputational damage Manage the message Minimizing disruption to operations Employment law considerations Page 16

17 How to manage a fraud investigation Preserving and managing evidence Interviews Documents Computer forensics Case management software Preserving assets Recovery of assets Page 17

18 Risk Intelligence Learn and Move On Collusion considerations Analyzing control failures Designing new controls using risk intelligence Whistleblower hotlines/reward system Management review Organizational behaviour Page 18

19 Risk Intelligence Learn and Move On Page 19

20 Questions Page 20

21 Arn Kashino, Regional Technology Consulting Leader, MNP LLPArn Kashino, Regional Technology Consulting Leader, MN Contact us! Matthew McGuire, CPA, CA, DIFA, CFF, CAMS, AMLP National AML Leader Investigative and Forensic Services MNP LLP Leigh Beijer, CPA, CA, DIFA, CFF, CFE, CAMS Senior Manager, Forensics MNP LLP Page 21