Presentation is loading. Please wait.

Presentation is loading. Please wait.

Part 2 D – 1 V3.0 THE IIA’S CIA LEARNING SYSTEM TM www.LearnCia.com Section Topics 1.Discovery sampling 2.Interrogation techniques 3.Forensic auditing.

Similar presentations


Presentation on theme: "Part 2 D – 1 V3.0 THE IIA’S CIA LEARNING SYSTEM TM www.LearnCia.com Section Topics 1.Discovery sampling 2.Interrogation techniques 3.Forensic auditing."— Presentation transcript:

1 Part 2 D – 1 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Section Topics 1.Discovery sampling 2.Interrogation techniques 3.Forensic auditing 4.Use of computers in analyzing data 5.Red flags 6.Types of fraud Part 2, Section D

2 Part 2 D – 2 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Fraud Investigation Roles and Players Standard 1210.A2 “Internal auditors must have sufficient knowledge to evaluate the risk of fraud and the manner in which it is managed by the organization, but are not expected to have the expertise of a person whose primary responsibility is detecting and investigating fraud.” Part 2, Section D, Introduction

3 Part 2 D – 3 V3.0 THE IIA’S CIA LEARNING SYSTEM TM What are some of the objectives of a fraud investigation? Sample answer: Protect the innocent, establish facts, resolve the matter, and clear the air. Quickly stop loss. Support successful prosecution. Identify, gather, and protect evidence. Identify and interview witnesses. Identify behavior patterns. Determine motives and suspects. Provide basis for discipline, etc. Account for and recover assets. Identify control weaknesses to be fixed. Discussion Question Part 2, Section D, Introduction

4 Part 2 D – 4 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Discussion Question If you are interviewing (not interrogating) an audit client, why do you establish rapport? What are some methods of doing so? Sample answer: Why—To make client comfortable with providing information. Methods—Agree on convenient time and place; keep number of interviewers to a minimum; dress appropriately for client and situation; use open, attentive body language. Part 2, Section D, Topic 2

5 Part 2 D – 5 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Discussion Question What are some hallmarks of active listening? Sample answer: Soft eye contact. Facial expressions showing interest. Brief silences to allow for more information. Paraphrasing. Unobtrusive note-taking. Part 2, Section D, Topic 2

6 Part 2 D – 6 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Discussion Question What are some examples of open and closed questions? Use Open ClosedTo uncover facts in brief statements; to get to yes or no. To invite opinions, descriptions, narratives, etc. Examples How often do employees skip a step in the approved process? Please describe your unit’s step-by-step recycling procedure. Type Part 2, Section D, Topic 2 Answer:

7 Part 2 D – 7 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Discussion Question What are some interview behaviors that you would consider indicators of fraud? Sample answer: Inappropriate attitude No eye contact Anxiety Attitude change Restlessness. Leaning away Changing answers Part 2, Section D, Topic 2

8 Part 2 D – 8 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Interviewing Model Document Complete report soon. Don’t transcribe. Include attitude, next steps. Agree Prepare Summarize key points. Confirm or correct points. Define goals. Get background. Plan questions, strategies. Conduct Stick to plan. Verify fact or hearsay. Take notes. Part 2, Section D, Topic 2

9 Part 2 D – 9 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Discussion Question You are a specialized fraud investigator. You don’t already know the answers. A.Interview B.Interrogation You want to confirm or eliminate suspicion of fraud. Match the questioning method on the right to the appropriate context for using that method on the left. You want a confession. A B A Answers: B Part 2, Section D, Topic 2

10 Part 2 D – 10 V3.0 THE IIA’S CIA LEARNING SYSTEM TM The Forensic Auditor Internal auditorForensic auditor Identifies fraud indicators.Gathers evidence suitable for use in court—and can present it in court. Pieces together the fraud narrative from experience, knowledge, and intuition. Knows when to call for full fraud audit. May be certified by Association of Certified Fraud Examiners (ACFE). Part 2, Section D, Topic 3

11 Part 2 D – 11 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Discussion Question Sample answer: What are some types of information that computers can provide? Voice mail (computer-stored) Internet history reports Computer forensics Word-processed documents Customer lists logs Financial records Scheduling systems or logs Operations logs Personnel records Part 2, Section D, Topic 3

12 Part 2 D – 12 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Types of Computer Analysis Numerical analysis Enterprise auditing Regression analysis Continuous online auditing Study of number sequences (e.g., check amounts) for unlikely patterns, often using Benford’s Law Comparison of transactions as (or soon after) occurrence against predefined acceptable patterns Mining data in enterprise-wide systems to identify suspicious patterns Computer analysis of relationship between variables—one dependent on the other(s) Part 2, Section D, Topic 4

13 Part 2 D – 13 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Types of Red Flags Part II D-5 Audit cycle red flags Environmental red flags Industry- specific red flags Perpetrator red flags Part 2, Section D, Topic 5

14 Part 2 D – 14 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Discussion Question Sample answer: What are some examples of audit cycle red flags? Changes to key figures pre-financing; sales receivables discrepancies Expenditure cycle Production cycle Financing cycle Revenue cycle Consistent overruns; excessive waste or write-offs; unsecured warehouse High turnover in purchases/payroll; inordinate purchasing from a vendor Unusual increases; sales to shipments discrepancies; slow collections Part 2, Section D, Topic 5

15 Part 2 D – 15 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Discussion Question Sample answer: What are some examples of environmental red flags? Stiff, unfair competition Lax regulation Industry or cultural tendency toward illegal practices (bribes, etc.) Loss of contracts; reorganization that disrupts control policies; poor ethics training International organizations and organizations dependent on computer technology Part 2, Section D, Topic 5

16 Part 2 D – 16 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Discussion Question Sample answer: What are some examples of industry- specific red flags in the following areas? Financial services Manufacturing Insurance Energy Misstatement of sales and earnings; diversion of cash from accounts; phony loans Cost overruns and discrepancies Fraudulent claims; payouts to phony clients; misevaluation of underwritten properties False valuation of assets; misstatement of profits; bribes and cover-ups Part 2, Section D, Topic 5

17 Part 2 D – 17 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Discussion Question Sample answer: Pattern of complaints Decline in morale or attendance Abrupt resignations Evasive answers; adversarial attitude; lack of cooperation during audit Unexplained variances; unusual shortages in cash or inventories; missing or altered documents Managers who are late with reports, play favorites What are some examples of perpetrator red flags? Part 2, Section D, Topic 5

18 Part 2 D – 18 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Discussion Question Sample answer: Fictitious revenues Improper asset valuation Concealed liabilities Improper disclosures What are some examples of financial statement red flags? Part 2, Section D, Topic 5

19 Part 2 D – 19 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Discussion Question Financial statement fraud What are some examples of fraud in each area? Skimming cash; diverting payments; pocketing deposits; selling waste and keeping proceeds Sample answer: Diverting money from phony accounts to oneself; altering timecards; faking expense reports Sale of fictitious assets; intentionally concealing events, transactions, or data; theft of office equipment and supplies Illegal business activities; intentional errors to reduce tax liabilities; failure to act as required; bid rigging Fictitious revenues; intentional, improper transfer pricing; concealing liabilities Misuse or theft of assets Bribery and corruption Fraudulent disbursement Cash theft Part 2, Section D, Topic 6

20 Part 2 D – 20 V3.0 THE IIA’S CIA LEARNING SYSTEM TM Reinforcing Activity 2-8 Part 2, Section D Fraud Knowledge Elements Part 2, Section D

21 Part 2 D – 21 V3.0 THE IIA’S CIA LEARNING SYSTEM TM End of Section D Questions? Part 2, Section D


Download ppt "Part 2 D – 1 V3.0 THE IIA’S CIA LEARNING SYSTEM TM www.LearnCia.com Section Topics 1.Discovery sampling 2.Interrogation techniques 3.Forensic auditing."

Similar presentations


Ads by Google