2. Fraud Risk Assesment Pertemuan XX Matakuliah: F0184/Audit atas Kecurangan Tahun: 2007

3. Bina Nusantara Mahasiswa diharapkan dapat mengidentifikasi metode- metode dalam melakukan analisa berbasis resiko Mahasiswa diharapkan mampu mengetahui dan melakukan pengendalian kecurangan berbasis resiko Learning Outcomes 3

4. Bina Nusantara Understand the risk Fraud Risk Factors Internal Controls and Fraud Proofing Environment for Fraud Risk Detection and Enforcement Risk Management Checklist Outline Materi 4

5. High Fraud – Low Fraud Environment Tight accounting and audit controls Thorough screening of applicants for employment Close supervision and monitoring of employee performance and behavior Explicit rules against theft, financial statement fraud, embezzlement, sabotage, and information piracy Bina Nusantara

6. A Comparison of The Environments and Cultures of Organizations With High and Low Fraud Potential 6 VariableHigh Fraud PotentialLow Fraud Potential Management styleAutocraticParticipative Management orientation Low trust Power-driven High trust Achievement-driven Distribution of authority Centralized, reserved by top management Decentralized, dispersed to all levels, delegated PlanningCentralized Short range Decentralized Long range PerformanceMeasured quantitatively and on a short-term basis Measured both quantitatively and qualitatively and on a long- term basis

7. Bina Nusantara 7 VariableHigh Fraud PotentialLow Fraud Potential Business focusProfit-focusedCustomer-focused Management strategyManagement by crisisManagement by objective ReportingReporting by routineReporting by exception Policies and rulesRigid and inflexible, strongly policed Reasonable, fairly enforced Primary management concern Capital assetsHuman, then capital and technological assets Reward system- Punitive - Penurious - Politically administered Generous Reinforcing Fairly administered

8. Bina Nusantara 8 VariableHigh Fraud PotentialLow Fraud Potential Feedback on performanceCritical Negative Positive Stroking Interaction modeIssues and personal differences are skirted or repressed Issues and personal differences are confronted and addressed openly Payoffs for good behavior Mainly monetary Recognition, promotion, added responsibility, choice assignment, plus money Business ethicsAmbivalent, rides the tideClearly defined and regularly followed Internal relationshipsHighly competitive, hostileFriendly, competitive, supportive Values and beliefsEconomic, political, self- centered Social, spiritual, group- centered

9. Bina Nusantara 9 VariableHigh Fraud PotentialLow Fraud Potential Success formulaWorks harderWorks smarter Human resourcesBurnout High turnover Grievances Not enough promotional opportunities for all the talent Low turnover Job satisfaction Company loyaltyLowHigh Major financial concernCash-flow shortageOpportunities for new investment Growth patternSporadicConsistent Relationship with competitorHostileProfessional

10. Bina Nusantara 10 VariableHigh Fraud PotentialLow Fraud Potential InnovativenessCopy cat, reactiveLeader, proactive CEO characteristicsBraggart, self-interested, driver, insensitive to people, feared, insecure, gambler, impulsive, tight-fisted, numbers-oriented, materialistic, profit-seeker, vain, bombastic, highly emotional, partial Professional; decisive; fast- paced; respected by peers; secure risk-taker; thoughtful; generous with personal time and money; people-products-and market oriented; builder-helper; self-confident; composed; calm; deliberate; fair; and know who and what he or she is, and where he or she is going

11. Bina Nusantara 11 VariableHigh Fraud PotentialLow Fraud Potential Management structure, systems and controls Bureaucratic Regimented Inflexible Imposed controls Many-tiered structure, vertical Everything is documented and have a rule Collegial Systematic Open to change Self-controlled Flat structure, horizontal Documentation is adequate but not burdensome, and some discretion is afforded Internal communicationFormal, written, stiff, pompous, ambiguous Informal, oral, clear, friendly, open, candid Peer relationshipsHostile, aggressive, rivalrous Cooperative, friendly, trusting

12. Internal Control The limit of risk that we would like to accept will inline with the level of internal control that we should implement!! Internal control is one of the major agenda if we would like to discuss about “fraud proofing” since fraud proofing is want to reduce the risk into our acceptable level that we already define at the beginning. Bina Nusantara

13. Basic Controls A Physical Access B Job Descriptions C Accounting Reconciliation and Analysis Bina Nusantara

14. Supervision Fraud AwarenessApproval and ReviewDouble Check and Redoing Bina Nusantara

15. Internal Audit External Audit Bina Nusantara Audit