Basic Fraud Audit Pertemuan VII Matakuliah: F0184/Audit atas Kecurangan Tahun: 2007

Bina Nusantara Mahasiswa diharapkan mampu mengidentifikasi langkah-langkah dalam melakukan audit atas kecurangan Mahasiswa dapat melihat red flag atau symptom atas suatu kejadian didalam setiap transaksi Mahasiswa dapat melakukan audit atas kecurangan Learning Outcomes 3

Bina Nusantara Audit Step Audit Guidance Audit Plan Identify fraud scheme and red flag Outline Materi 4

Audit Strategies for Detecting Fraud Financial Audit Fraud Audit Investigation Passive Approach Proactive Approach Reactive Approach Bina Nusantara 5

Scheme The first thing that we should do is building the fraud scheme into our audit plan. Below is the following step: Identify the fraud schemes that are relevant to audit systems Determine the quality of audit evidence to provide audit assurance Consider sampling technique as to size Understand the money trail in relation to fraud scheme Build in skepticism Bina Nusantara 6

Audit Step to Identify Fraud Identify the transactions and the fraud scheme Identify the concealment technique Consider true economic substance of the transaction Validate to outside source Check payments for non-performance service Make sure whether Managing Director selected vendor and authorized payment Bina Nusantara 7

OCCUPATIONAL FRAUD AND ABUSE Corruption Asset Misappropriation Fraudulent Statement 8 Bina Nusantara

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CORRUPTION Bribery Conflicts of interest Illegal Gratuities Economic extortion 10 Bina Nusantara

Bribery Invoice kickback Bid rigging 11 Bina Nusantara

Kickback Scheme Diverting business to vendorOverbilling schemes Employees with approval authority Fraudster lacking approval authority 12 Bina Nusantara

Kickback Modus 13 Bina Nusantara

Bid-rigging Scheme Can be categories based on stage of bidding The pre-solicitation phase –Need recognition schemes –Specification schemes The solicitation phase –Bus pooling –Fictitious suppliers –Other methods The submission phase 14 Bina Nusantara

Bid-rigging Modus 15 Bina Nusantara

Bribery Detection Red flags that may indicate that employee are involve in a bribery scheme : –General purchasing –Pre-bid solicitation –Bid solicitation –Bid or contract acceptance –Behavior profile of bribery recipient 16 Bina Nusantara

General Purchasing Red Flag Material ordered at optimal reorder point ? Made from the same vendor ? Establish bidding policies being followed ? Cost of material out of line ? 17 Bina Nusantara

Prebid solicitation Tailoring specification and statement Using “prequalification” procedures to restrict competition Noncompetitive procurement justification Buyer provide to contractor information on a preferential basis Use information provide by contractor who will be permitted to bid Permitted consultant who assisted in preparing biding document Spitting cost into separate contract 18 Bina Nusantara

Bid Solicitation Limiting time for submission Revealing information to contractor Permit improper communication between contractor Failure to ensure a sufficient number of potential competitors Bid solicitations are vague Inadequate internal control over Improper communication by purchaser Financial interest by purchaser Assistance by purchaser etc 19 Bina Nusantara

Bid or Contract Acceptance Restricting procurement to exclude any qualified contractor Improper acceptance of late bid Falsification of document Change in a bid after other bidder’s price known Withdrawal of low bidder who may become a subcontractor to the higher bidder who gets the contract Collusion between bidders Revealing one bidder’s price to another False certification by contractor. 20 Bina Nusantara

Behavior Profile of Bribery Recipient A drug and/or alcohol addition Personal financial problems A gambling habit Extravagant lifestyle Loan shark or other private debt Family supported by the subject Extraordinary medical expense Significant cash expense for entertainment and/or travel 21 Bina Nusantara

Bribery Prevention Bribery prevention policy (Business Ethic or code of conduct policy) A company policy that specifically addresses the problems and illegalities associated with bribery and related offense, such –Gift –Reporting gift –Discount –Business meeting –Entertainment 22 Bina Nusantara