Financial Orchestra - PICPA Middle East Conference

Case%Study:%Nick%Leeson%%
• Leeson%did%an%unauthorized%specula8ve%trading%
that%Bankrupted%the%233>year%old%Barings%Bank%of%
London%
• Losses%eventually%reached%£827%million%%
%%%%(US$1.4%billion)%

Playing%the%%
Forecas8ng%Game%%
using%Hockey%S8cks%%

Assumptions (What music notes to include)
Estimates (Where to include)
'
You may assume that they$re accurate down to the
last dollar. Not true! The balance in the cash account
is exact, but virtually every other number you see in
a financial report is based on an estimate.
'

Increase Revenue
(Revenue Recognition)

Round&Trip&Recipe&&
Pre>Paid%Services%4%Million%%
Company% Vender%
Current%Revenue%1%Million%%%
Reporting&more&revenue&

Deferral&of&Revenue&Recipe&&
Customer%
Balance%Sheet%
2%Million% Unearned%Revenue%%
1%Million%
Current%Revenue%%
Manipulating&revenue&

- Sold equipment on four-year leases, including service
and maintenance.
- Booked all the revenues up front.
- Xerox mis-stated four years' worth of profits,
resulting in an overstatement of close to $6bn.

Reduce Expenses
(Matching Principle)

Capitalize&Expenses&Recipe&&
Expenses%
Balance%Sheet%
8%Million% Capital%
8%Million% Income%Satement%%
Expenses%

- Took a pretax charge -a one-time
write off- of 3.54 billion against its
earnings
- Grow rapidly by buying other
garbage companies. But didn't
know to run them.
- Changed the depreciation of
their 20,000 tracks from 8-10
years to 12-15 years and did the
same for their 1.5 million
dumpsters

Underreporting #line
costs$ (interconnection
expenses with other
telecommunication companies)
by capitalizing these costs on
the balance sheet rather than
properly expensing them.

Are the accountants making the right judgment
decisions?
'

! !
Who controls your organization?
'

$115,000%in%Expenses%for%one%year%

- Absolute%Trust%
- No%Review%%
- No%Details%
- No%Suppor8ng%Documents%
- No%control%%%
%

55'
Tools%Used%
%in%Fraud%%
Examina8on%
T'
Observa4on'

Opportunity%
Fraud%%
Triangle%
Pressure% Ra8onaliza8on%

Fraud%is%all%about%decep8on…%%

Occupa8onal%Fraud%and%Abuse%
Corrup4on' Asset''
Fraudulent'
Misappropria4ons' Statements'
Conflicts
of Interest
Bribery
Illegal
Gratuities
Economic
Extortion
Cash
Inventory
All Other Assets
Financial
Nonfinancial

Goodner%Brother%%
• Selling'Tires'on'the'Sly'
• Visit'a'remote'storage'site'
• Searched'for'set'of'4res'that'
siAng'for'a'while'in'the'storage'
and'started'collec4ng'dust'
• He'took'the'specifica4ons'of'the'
set'of'4res'and'started'lis4ng'
customers'who'could'poten4ally'
find'some'use'of'them'

Goodner%Brother%%
• Later'that'day'Woody'convinced'a'
local'plumping'supply'dealer'that'
needed'4res'for'his'small'fleet'of'
vehicles''
• He'told'him'that'the'company'is'
moving'some'old'inventory'and'that'
inventory'will'be'sold'on'cash'basis''
• The'owner'agree'and'woody'deliver'
the'4res'to'him'and'got'$900'

Goodner'Brother''
• He'keep'doing'this'for'2'years''
• He'will'charge'some'orders'to'accounts'with'
large'volume'of'sales.'When'some'of'them'
complained,'Woody'will'change'it.'If'they'don’t'
complain.'They'will'pay'of'it'and'help'him'cover'
his'fraud.''
• He'was'then'selling'most'of'the'inventory'to'
his'friend.'

What%can%you%do%with%
more%money?%

Fraudexaminationis#a#methodology#developed#by#
ACFE#for#resolving#fraud#allegations#from#inception#
to#disposition,#including#obtaining#evidence,#
interviewing,#writing#reports,#testifying#to#indings,#
and#assisting#in#the#detection#and#prevention#of#
fraud.##

OpenThinking%is%an%%
ACFE%Authorized%
Trainer%in%the%%
UAE%and%Qatar%%

Fraud%Examiner%%%%%%%
LawyerAccountant

CriminologistInvestigator

Cer8fied%Fraud%Examiner%(CFE)%
###
1. Be#an#Associate#member#of#the#ACFE#in#good#standing.###
2. Submit#the#CFE#Exam#application#with#proof#of#education#and#
professional#recommendations.####
3. Prepare#for#the#CFE#Exam###
4. Pass#the#CFE#Exam.###
5. Gain#inal#approval#from#the#certiication###########################committee#and#
become#a#CFE.###


! 10hourstocompletetheCFEExam.
! Eachsectionisallocatedamaximumof2.6hourstocomplete.
! Eachofthefourexamsectionshas125questions.
! Youwillhaveamaximumof75secondstoanswereachquestion.
! Youhave30daystocompleteallfoursectionsoftheCFEExam.
! Youmustcompleteeachsectioninonesitting.

###
• Fraud Prevention and Deterrence
• Financial Transactions
• Fraud Investigation
• Legal Elements of Fraud

For%the%first%8me%in%the%UAE.%%
Dubai,%UAE%%
Dec%14%–%18,%2014%/%Feb%22%–%26,%2015%
Arjaan%Rotana%Dubai%Media%City,%
Dubai,%UAE%
Registra8on%%Fees%for%2014%Course:%%%%%%%%%%
Early'Registra4on'Deadline:'Nov'1,'2014'''
Packages'star4ng'at'$3,370.'Register'by'
the'Early'Registra4on'Deadline'to'SAVE'an'
addi4onal'$880!''
Fees%of%the%course%include:%
5'Full'Training'Days'
ACFE'Training'Materials'and'Slides'
'Annual'Associate'Membership'($95.00)'
'2014'CFE'Exam'Prep'Course'($945)'
30'CPEs'Cer4ficate'from'the'ACFE'
'

CFE Exam Review Course
Dubai, UAE: Dec 14 - Dec 18, 2014 / Dubai, UAE: Feb 22 - Feb 26, 2015
CFE Exam Review Course
S chedule DAY 1
Sunday
DAY 2
Monday
DAY 3
Tuesday
DAY 4
Wednesda,
7:30-8:00 a.m. Registration and continental
breakfast
Continental breakfast Continental breakfast Continental breakfast
8:00-9:20 a.m. Introduction
• Interview Theory and
Application
Law Related to Fraud
•
Overview of the U.S. Legal
System
•
Legal Rights of Employees
Financial Transactions and
Fraud Schemes
•
Cash Receipts
•
Theft of Intellectual Property
•
Consumer Fraud
Group lunch Group Continental Continental breakfast
Group lunch Group Continental Continental breakfast
Group lunch Group lunch
Group lunch Group lunch
Fraud Prevention and Deterrence
•
Understanding Behavior
9:20-9:35 a.m. Break
9:35-10:55 a.m. Investigation Techniques
Application (cont.)
•
Criminal Prosecutions for
Fraud
•
Evidence
Financial Transactions and Fraud
Schemes
•
Inventory and Other Assets
•
Management Responsibilities
•
Auditors Responsibilities
10:55-11:10 a.m. Break
11:10 a.m.-
12:30 p.m.
Investigation Techniques
• Planning the Investigation
• Data Analysis and Reporting
Tools
• Analyzing Documents
•
Schemes
•
Computer and Internet Fraud
•
Bribery and Corruption
•
Procurement Fraud
•
Fraud Prevention Programs
•
ACFE Code of Professional
Ethics
12:30-1:30 p.m. Group lunch Group lunch Group lunch
1:30-3:00 p.m. Investigation Techniques
• Tracing Illicit Transactions
•
Civil Justice System
•
Securities Fraud
•
Money Laundering
Schemes
•
Accounting Concepts
•
Financial Statement Fraud
•
Fraud Risk Assessment
•
Fraud Risk Management
•
Sources of Information
•
Computer Forensics
•
Covert Examinations
•
Money Laundering (cont.)
•
Bankruptcy Fraud
•
Tax Fraud
Schemes
•
Fraudulent Disbursements
•
Check and Credit Card Fraud
DAY 5
Thursday
• Corporate Governance
CouCrFsEe Exam Review Course
S chedule DAY 1
Sunday
DAY 2
Monday
DAY 3
Tuesday
DAY 4
Wednesda,
breakfast
Application
•
System
•
Fraud Schemes
•
Cash Receipts
•
•
Consumer Fraud
•
•
White-Collar Crime
9:20-9:35 a.m. Break
Application (cont.)
•
Fraud
•
Evidence
Schemes
•
Fraud •
•
10:55-11:10 a.m. Break
11:10 a.m.-
12:30 p.m.
Tools
•
•
Testifying as an Expert
Schemes
•
•
•
Procurement Fraud
Fraud •
•
• Reporting Standards
•
•
Securities Fraud
•
Money Laundering
Schemes
•
Accounting Concepts
•
Fraud •
•
•
•
Computer Forensics
•
Covert Examinations
•
•
Bankruptcy Fraud
•
Tax Fraud
Schemes
•
•
DAY Thursday
Fraud • CFE S chedule DAY 1
Sunday
DAY 2
Monday
DAY 3
Tuesday
DAY 4
Wednesda,
breakfast
Application
•
System
•
Fraud Schemes
•
Cash Receipts
•
•
Consumer Fraud
•
•
White-Collar Crime
9:20-9:35 a.m. Break
Application (cont.)
•
Fraud
•
Evidence
Schemes
•
•
Financial Institution Fraud
•
Health Care Fraud
•
Management Responsibilities
•
Auditors Responsibilities
10:55-11:10 a.m. Break
11:10 a.m.-
12:30 p.m.
Tools
•
•
Schemes
•
•
•
Procurement Fraud
•
Fraud Prevention Programs
•
ACFE Code of Professional
Ethics
•
•
Securities Fraud
•
Money Laundering
Schemes
•
Accounting Concepts
•
•
Fraud Risk Assessment
•
Fraud Risk Management
•
•
Computer Forensics
•
Covert Examinations
•
•
Bankruptcy Fraud
•
Tax Fraud
Schemes
•
•
DAY 5
Thursday
• Corporate Governance
CouCrFsEe Exam Review Course
S chedule DAY 1
Sunday
DAY 2
Monday
DAY 3
Tuesday
DAY 4
Wednesda,
breakfast
Application
•
System
•
Fraud Schemes
•
Cash Receipts
•
•
Consumer Fraud
•
•
White-Collar Crime
9:20-9:35 a.m. Break
Application (cont.)
•
Fraud
•
Evidence
Schemes
•
•
Financial Institution Fraud
•
Health Care Fraud
Fraud •
•
10:55-11:10 a.m. Break
11:10 a.m.-
12:30 p.m.
Tools
•
•
Schemes
•
•
•
Procurement Fraud
Fraud •
•
•
•
Securities Fraud
•
Money Laundering
Schemes
•
Accounting Concepts
•
Fraud •
•
•
•
Computer Forensics
•
Covert Examinations
•
•
Bankruptcy Fraud
•
Tax Fraud
Schemes
•
•
DAY Thursday
Fraud • CFE

Financial Orchestra - PICPA Middle East Conference

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Financial Orchestra - PICPA Middle East Conference