Índice en Español de la versión internacional del Manual de certificación de la ACFE, hoy en día el referente profesional por excelencia en materia de compliance y fraude a nivel mundial.
6. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
FRAUD EXAMINERS MANUAL
INTERNATIONAL VERSION
TABLE OF CONTENTS
OCCUPATIONAL FRAUDS
ACCOUNTING CONCEPTS
Accounting Basics ........................................................................................................................ 1.101
Accounts and the Accounting Cycle .................................................................................. 1.102
Journal Entries ....................................................................................................................... 1.104
Accounting Methods ............................................................................................................ 1.104
Financial Statements .................................................................................................................... 1.105
Balance Sheet ......................................................................................................................... 1.106
Income Statement ................................................................................................................. 1.108
Statement of Owners’ Equity .............................................................................................. 1.110
Statement of Cash Flows ..................................................................................................... 1.112
Cash Flows from Operations ....................................................................................... 1.113
Cash Flows from Investing Activities ......................................................................... 1.114
Cash Flows from Financing Activities ........................................................................ 1.114
Users of Financial Statements ............................................................................................. 1.114
MANAGEMENT'S AND AUDITORS' RESPONSIBILITIES
Management .................................................................................................................................. 1.201
The Treadway Commission ................................................................................................. 1.201
Mandatory Independent Audit Committee ................................................................ 1.202
Written Charter ............................................................................................................... 1.202
Resources and Authority ............................................................................................... 1.202
Informed, Vigilant, and Effective Audit Committees ............................................... 1.202
The COSO Reports .............................................................................................................. 1.202
Internal Control—Integrated Framework .................................................................. 1.202
Enterprise Risk Management—Integrated Framework............................................ 1.203
COSO Guidance for Smaller Public Companies ....................................................... 1.204
Document Retention Policies .............................................................................................. 1.205
What Documents Should Be Kept? ............................................................................ 1.206
Document Storage.......................................................................................................... 1.206
Document Destruction .................................................................................................. 1.207
DRP Managers ................................................................................................................ 1.207
Fraud Prevention Programs ................................................................................................. 1.207
Corporate Governance ................................................................................................................ 1.208
The Importance of Corporate Governance ...................................................................... 1.208
The Organisation for Economic Cooperation and Development ................................. 1.208
2011 Fraud Examiners Manual (International) 1.i
7. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
MANAGEMENT'S AND AUDITORS' RESPONSIBILITIES (CONT.)
The OECD Principles of Corporate Governance..................................................... 1.209
External Auditors ......................................................................................................................... 1.220
International Standard on Auditing (ISA) 240, The Auditor’s Responsibility
to Consider Fraud in the Audit of Financial Statements ........................................................ 1.220
Purpose of the Standard ................................................................................................ 1.220
Characteristics of Fraud ................................................................................................. 1.220
Responsibility for the Prevention and Detection of Fraud ...................................... 1.223
Responsibilities of the Auditor ..................................................................................... 1.223
Objectives ........................................................................................................................ 1.224
Definitions ....................................................................................................................... 1.224
Professional Scepticism ................................................................................................. 1.225
Discussion Among the Engagement Team ................................................................ 1.225
Risk Assessment Procedures and Related Activities ................................................. 1.225
Identification and Assessment of the Risks of Material Misstatement
Due to Fraud ............................................................................................................... 1.228
Responses to the Assessed Risks of Material Misstatement Due to Fraud ........... 1.229
Evaluation of Audit Evidence ...................................................................................... 1.230
Auditor Unable to Continue the Engagement ........................................................... 1.231
Management Representations ....................................................................................... 1.232
Communications to Management and with Those Charged with Governance .... 1.232
Communications to Regulatory and Enforcement Authorities ............................... 1.233
Documentation ............................................................................................................... 1.233
Appendix ......................................................................................................................... 1.234
International Principles for Auditor Oversight ................................................................ 1.236
The International Organisation of Securities Commissions’ Principles
for Auditor Oversight ............................................................................................... 1.237
The Public Interest Oversight Board ......................................................................... 1.244
International Standards for Government Auditing .......................................................... 1.245
The International Organisation of Supreme Audit Institutions ............................. 1.245
Professional Framework ................................................................................................ 1.245
Internal Auditors .......................................................................................................................... 1.254
Standard 1210—Proficiency ................................................................................................ 1.254
1210.A2 ............................................................................................................................ 1.254
Standard 1220—Due Professional Care ............................................................................ 1.254
1220.A1 ............................................................................................................................ 1.255
1220.A3 ............................................................................................................................ 1.255
Standard 2110—Governance .............................................................................................. 1.255
2110.A1 ............................................................................................................................ 1.255
Standard 2120—Risk Management .................................................................................... 1.256
2120.A1 ............................................................................................................................ 1.256
2120.A2 ............................................................................................................................ 1.256
Standard 2130—Control ...................................................................................................... 1.256
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8. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
MANAGEMENT'S AND AUDITORS' RESPONSIBILITIES (CONT.)
2130.A1 ............................................................................................................................ 1.256
Standard 2210—Engagement Objectives .......................................................................... 1.256
2110.A1 ............................................................................................................................ 1.256
2110.A2 ............................................................................................................................ 1.257
IIA's IPPF—Practice Guide: Internal Auditing and Fraud ..................................................... 1.257
Internal Audit's Role in Fighting Fraud ...................................................................... 1.257
Other Roles and Responsibilities for Fraud Prevention and Detection................. 1.258
Certified Fraud Examiners.......................................................................................................... 1.259
Help Resolve Allegations of Fraud ..................................................................................... 1.259
Obtain Evidence .................................................................................................................... 1.259
Take Statements..................................................................................................................... 1.260
Write Reports ......................................................................................................................... 1.260
Testify to Findings ................................................................................................................ 1.260
Assist in the Detection and Prevention of Fraud ............................................................. 1.260
FINANCIAL STATEMENT FRAUD
What Is Financial Statement Fraud? ......................................................................................... 1.303
Why Financial Statement Fraud Is Committed ....................................................................... 1.303
Trends in Financial Statement Fraud ........................................................................................ 1.305
Financial Statement Fraud Schemes .......................................................................................... 1.305
Fictitious Revenues ............................................................................................................... 1.306
Sales with Conditions ..................................................................................................... 1.307
What Red Flags Are Associated with Fictitious Revenues? ..................................... 1.307
Timing Differences (Including Premature Revenue Recognition) ................................ 1.308
Premature Revenue Recognition .................................................................................. 1.308
Long-Term Contracts .................................................................................................... 1.310
Channel Stuffing ............................................................................................................. 1.310
Recording Expenses in the Wrong Period ................................................................. 1.311
What Red Flags Are Associated with Timing Differences (Including
Premature Revenue Recognition)? ........................................................................... 1.311
Improper Asset Valuation .................................................................................................... 1.312
Inventory Valuation ....................................................................................................... 1.312
Accounts Receivable ...................................................................................................... 1.313
Business Combinations.................................................................................................. 1.314
Fixed Assets..................................................................................................................... 1.314
Understating Assets........................................................................................................ 1.316
Misclassifying Assets ...................................................................................................... 1.316
What Red Flags Are Associated with Improper Asset Valuation?.......................... 1.316
Concealed Liabilities and Expenses .................................................................................... 1.316
Liability/Expense Omissions ....................................................................................... 1.317
Capitalised Expenses ...................................................................................................... 1.319
2011 Fraud Examiners Manual (International) 1.iii
9. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
FINANCIAL STATEMENT FRAUD (CONT.)
What Red Flags Are Associated with Concealed Liabilities and Expenses?.......... 1.320
Improper Disclosures ........................................................................................................... 1.321
Liability Omissions ......................................................................................................... 1.321
Subsequent Events ......................................................................................................... 1.321
Related-Party Transactions ........................................................................................... 1.322
Accounting Changes ...................................................................................................... 1.323
What Red Flags Are Associated with Improper Disclosures? ................................. 1.323
What Red Flags Are Associated with Financial Statement Fraud Generally? ..................... 1.324
Detection of Fraudulent Financial Statement Schemes ......................................................... 1.325
Financial Statement Analysis ...................................................................................................... 1.327
Percentage Analysis—Horizontal and Vertical ................................................................. 1.328
Vertical Analysis Discussion ......................................................................................... 1.329
Horizontal Analysis Discussion.................................................................................... 1.330
Ratio Analysis......................................................................................................................... 1.330
Common Financial Ratios ............................................................................................. 1.331
Tax Return Review ................................................................................................................ 1.334
Interviews in Fraudulent Financial Statement Cases .............................................................. 1.334
Interviewing Techniques ...................................................................................................... 1.335
The Interview .................................................................................................................. 1.337
Prevention of Financial Statement Fraud ................................................................................. 1.343
Internal Auditors ................................................................................................................... 1.343
Management ........................................................................................................................... 1.343
Reduce the Situational Pressures that Encourage Financial Statement Fraud ...... 1.343
Reduce the Opportunity to Commit Fraud ................................................................ 1.344
Reduce the Rationalisation of Fraud—Strengthen Employee
Personal Integrity ........................................................................................................ 1.344
ASSET MISAPPROPRIATION: CASH RECEIPTS
Skimming ....................................................................................................................................... 1.401
Sales Skimming ...................................................................................................................... 1.402
Register Manipulation .................................................................................................... 1.404
Skimming During Nonbusiness Hours ....................................................................... 1.405
Skimming of Off-Site Sales ........................................................................................... 1.405
Poor Collection Procedures .......................................................................................... 1.406
Understated Sales ........................................................................................................... 1.407
Theft of Cheques Received Through the Mail........................................................... 1.409
Cheque for Currency Substitutions .................................................................................... 1.411
Skimming Receivables .......................................................................................................... 1.412
Forcing Account Balances or Destroying Transaction Records ............................. 1.412
Lapping ............................................................................................................................ 1.413
Stolen Statements ........................................................................................................... 1.414
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10. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
ASSET MISAPPROPRIATION: CASH RECEIPTS (CONT.)
False Account Entries .................................................................................................... 1.415
Inventory Padding ................................................................................................................. 1.416
Detection of Skimming Schemes ........................................................................................ 1.417
Receipt or Sales Level Detection.................................................................................. 1.417
Journal Entry Review ..................................................................................................... 1.417
Detecting Lapping of Sales or Receivables ................................................................. 1.417
Prevention of Skimming Schemes ...................................................................................... 1.418
Receipt or Sales Level Control ..................................................................................... 1.418
General Controls ............................................................................................................ 1.418
Skimming Controls......................................................................................................... 1.418
Cash Larceny................................................................................................................................. 1.419
Incoming Cash ....................................................................................................................... 1.420
Theft of Cash from the Register .................................................................................. 1.420
Other Larceny of Sales and Receivables ..................................................................... 1.423
Cash Larceny from the Deposit .......................................................................................... 1.424
Deposit Lapping ............................................................................................................. 1.428
Deposits in Transit ......................................................................................................... 1.428
Detection of Cash Larceny .................................................................................................. 1.428
Receipt Recording .......................................................................................................... 1.428
Control Objectives ......................................................................................................... 1.429
Analytical Review ........................................................................................................... 1.429
Detection at the Register ............................................................................................... 1.430
Cash Account Analysis .................................................................................................. 1.430
Prevention of Cash Larceny ................................................................................................ 1.430
Segregation of Duties ..................................................................................................... 1.430
Assignment Rotation and Mandatory Vacations ....................................................... 1.431
Surprise Cash Counts and Procedure Supervision .................................................... 1.431
Physical Security of Cash ............................................................................................... 1.431
ASSET MISAPPROPRIATION: FRAUDULENT DISBURSEMENTS
Register Disbursement Schemes ................................................................................................ 1.501
False Refunds ......................................................................................................................... 1.501
Fictitious Refunds........................................................................................................... 1.503
Overstated Refunds........................................................................................................ 1.503
Credit Card Refunds ...................................................................................................... 1.503
False Voids ............................................................................................................................. 1.504
Concealing Register Disbursement Schemes .................................................................... 1.507
Small Disbursements...................................................................................................... 1.508
Destroying Records ........................................................................................................ 1.508
Detection of Register Disbursement Schemes ................................................................. 1.508
Fictitious Refunds or Voided Sales .............................................................................. 1.508
2011 Fraud Examiners Manual (International) 1.v
11. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
ASSET MISAPPROPRIATION: FRAUDULENT DISBURSEMENTS (CONT.)
Review and Analysis of Decreases in Gross Sales and/or Increases in
Returns and Allowances ............................................................................................. 1.509
Register Disbursement Scheme Red Flags ................................................................. 1.509
Prevention of Register Disbursement Schemes................................................................ 1.510
Cheque Tampering Schemes ...................................................................................................... 1.510
Forged Maker Schemes ........................................................................................................ 1.511
Obtaining the Cheque .................................................................................................... 1.511
To Whom Is the Cheque Made Payable?.................................................................... 1.512
Forging the Signature ..................................................................................................... 1.514
Converting the Cheque .................................................................................................. 1.516
Forged Endorsement Schemes ........................................................................................... 1.516
Intercepting Cheques Before Delivery ........................................................................ 1.516
Theft of Returned Cheques .......................................................................................... 1.518
Re-Routing the Delivery of Cheques ........................................................................... 1.519
Converting the Stolen Cheque...................................................................................... 1.519
Altered Payee Schemes ......................................................................................................... 1.520
Altering Cheques Prepared by Others: Inserting a New Payee ............................... 1.520
Altering Cheques Prepared by Others: “Tacking On” ............................................. 1.522
Altering Cheques Prepared by the Fraudster: Erasable Ink ..................................... 1.522
Altering Cheques Prepared by the Fraudster: Blank Cheques ................................. 1.523
Converting Altered Cheques......................................................................................... 1.523
Authorised Maker Schemes ................................................................................................. 1.523
Overriding Controls Through Intimidation ............................................................... 1.524
Poor Controls.................................................................................................................. 1.526
Concealing Cheque Tampering Schemes........................................................................... 1.526
The Fraudster Reconciling the Bank Statement ........................................................ 1.527
Re-Alteration of Cheques .............................................................................................. 1.528
Miscoding Fraudulent Cheques .................................................................................... 1.528
Re-Issuing Intercepted Cheques .................................................................................. 1.529
Bogus Supporting Documents ..................................................................................... 1.530
Detection of Cheque Tampering Schemes ........................................................................ 1.530
Account Analysis Through Cut-Off Statements ....................................................... 1.530
Bank Reconciliations ...................................................................................................... 1.530
Bank Confirmation ......................................................................................................... 1.531
Cheque-Tampering Red Flags ...................................................................................... 1.531
Prevention of Cheque Tampering Schemes ...................................................................... 1.532
Cheque Disbursement Controls ................................................................................... 1.532
Bank-Assisted Controls ................................................................................................. 1.533
Physical Tampering Prevention .................................................................................... 1.533
Cheque Theft Control Procedures ............................................................................... 1.534
Billing Schemes ............................................................................................................................. 1.534
Invoicing Via Shell Companies ........................................................................................... 1.535
1.vi 2011 Fraud Examiners Manual (International)
12. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
ASSET MISAPPROPRIATION: FRAUDULENT DISBURSEMENTS (CONT.)
Forming a Shell Company ............................................................................................. 1.535
Submitting False Invoices ............................................................................................. 1.537
Self-Approval of Fraudulent Invoices ......................................................................... 1.538
“Rubber Stamp” Supervisors ........................................................................................ 1.538
Reliance on False Documents ...................................................................................... 1.539
Collusion .......................................................................................................................... 1.539
Purchases of Services Rather than Goods .................................................................. 1.539
Pass-Through Schemes .................................................................................................. 1.540
Invoicing Via Nonaccomplice Vendors ............................................................................. 1.540
Pay-and-Return Schemes............................................................................................... 1.540
Overbilling with a Nonaccomplice Vendor’s Invoices ............................................. 1.542
Personal Purchases With Company Funds........................................................................ 1.542
Personal Purchases Through False Invoicing ............................................................ 1.542
Personal Purchases on Credit Cards or Other Company Accounts ....................... 1.545
Detection ................................................................................................................................ 1.549
Analytical Review ........................................................................................................... 1.549
Computer-Assisted Analytical Review ........................................................................ 1.549
Statistical Sampling ......................................................................................................... 1.550
Vendor or Outsider Complaints .................................................................................. 1.550
Site Visits—Observation ............................................................................................... 1.550
Sample Audit Program .................................................................................................. 1.550
Prevention of Billing Schemes ............................................................................................ 1.552
Education (Training) ...................................................................................................... 1.553
Compensation ................................................................................................................. 1.553
Proper Documentation .................................................................................................. 1.553
Proper Approvals ........................................................................................................... 1.553
Segregation of Duties ..................................................................................................... 1.553
Hotlines ............................................................................................................................ 1.553
Competitive Bidding ...................................................................................................... 1.553
Prevention Checklist ...................................................................................................... 1.554
Payroll Fraud Schemes ................................................................................................................ 1.554
Ghost Employees .................................................................................................................. 1.555
Adding the Ghost to the Payroll .................................................................................. 1.555
Collecting Timekeeping Information .......................................................................... 1.558
Issuing the Ghost’s Paycheque ..................................................................................... 1.559
Delivery of the Paycheque ............................................................................................ 1.559
Falsified Hours and Salary ................................................................................................... 1.560
Manually Prepared Timecards ...................................................................................... 1.561
Time Clocks and Other Automated Timekeeping Systems ..................................... 1.565
Rates of Pay ..................................................................................................................... 1.565
Commission Schemes ........................................................................................................... 1.565
Fictitious Sales................................................................................................................. 1.565
2011 Fraud Examiners Manual (International) 1.vii
13. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
ASSET MISAPPROPRIATION: FRAUDULENT DISBURSEMENTS (CONT.)
Altered Sales .................................................................................................................... 1.567
Altering Commission Rates .......................................................................................... 1.568
Detection of Payroll Schemes ............................................................................................. 1.568
Independent Payroll Distribution ................................................................................ 1.568
Analysis of Payee Address or Accounts ...................................................................... 1.568
Duplicate Identification Numbers ............................................................................... 1.568
Overtime Authorisation ................................................................................................ 1.568
Commissions ................................................................................................................... 1.568
Analysis of Deductions from Payroll Cheques .......................................................... 1.569
Other Detection Methods ............................................................................................. 1.569
Prevention of Payroll Schemes............................................................................................ 1.569
Segregation of Duties ..................................................................................................... 1.570
Periodic Review and Analysis of Payroll ..................................................................... 1.570
Indicators of Payroll Fraud ........................................................................................... 1.571
Expense Reimbursement Schemes ............................................................................................ 1.572
Mischaracterised Expense Reimbursements ..................................................................... 1.573
Overstated Expense Reimbursements ............................................................................... 1.576
Altered Receipts .............................................................................................................. 1.576
Overpurchasing............................................................................................................... 1.578
Overstating Another Employee’s Expenses ............................................................... 1.578
Orders to Overstate Expenses ..................................................................................... 1.578
Fictitious Expense Reimbursements .................................................................................. 1.579
Producing Fictitious Receipts ....................................................................................... 1.579
Obtaining Blank Receipts from Vendors.................................................................... 1.579
Claiming the Expenses of Others ................................................................................ 1.581
Multiple Reimbursements .................................................................................................... 1.581
Detection of Expense Reimbursement Schemes ............................................................. 1.582
Review and Analysis of Expense Accounts ................................................................ 1.582
Detailed Review of Expense Reports .......................................................................... 1.582
Prevention of Expense Reimbursement Schemes............................................................ 1.582
Detailed Expense Reports: Submission and Review ................................................. 1.582
ASSET MISAPPROPRIATION: INVENTORY AND OTHER ASSETS
Misuse of Inventory and Other Assets ..................................................................................... 1.601
The Costs of Inventory Misuse ........................................................................................... 1.601
Theft of Inventory and Other Assets........................................................................................ 1.602
Larceny Schemes ................................................................................................................... 1.602
The False Sale.................................................................................................................. 1.605
Asset Requisitions and Transfers ........................................................................................ 1.605
Purchasing and Receiving Schemes .................................................................................... 1.606
Falsifying Incoming Shipments .................................................................................... 1.607
1.viii 2011 Fraud Examiners Manual (International)
14. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
ASSET MISAPPROPRIATION: INVENTORY AND OTHER ASSETS (CONT.)
False Shipments of Inventory and Other Assets .............................................................. 1.607
Concealing Inventory Shrinkage ......................................................................................... 1.609
Altered Inventory Records ............................................................................................ 1.612
Fictitious Sales and Accounts Receivable ................................................................... 1.612
Write-Off of Inventory and Other Assets .................................................................. 1.613
Physical Padding ............................................................................................................. 1.613
Detection of Inventory Schemes ........................................................................................ 1.613
Statistical Sampling ......................................................................................................... 1.613
Perpetual Inventory Records ........................................................................................ 1.613
Shipping Documents ..................................................................................................... 1.614
Physical Inventory Counts ............................................................................................ 1.614
Analytical Review ........................................................................................................... 1.614
Computer-Generated Trend Analysis ......................................................................... 1.615
Detailed Audit Program ................................................................................................ 1.616
Prevention of Inventory Schemes ...................................................................................... 1.617
Proper Documentation .................................................................................................. 1.617
Segregation of Duties ..................................................................................................... 1.618
Independent Checks ...................................................................................................... 1.618
Physical Safeguards ........................................................................................................ 1.618
BRIBERY AND CORRUPTION
Bribery ........................................................................................................................................... 1.701
Kickback Schemes................................................................................................................. 1.702
Diverting Business to Vendors..................................................................................... 1.704
Overbilling Schemes ...................................................................................................... 1.704
Other Kickback Schemes .............................................................................................. 1.706
Kickback Payments ........................................................................................................ 1.706
Bid-Rigging Schemes ............................................................................................................ 1.707
The Presolicitation Phase .............................................................................................. 1.707
The Solicitation Phase.................................................................................................... 1.711
The Submission Phase ................................................................................................... 1.712
Economic Extortion ............................................................................................................. 1.713
Illegal Gratuities..................................................................................................................... 1.713
Methods of Making Illegal Payments ................................................................................. 1.714
Gifts, Travel, and Entertainment ................................................................................. 1.714
Cash Payments ................................................................................................................ 1.714
Checks and Other Financial Instruments ................................................................... 1.715
Hidden Interests ............................................................................................................. 1.715
Loans ................................................................................................................................ 1.715
Payment of Credit Card Bills ........................................................................................ 1.715
Transfers at Other than Fair Market Value ................................................................ 1.715
2011 Fraud Examiners Manual (International) 1.ix
15. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
BRIBERY AND CORRUPTION (CONT.)
Promises of Favourable Treatment ............................................................................. 1.715
Detection of Bribery Schemes ................................................................................................... 1.716
Red Flags of Bribery Schemes ............................................................................................. 1.716
The Corrupt Recipient ................................................................................................... 1.716
The Corrupt Payer .......................................................................................................... 1.717
General Purchasing ........................................................................................................ 1.717
Presolicitation .................................................................................................................. 1.717
Bid Solicitation ................................................................................................................ 1.718
Bid Submission or Contract Acceptance .................................................................... 1.719
Methods of Proving Corrupt Payments ............................................................................. 1.720
The Business Profile—Analysis ................................................................................... 1.720
Sources of Information for the Business Profile ....................................................... 1.722
Proving On-Book Payments................................................................................................ 1.722
Fictitious Disbursement Schemes ................................................................................ 1.722
Ghost Employee Schemes ............................................................................................ 1.726
Overbilling Schemes ...................................................................................................... 1.726
Proving Off-Book Payments ............................................................................................... 1.727
Indirect Evidence of Unrecorded Sales on the Suspect Company’s
Books and Records ..................................................................................................... 1.727
Unbalanced Ratios of Costs to Sales ........................................................................... 1.727
Investigation in the Marketplace .................................................................................. 1.728
Proving Payments in Cash ............................................................................................ 1.728
Conflicts of Interest ..................................................................................................................... 1.730
Purchase Schemes ................................................................................................................. 1.732
Unique Assets ................................................................................................................. 1.734
Turnaround Sales ............................................................................................................ 1.735
Sales Schemes......................................................................................................................... 1.735
Underbillings ................................................................................................................... 1.735
Writing Off Sales ............................................................................................................ 1.736
Other Schemes....................................................................................................................... 1.736
Business Diversions ....................................................................................................... 1.736
Resource Diversions ...................................................................................................... 1.736
Financial Interest in Companies Under Perpetrator’s Supervision ......................... 1.737
Financial Disclosure ....................................................................................................... 1.737
Appearance of Conflict of Interest .............................................................................. 1.737
Detection of Conflicts of Interest ...................................................................................... 1.738
Tips and Complaints ...................................................................................................... 1.738
Comparison of Vendor Addresses with Employee Addresses ................................ 1.738
Review of Vendor Ownership Files ............................................................................ 1.738
Review of Exit Interviews and Comparisons of Vendor Addresses to
Addresses of Subsequent Employers ....................................................................... 1.738
1.x 2011 Fraud Examiners Manual (International)
16. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
BRIBERY AND CORRUPTION (CONT.)
Interviews of Purchasing Personnel for Favourable Treatment of One or
More Vendors .............................................................................................................. 1.739
Policies Requiring Certain Employees to Provide the Names and
Employers of Immediate Family Members............................................................. 1.739
Prevention of Conflicts of Interest ..................................................................................... 1.739
THEFT OF INTELLECTUAL PROPERTY
Competitive Intelligence (CI) Versus Espionage .................................................................... 1.802
Open Sources of Information .................................................................................................... 1.803
Why Do Companies Resort to Corporate Espionage? .................................................... 1.804
The Bootstrap Effect ............................................................................................................ 1.806
The Intelligence Pyramid ............................................................................................................ 1.807
Fundamental Intelligence Techniques................................................................................ 1.807
Basic Sources.......................................................................................................................... 1.807
Industry Analyst Reports ............................................................................................... 1.808
Electronic Sources .......................................................................................................... 1.808
Creative Sources .................................................................................................................... 1.809
Classified Ads .................................................................................................................. 1.809
Environmental Impact Statements .............................................................................. 1.810
Proxies .............................................................................................................................. 1.810
Posing as a Customer ..................................................................................................... 1.810
Building Financial Statements .................................................................................................... 1.811
How Income Statements Are Calculated ........................................................................... 1.812
Revenue Estimates ......................................................................................................... 1.812
Costs of Goods Sold ...................................................................................................... 1.812
Overhead ......................................................................................................................... 1.813
How Balance Sheets Are Calculated................................................................................... 1.813
Nontraditional Sources................................................................................................................ 1.814
A Corporate Spy Uses Open Sources: What of It? ................................................................. 1.815
Favourite Targets ......................................................................................................................... 1.816
Research and Development ................................................................................................. 1.816
Marketing ................................................................................................................................ 1.817
Manufacturing and Production ........................................................................................... 1.817
Human Resources ................................................................................................................. 1.817
How Information Is Lost ........................................................................................................... 1.817
Accident .................................................................................................................................. 1.818
Poor Information Security Procedures .............................................................................. 1.818
On-site Materials That Are Targeted ........................................................................... 1.818
Guarding Manual Systems............................................................................................. 1.820
Guarding Information Stored in Electronic Format................................................. 1.821
Basic Principles of Spying ........................................................................................................... 1.823
2011 Fraud Examiners Manual (International) 1.xi
17. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
THEFT OF INTELLECTUAL PROPERTY (CONT.)
Recruited Spies ...................................................................................................................... 1.823
False Flag Recruitment .................................................................................................. 1.823
Recruiting by Justification ............................................................................................. 1.824
Trapping Recruits ........................................................................................................... 1.824
Counter-Recruitment Training ............................................................................................ 1.824
After Recruitment ................................................................................................................. 1.825
Targeted Information .................................................................................................... 1.825
Methods for Safely Collecting Data ............................................................................. 1.826
Communications Between the Employee and the Control...................................... 1.826
Security Measures for the Recruit ................................................................................ 1.827
Planting Bugs .................................................................................................................. 1.827
Deception Techniques .......................................................................................................... 1.827
Employment Advertisements ....................................................................................... 1.828
Headhunter Scams.......................................................................................................... 1.828
Market Research Scams ................................................................................................. 1.828
Phoney Contract Bids .................................................................................................... 1.828
Infiltration Techniques ................................................................................................................ 1.829
Posing as an Employee or Contract Labourer .................................................................. 1.829
Stealing Badges ...................................................................................................................... 1.830
Moles and Sleepers ................................................................................................................ 1.831
Places Where Spies Snoop ................................................................................................... 1.831
Mailroom ......................................................................................................................... 1.832
Loading Docks ................................................................................................................ 1.832
Storage Areas................................................................................................................... 1.832
Hotels ............................................................................................................................... 1.833
Warning Signs of Infiltrations ............................................................................................. 1.834
Countermeasures ................................................................................................................... 1.836
Transactional Intelligence ........................................................................................................... 1.837
Informants .............................................................................................................................. 1.837
Decoy Websites ..................................................................................................................... 1.838
Telling Good Lies ........................................................................................................................ 1.839
Visual Surveillance Against People ............................................................................................ 1.840
Pre-Recruitment Surveillance .............................................................................................. 1.840
Briefing Files on the Subject ................................................................................................ 1.841
Moving Surveillance .............................................................................................................. 1.841
Fixed Surveillance.................................................................................................................. 1.842
E-Mail ............................................................................................................................................ 1.842
Social Engineering........................................................................................................................ 1.843
The Neophyte ........................................................................................................................ 1.843
The Power Broker ................................................................................................................. 1.843
The Systems Administrator ................................................................................................. 1.844
Fraudulent Surveys ................................................................................................................ 1.844
1.xii 2011 Fraud Examiners Manual (International)
18. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
THEFT OF INTELLECTUAL PROPERTY (CONT.)
Fake Prizes ............................................................................................................................. 1.844
Reverse Social Engineering .................................................................................................. 1.844
Countering Social Engineering ............................................................................................ 1.845
Cloaking and Misdirection .......................................................................................................... 1.846
Intelligence Needs ................................................................................................................. 1.846
Print Media ...................................................................................................................... 1.846
Database Searches .......................................................................................................... 1.847
Existing Staffing ............................................................................................................. 1.847
Security Surveys .............................................................................................................. 1.848
Cloaking Operations ............................................................................................................. 1.849
Trash and Waste Disposal ............................................................................................. 1.850
Deliveries and Shipments .............................................................................................. 1.850
Hours of Operation and Power Consumption .......................................................... 1.850
Emissions......................................................................................................................... 1.850
Food Deliveries............................................................................................................... 1.851
Computer Emanations .................................................................................................. 1.851
Travel Plans ..................................................................................................................... 1.851
Misdirection ........................................................................................................................... 1.852
Spotting False Suitors .................................................................................................... 1.852
Vendors and Suppliers ................................................................................................... 1.854
Technical Articles and Publications ............................................................................. 1.854
Consultants ...................................................................................................................... 1.854
Dealing with Employees Who Are Leaving ............................................................... 1.855
Hackers ............................................................................................................................ 1.855
Technical Surveillance ................................................................................................................. 1.856
Aerial Photography ............................................................................................................... 1.858
Bugging and Wiretapping ..................................................................................................... 1.858
The Insertion Point ........................................................................................................ 1.858
The Technology .............................................................................................................. 1.859
Warning Signs of Bugging ............................................................................................. 1.861
Preliminary Search Procedures ..................................................................................... 1.864
Video Surveillance ................................................................................................................. 1.867
Photographic Cameras.......................................................................................................... 1.868
Minicameras .................................................................................................................... 1.868
Digital Cameras ............................................................................................................... 1.868
Infrared Film ................................................................................................................... 1.869
Digital Cameras ............................................................................................................... 1.869
Cellular Telephones............................................................................................................... 1.870
Monitoring Computer Emanations .................................................................................... 1.870
Tape Recorders ...................................................................................................................... 1.871
Computer System Penetrations ........................................................................................... 1.871
Investigating an Information Theft Case ................................................................................. 1.871
2011 Fraud Examiners Manual (International) 1.xiii
19. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
THEFT OF INTELLECTUAL PROPERTY (CONT.)
Program for Safeguarding Proprietary Information (SPI) ..................................................... 1.873
Task Force .............................................................................................................................. 1.873
Employee Awareness ............................................................................................................ 1.874
Nondisclosure Agreements .................................................................................................. 1.874
Document Classification ...................................................................................................... 1.875
Visitors .................................................................................................................................... 1.875
Offices..................................................................................................................................... 1.875
Maintenance Workers ........................................................................................................... 1.876
Meeting Rooms...................................................................................................................... 1.876
Quiet Rooms .......................................................................................................................... 1.876
Communications Equipment .............................................................................................. 1.876
Electronic Mail and Voice Mail ........................................................................................... 1.876
Computer Systems ................................................................................................................ 1.877
Faxing Documents ................................................................................................................ 1.878
Video Encryption .................................................................................................................. 1.878
Corporate Telephone Exchanges........................................................................................ 1.878
Trade Shows and Public Events ......................................................................................... 1.879
Foreign Travel........................................................................................................................ 1.879
Technical Surveillance Countermeasures (TSCM) Survey ..................................................... 1.879
Preventing Employee Theft of Proprietary Information ....................................................... 1.881
Employee Awareness ............................................................................................................ 1.881
Nondisclosure and Noncompetition Agreements............................................................ 1.882
Make Sure Employees Know When Not to Speak .......................................................... 1.883
Exit Interviews....................................................................................................................... 1.883
Protecting the Trade Secrets of Others .................................................................................... 1.884
FINANCIAL INSTITUTION FRAUD
Embezzlement Schemes ............................................................................................................. 1.901
Types of Embezzlement Schemes ...................................................................................... 1.901
False Accounting Entries .............................................................................................. 1.901
Unauthorised Withdrawals ............................................................................................ 1.901
Unauthorised Disbursement of Funds to Outsiders ................................................. 1.901
Paying Personal Expenses from Bank Funds............................................................. 1.902
Theft of Physical Property ............................................................................................ 1.902
Moving Money from Customers’ Dormant or Inactive Accounts ......................... 1.902
Unauthorised, Unrecorded Cash Payments................................................................ 1.902
Theft and Other Unauthorised Use of Collateral ...................................................... 1.902
Detection Methods ............................................................................................................... 1.902
Loan Fraud .................................................................................................................................... 1.903
Financial Institution Failures as a Result of Real Estate Loan Fraud ............................ 1.903
Common Loan Fraud Schemes .......................................................................................... 1.903
1.xiv 2011 Fraud Examiners Manual (International)
20. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
FINANCIAL INSTITUTION FRAUD (CONT.)
Loans to Nonexistent Borrowers ................................................................................. 1.903
Sham Loans with Kickbacks and Diversion ............................................................... 1.903
Double-Pledging Collateral ........................................................................................... 1.904
Reciprocal Loan Arrangements .................................................................................... 1.904
Swapping Bad Loans—Daisy Chains .......................................................................... 1.904
Linked Financing ............................................................................................................ 1.904
False Applications with False Credit Information ..................................................... 1.904
Single-Family Housing Loan Fraud ............................................................................. 1.904
Construction Loans ........................................................................................................ 1.904
Red Flags of Loan Fraud...................................................................................................... 1.908
Nonperforming Loans ................................................................................................... 1.908
High Turnover in Developer’s Personnel ................................................................... 1.909
High Turnover in Tenant Mix ...................................................................................... 1.909
Increased Change Orders .............................................................................................. 1.909
Missing Documentation ................................................................................................ 1.909
Loan Increases or Extensions, Replacement Loans .................................................. 1.911
Funds Transformation ................................................................................................... 1.912
Cash Flow Deficiencies ................................................................................................. 1.912
Change in Ownership Makeup ..................................................................................... 1.912
Disguised Transactions......................................................................................................... 1.912
Real Estate Fraud ......................................................................................................................... 1.913
Appraisal Fraud ..................................................................................................................... 1.914
The Role of the Appraiser............................................................................................. 1.914
Fundamentals of Real Estate Appraisals ..................................................................... 1.914
Determining “Value” ..................................................................................................... 1.914
Valuation Methods ......................................................................................................... 1.915
Fraudulent Appraisals .................................................................................................... 1.916
Uses for Fraudulent Appraisals .................................................................................... 1.916
Red Flags of “Made-as-Instructed” Appraisals .......................................................... 1.917
Detecting Fraudulent Appraisals .................................................................................. 1.917
Equity Skimming ................................................................................................................... 1.918
Property Flipping .................................................................................................................. 1.918
Nominee or Strawman Loans.............................................................................................. 1.919
Mortgage Pulling ................................................................................................................... 1.919
New Account Fraud Schemes .................................................................................................... 1.919
False Identification ................................................................................................................ 1.919
Business Accounts Using Stolen Cheques ......................................................................... 1.919
Personal Accounts Using Fraudulent Cheques................................................................. 1.920
Prevention .............................................................................................................................. 1.920
Personal Accounts .......................................................................................................... 1.920
Business Accounts .......................................................................................................... 1.921
Detection ................................................................................................................................ 1.922
2011 Fraud Examiners Manual (International) 1.xv
21. FINANCIAL TRANSACTIONS AND FRAUD SCHEMES
FINANCIAL INSTITUTION FRAUD (CONT.)
Money Transfer (Wire) Fraud Schemes .................................................................................... 1.922
Instantaneous Transfer ......................................................................................................... 1.922
Common Schemes ................................................................................................................ 1.923
Dishonest Bank Employees .......................................................................................... 1.923
Misrepresentation of Identity ....................................................................................... 1.923
System Password Security Compromised ................................................................... 1.923
Forged Authorisations ................................................................................................... 1.923
Unauthorised Entry and Interception ......................................................................... 1.923
Preventing and Detecting Wire Transfer Fraud ............................................................... 1.923
Business Audits and Other Controls ........................................................................... 1.923
Bank Audits ..................................................................................................................... 1.924
Automated Teller Machine (ATM) Fraud ................................................................................ 1.925
Detection ................................................................................................................................ 1.926
Advanced Fee Fraud .................................................................................................................... 1.926
Red Flags ................................................................................................................................ 1.926
Brokered Loans ..................................................................................................................... 1.927
Letter-of-Credit Fraud ................................................................................................................. 1.927
Inside/Outside Frauds ................................................................................................................ 1.927
Account Information Frauds............................................................................................... 1.928
Trading Activities .................................................................................................................. 1.928
Prevention ..................................................................................................................................... 1.928
Loan Origination, Underwriting, Closing, Disbursement, and
Servicing Segregation......................................................................................................... 1.928
Committee Approval of All Large or Unusual Transactions.......................................... 1.928
Transfer Journal Entries and Orders Review .................................................................... 1.929
Independent Review of Loans ............................................................................................ 1.929
Management Review of Write-Offs ................................................................................... 1.929
Routine Examination of Officers’ Accounts .................................................................... 1.929
Proper Lending Policies ....................................................................................................... 1.929
Document Requirements for Standard Transactions ...................................................... 1.929
Information Verification (For Example, Loan Applications)......................................... 1.930
Employee Training ................................................................................................................ 1.930
Standardised Procedures ...................................................................................................... 1.930
The Basel Committee on Banking Supervision ....................................................................... 1.931
The Basel Core Principles for Effective Banking Supervision ....................................... 1.932
The International Convergence of Capital Measurement and Capital Standards ........ 1.938
Capital Requirements ............................................................................................................ 1.938
The Basel II Framework ...................................................................................................... 1.939
Sound Practices for the Management and Supervision of Operational Risk ............... 1.941
Background ..................................................................................................................... 1.942
Industry Trends and Practices ...................................................................................... 1.943
Sound Practices ............................................................................................................... 1.944
1.xvi 2011 Fraud Examiners Manual (International)