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2007
Skimming: The Achilles’ Heel of the Audit?
JUNE
2007 - When it
comes to skimming used in fraud schemes, it’s important to remember
the “Three R’s”: revenues, receivables, and refunds. According to
data assembled by the Association of Certified Fraud Examiners (ACFE)
in its 2006 Report to the Nation on Occupational Fraud and
Abuse, revenues is by far the most popular target for
skimming. (The report may be downloaded free of charge from
www.acfe.com.) The total losses and the number of incidents exceed
the other two combined. It is not hard to understand why, because
skimming receivables and refunds invariably requires a fraudster to
manipulate the books and records. But that is not necessarily the
case with revenues. Skimming revenue before it enters the
accounting system can be the Achilles’ heel of the audit. After
all, what is examined is normally only in the books and records.
This article describes the various methods employees and owners use
to skim money and what the forensic accountant can do to better
detect and prevent such schemes. (Read
more...)
VAT Fraud and Evasion: What Do We Know, and What Can be Done?
February 2007: Like any tax, the VAT is
vulnerable to evasion and fraud. But its credit and refund mechanism does
offer unique opportunities for abuse, and this has recently become an urgent
concern in the European Union (EU). This paper describes the main forms of
noncompliance distinctive to a VAT, considers how they can be addressed, and
assesses evidence on their extent in high-income countries. While the
practical significance of current difficulties in the EU should not be
over-stated, administrative measures alone may prove insufficient to deal
with them, and a fundamental redesign of the VAT treatment of
intra-community trade required. The current difficulties in the EU largely
reflect circumstances that would not apply in the United States. (Read
more...)
Value for money?
Fraud in the property market
FEBRUARY 2007: This paper considers the
predominant forms of fraud encountered in the property/lending industry, and
the avenues for recovery available to the victims of fraud once it has been
perpetrated. (Read
more...)
Vendor Fraud: Reducing the Risks
FEBRUARY 2007: It seems you can’t open the
newspaper anymore without seeing a front page article detailing another case
where a company has been victimized by fraud. It is easy to think “somebody
should have been watching this.” Unfortunately, most occupational fraud
occurs because someone was not paying attention and the opportunity was just
too good for the fraudster to pass by.
Vendor fraud, in particular, continues to be a
leading concern in the insurance and risk management arenas. This type of
fraud is more difficult to detect and as such tends to occur over longer
periods of time thus increasing the magnitude of the fraud. Vendors are
typically defined as anyone that you or your company pays in exchange for
goods or services. (Read
more...)
Building a Case to Arrest
Bank Fraud
JANUARY 2007: From forged checks to password
theft, bank fraud is on the rise. Corporate security departments at
financial institutions need to train bank employees to recognize fraudulent
schemes. In addition, the construction of case files is essential to ensure
recoveries and convict perpetrators, says author Dan Levin. (Read
more...)
Procurement fraud
JANUARY 2007: "... the United States has been
billed for nonexistent or worthless goods, charged exorbitant prices for
goods delivered, and generally robbed in purchasing the necessities of war."
(1)
Sadly, the rhetoric has not changed since the
Civil War as procurement fraud is daily news today as it was during the
1860s. Bottom line: as in the day of Lincoln, when there is a war, there are
those who seek to be war profiteers. The purpose of this update is to
examine how the combined forces of the government's civil, criminal, and
administrative fraud fighters, along with private citizen whistleblowers,
held defense contractors accountable this past year and how the mission to
fight fraud continues to evolve. (Read
more...)
2006
Procurement fraud and misconduct – a rising trend in East Africa?
JULY 2006: The very mention of the word
‘procurement’ to anyone in the East Africa region is likely to result in
animated expression and debate. Images of ‘commissions’, rife corruption
involving onerous road contracts and tenders – particularly in the public
and government sectors – promptly come to mind, especially in light of
extensive recent press coverage on allegations of high-level corruption in
the region. (Read
more...)
 (1 MB)
Fighting VAT
Fraud: The Bulgarian Experience
JUNE 2006: This paper draws on the
experience of Bulgaria in identifying the types and modus operandi
of VAT frauds with a focus on the abuse of tax credit. It analyses
the elements of tax design permissive of such abuses and discusses
the possible solutions in the light of the international and
domestic experience and the capacity of the tax administration. It
offers a critical analysis of the Bulgarian anti-fraud device the
VAT account, as well as the various alternative policy and
administrative measures proposed or applied as barriers to abuse of
VAT credit, including those pertaining to the domain of commercial
registration, or those related to indicative “market” prices of
commercial transactions. The study concludes that the possible
solutions should be sought along the lines of optimizing risk
management and the principle of joint liability rather than through
tighter controls at entry and on the conduct of business. (Read
more...)
2005
Tender crimes
MARCH 2005: A number of South African corporations derive a substantial
amount of business and profit from participating in government
and private sector contracts. Recognising the importance of these
contracts in a modern society, and to promote fairness and
accountability in the awarding of such contracts, it has long
been accepted in South Africa and numerous other countries that
such contracts should only be awarded after all competing parties
have had the opportunity of tendering on an equal basis. But
often something called ‘corruption' sneaks in and it's later
found that one vendor was favoured over all the others. (Read
more...)
Fraud, what is it and how to spot it
John Bird of the Litigation Support Group, a special interest
group at the Institute of Chartered Accountants in England &
Wales (ICAEW), gives a quick guide to the main types of fraud and
easy ways to spot them.
Fraud is all too common, costing businesses in the UK several
hundred million pounds a year. Yet it is not often reported due
to its embarrassing nature and the resulting lack of confidence
in the business by both shareholders and consumers. (Read
more...)
Q&A: the fraud carousel
Carousel fraud is high on the government’s agenda. So,
what is it?
Carousel is a particular type of VAT fraud, often
characterised by a circular chain of transactions, where the
goods being moved around to create fictitious transactions can
end up back with the original perpetrator. Also known as missing
trader intra-community fraud, it typically involves high-value,
high-volume goods. Often, only the parties at the ends of the
chain are the actual fraudsters, using innocent intermediate
dealers and wholesalers to give an air of legitimacy. (Read
more...)
Tackling VAT Fraud
(United Kingdom)
March 2004: Fraud comes in many guises from
traders from omitting the occasional sale from their records to systematic
suppression of sales or falsification of purchase invoices. Other fraudsters
may have little or no legitimate business activity and register with Customs
for the purpose of stealing VAT. (Read
more...)
MAY 2002: In the March/April issue of The
White Paper we reviewed the main fraud categories of misrepresentation of
material facts, concealment of material facts, and bribery. In this issue we
conclude with conflicts of interest, theft of money or property, theft of
trade secrets or intellectual property, and breach of fiduciary duty. (Read
more...)
The faces of fraud
APRIL 2002: Fraud doesn't always wear a black
hat. Today's average businessman can be tomorrow's crook.
Everyone wants to believe that a business deal
will go well, and that all parties are playing straight. However; giving the
benefit of the doubt, working from assumptions and taking a laissez-faire
attitude in a tighter economy can be lethal. Fraud hits hardest when times
are tough. (Read
more...)
MARCH 2002: You may be new to the fraud
examination arena or you may have been in the business for decades and you
have the low CFE number to prove it. Regardless, you still may want to
review the legal descriptions of the principal types of fraud.
Main Fraud Categories
The principal categories of fraud (or white-collar crime) are:
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Misrepresentation of material facts
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Concealment of material facts
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Bribery
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Conflicts of interest
-
Theft of money or property
-
Theft of trade secrets or intellectual
property
-
Breach of fiduciary duty
(Read
more...)
Prior 2000
Crime and Fraud
1999: Both individuals and
businesses commit many criminal activities that cost businesses,
consumers, government agencies, and stockholders considerable
sums of money each year. Business crime is not new; in fact,
fraudulent activities have been a common part of business
operations for thousands of years.
Business-related individual
criminal activities are normally broken down into two categories:
internal and external. (Read
more...)
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