Detecting and Investigating Financial Statement Fraud (2 days)

Course code: 4200

Introduction

This two-day immersion course provides an in-depth examination of financial statement fraud – how it is defined, who commits it, assessing fraud risks and developing appropriate responses, common fraud schemes, how financial statement fraud typically is discovered, methods for detecting and investigating financial statement fraud, and the impact of financial statement fraud on victimized businesses.

The course uses case examples, fraud studies by the Association of Certified Fraud Examiners and other sources, and a significant number of real-world examples to give participants’ hands-on experience in identifying and analysing financial statement fraud; to help participants understand how financial statement frauds are committed and concealed for years or even decades; and how participants can use trend analyses, analytics, and other techniques to promote more rapid fraud detection. Real-world examples covered in the course are drawn from exposed frauds worldwide including Olympus Corporation; Diageo plc; Satyam Computer Services; Syntax-Brillian; Reebok India; Dell; Diebold; Rino International; WorldCom; and others.

The course examines fraud indicators (red flags), common areas of exposure, and management or board committee responses to fraud reports and incidents to promote thoughtful analysis of financial statement fraud risk. In addition, the course addresses the development and maintenance of an effective anti-fraud environment and the role of preventive and detective controls in fraud detection, as well as the importance of fraud risk assessments in allocating audit and investigative resources.

The program answers questions such as:

  • What is financial statement fraud and how does it happen?
  • What are the red flags that might indicate a financial statement fraud has occurred or is currently occurring?
  • How can a business limit or reduce financial statement fraud losses?
  • Who commits financial statement fraud, and why?
  • What techniques are used to identify and investigate financial statement fraud?

Topics

  • Introduction
    • Financial statement fraud versus asset misappropriation fraud
    • Overview of financial statement fraud
    • Recent studies and related materials regarding fraudulent accounting
    • Prevention, detection, investigation, resolution
  • Recent studies regarding financial statement fraud
    • Treadway Commission (historical context)
    • ACFE Report to the Nations
    • Large accounting firm studies
  • Who commits financial statement fraud and why
    • The face of fraud
    • Personality and other traits
    • The fraud triangle: incentives to commit fraud, opportunity, and rationalization
    • Roles of the CEO and CFO in many financial statement frauds
  • Common financial statement fraud schemes
    • Revenue recognition: fictitious revenues, round trip transactions, bill and hold, contract backdating and premature recognition (cutoffs), channel stuffing, topside journal entries, capitalizing associated expenses, side letter agreements
    • Accounts receivable and billing
    • Inventory frauds: purchasing, inventory counts, and raw materials schemes
    • Frauds associated with estimates, fair values, and impairments
    • PP&E frauds: misclassification and manipulation
  • Fraud risk assessments
    • SAS 99 risk factors; PCAOB audit standards No. 8 through 15 on fraud risks
    • Assessing the company and its environment
    • Brainstorming sessions: internal and external auditors
    • Significant accounts, transactions, and processes, including the financial statement closing process
    • Preventive and detective controls
    • Risks of management override and circumvention
    • Testing and monitoring controls
    • Internal responses to assessed fraud risks
  • Red flags for financial statement fraud
    • Material deviations from past performance
    • Deteriorating business conditions
    • Unusual, complex and related party transactions
    • Business structure complexity
    • Other red flags
  • Preventive and detective controls and techniques
    • Anti-fraud training
    • Whistleblower hotlines and rewards
    • Surprise audits
    • Mandatory vacation policies
    • Preventive controls
    • Inquiries within the organization
    • Analysis of the financial statements and significant accounts
    • Trend analysis
    • Analytics
    • Tests of processes
    • Document examination
    • Auditing procedures
    • Investigating background and educational claims
    • Computer forensics
  • Real-life financial statement frauds and case studies
    • Computer Associates
    • Satyam Computer Services
    • Diageo plc
    • Rino International
    • Monster Worldwide
    • Longtop Financial Technologies
    • Diebold, Inc.
    • Case study: ABC Corporation stock reaches new high, but…
    • Case study: PPQ, Inc. internal audit department discovers red flags
  • How to create an effective anti-fraud environment
    • establishing and monitoring internal controls
    • disclosure controls
    • segregation of duties
    • preventive controls
    • use of internal audit function
    • fraud education and awareness
    • fraud incident responses
  • Creating an ethical business culture
    • “tone at the top”
    • meaningful actions
    • Adelphia Communications
    • Creating a positive corporate culture

Teaching method

  • Group live instruction in a workshop format
  • Review of the fraud risk assessment standards and guidance
  • Extensive use of real-world financial statement frauds to illustrate who commits fraud, how it is committed, and how it is discovered
  • High level of attention to individual participants
  • Interactive participation is encouraged
  • All participants receive a comprehensive binder containing copies of the presentation slides, handouts and other course materials

Prerequisites

Some accounting/finance experience and a basic working knowledge of the elements of financial statements will be helpful. No advance preparation is required for this course.

Course benefits

  • Understand common financial statement fraud schemes that are employed by management and/or others
  • Become familiar with red flags which may indicate the presence of financial statement fraud
  • Learn the investigative techniques and skills utilized in the investigation of financial statement fraud
  • Gain a better understanding of major financial statement fraud schemes – what happened, how did it happen and how were such cases discovered and investigated?

Testimonials

See what past participants said about this course:

Internal control is becoming more important. Fraud prevention and investigation will become a topic on the management's agenda. This course is a big help!

Leo van der Plas, Finance Manager,
CHitachi Transport System BV, UK

The live IASeminars are excellent. Everything is great. I will see you again in September.

This training was exactly what I was looking for: professional, hands-on and taught by someone with plenty of first hand experience in the matter. Very recommendable to internal auditors, finance functions or even regulators.

Who should attend?

  • Executive officers, industry controllers and accountants, internal audit personnel, finance professionals 
  • Public practitioners who provide audit, forensic accounting and investigative services 
  • Analysts who analyze or report on financial statement fraud 
  • Regulators who investigate and/or prosecute financial statement fraud

CPE / CPD Accreditation

NASBA

IASeminars is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org. 


Field of study: Accounting

ICAEW Partner in Learning

IASeminars is proud to have been named as an ICAEW Partner in Learning, working together to offer the ICAEW IFRS Certificate to our clients worldwide. ICAEW (The Institute of Chartered Accountants in England and Wales) is a world leading professional membership organisation that promotes, develops and supports over 145,000 chartered accountants worldwide. CPE certificates obtained from attending IASeminars courses are an ideal way for ICAEW members and others to demonstrate their continuing professional development, provided that the topic is relevant to their learning and development needs.

Texas State Board of Public Accountancy

IASeminars is registered with the Texas State Board of Public Accountancy as a CPE sponsor. Our CPE Sponsor ID is: 009689. This registration does not constitute an endorsement by the Board as to the quality of our CPE Program.

In House

To bring this course in-house please contact us and we will be pleased to assist

Course details

Course schedule

There are currently no dates scheduled.
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