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COVID-19: Fraud’s Partner in Crime

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Join us for next week’s webinar!

We plan to cover Top Questions from Employers Regarding COVID‐19

Thursday, April 30, 2–3 p.m. CDT

› Individuals

• Participate in entire webinar• Answer polls when they are provided

› Groups

• Group leader is the person who registered & logged on to the webinar• Answer polls when they are provided• Complete group attendance form • Group leader sign bottom of form• Submit group attendance form to training@bkd.com within 24 hours of webinar

› If all eligibility requirements are met, each participant will be emailed their CPE certificate within 15 business days of webinar

To Receive CPE Credit

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Presenter

Bryan Callahan, CPA, CFF, CVA, CFEPartnerForensics & Valuation Servicesbcallahan@bkd.com

Agenda

› How COVID-19 Is Increasing Fraud Risk

› Recent Trends in Fraud – 2020 Report to the Nations

› Ways to Mitigate the Risk

› What to Do if You Suspect Fraud

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Back to Basics – The Fraud Triangle

Exacerbated ineconomic downturn

Perceived pressure

facing individual

Perceived opportunity to commit

fraud

Person’s rationalization or integrity

Quote from President & CEO of ACFE

“Coronavirus Pandemic Is a Perfect Storm for Fraud”

– Bruce Dorris, April 10, 2020

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©2020 Association of Certified Fraud Examiners, Inc.

©2020 Association of Certified Fraud Examiners, Inc.

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©2020 Association of Certified Fraud Examiners, Inc.

©2020 Association of Certified Fraud Examiners, Inc.

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©2020 Association of Certified Fraud Examiners, Inc.

©2020 Association of Certified Fraud Examiners, Inc.

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©2020 Association of Certified Fraud Examiners, Inc.

©2020 Association of Certified Fraud Examiners, Inc.

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©2020 Association of Certified Fraud Examiners, Inc.

©2020 Association of Certified Fraud Examiners, Inc.

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©2020 Association of Certified Fraud Examiners, Inc.

©2020 Association of Certified Fraud Examiners, Inc.

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©2020 Association of Certified Fraud Examiners, Inc.

©2020 Association of Certified Fraud Examiners, Inc.

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©2020 Association of Certified Fraud Examiners, Inc.

Profile of Fraud Perpetrator

• No prior criminal history (5%)• Well liked by co-workers• Likes to give gifts/compulsive shopper• Gambling problems not unusual• Long-term employee• Rationalizes, starts small or “borrows”• Lifestyle clues

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› Former controller

› How it was discovered

› Expense reimbursements

› Credit card transactions

› Tickets to “Jerry World”

› Amount to date

Real Example #1

› Other unauthorized & inappropriate• 42 family related expenses, totaling $14,435.21. The expenses included Horse Riding School,

a membership fee for Elementary Parent Teacher Association (located in city where controller resided) & airfare, hotel, car & restaurant expenses for vacations to New Jersey & a cabin in Oklahoma. We also identified Las Vegas airfare for the controller & his wife

• 31 shopping related expenses, totaling $11,076.77. Merchants included Lululemon, Ertekin Fashion, Nordstrom, Francesca’s, REI, My Vinyl Direct, Etsy.com, Chewy.com, Four Paws & Buckeye Corner by Lids

• 36 expenses reimbursed more than once, totaling $10,747.50

• Three AT&T cellphone expenses, totaling $7,145.02

• 10 dentist, orthopedic, optometrist & other health & wellness related expenses, totaling $6,782.88. Eight of ten occurred in Plano, Texas, where controller resided

Real Example #1

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› Former controller

› How it was discovered

› Fictitious tax payments

› Arrest

Real Example #2

Data Analytics Basics

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Accounts Payable Payroll

General Ledger

Purchasing Cards

Examples of Uses in Examinations

Attribute Analysis

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Address Mining – Mailbox Services

Address Mining – Proximity

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Address Mining – Geocoding

AP Manager

Vinny’s Salvage Yard

Proximity

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Trending AnalysisVendor: JLM Plumbing Authorized: Janice L. McPhearson

Test phase

Acceleration as confidence

builds

Getting Greedy

Textual Analytics

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Textual Analytics

Relationship Mapping

Named Entity

Extraction

Predictive Coding

Topic Mapping

Digital Forensics

Tone Detection

Data Types

2018

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©2020 Association of Certified Fraud Examiners, Inc.

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› Resist urge to terminate them immediately

› Set up a “fence”

› Let trained interviewer have a shot

› Gather/preserve evidence

What to Do if You Suspect Fraud?

Questions?Bryan Callahan, CPA, CFF, CVA, CFEPartnerForensics & Valuation Servicesbcallahan@bkd.com | 317.383.4000@Bryan_Callahan3

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For more information, please visit BKD's COVID‐19 Resource Center atbkd.com/covid‐19‐resource‐center

Join us for next week’s webinar!

We plan to cover Top Questions from Employers Regarding COVID‐19

Thursday, April 30, 2–3 p.m. CDT

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Continuing Professional Education (CPE) Credit

BKD, LLP 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

› CPE credit may be awarded upon verification of participant attendance

› For questions, concerns or comments regarding CPE credit, please email the BKD Learning & Development Department at training@bkd.com

CPE Credit

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bkd.com | @BKDLLP

The information contained in these slides is presented by professionals for your information only & is not to be considered as legal advice. Applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor or legal counsel before acting on any matters covered