PREAMBLES
• The biggest challenge facing the global banking industry today is fraud.
• The banking industry has lost billions of dollars each year to fraudulent activity.
• Some scams are successfully executed by outsiders, while a fair amount of success with help for those enshrined in the / staff.
• Anyone can perpetuate fraud.
FALSE ASSUMPTIONS ABOUT CHEATING
Here are some faulty assumptions about the fraud:
1. Most people will not commit fraud.
Response: Most people, under certain conditions, to commit fraud, especially if they believe that it will be detected. Therefore each person must be assumed to have a propensity to commit fraud.
2. Fraud is not material.
Responses: Fraud is material and he was able to undermine the working capital of every organization that consequently the results for illiquidity and insolvency.
3. Most of the fraud to go undetected.
Response: Most fraud is detected from time to time, especially if the processes and procedures are followed.
4. Fraud can be hidden well and auditors can not detect it.
Response: There is usually a loop hole that will eventually come into the open. With internal control procedures, such fraud will eventually be detected.
A well-trained auditors can easily detect the fraud audit program is well designed.
5. They are caught and prosecuted is not wise.
Response: Staff with fraudulent intent to think that those who are caught not smart and position as the first time is a good liar: I would only do once or, I’m too smart to get caught.
COMMON TYPES OF FRAUD
common types of fraud in banking are as follows:
1. Check substitution
2. Suppression Check
3. Check cloning
4. Check kitting
5. Check changes
6. Solid and lading
7. Claiming overtime payment is deferred
8. Dry post
9. Collecting fees for the duration of the phone against unauthorized and unofficial long call
10. Exaggerated claims reimbursement
11. Deposit emphasis
12. Adding fictitious names to the payroll
13. Overcharging customers
14. Removing the money directly from the vault, until the box, petty cash etc.
15. Obtain payment for the false invoices prepared themselves or obtained either suppliers or vendors (eg hotels, air tickets etc.).
CONTRIBUTING FACTORS FOR FRAUD
• Growing complexity in the organizational structure
• Increase the speed of transactions dynamics
• Increasing technological advances that help facilitate transactions concluded
• History of lack of regulatory attention
• deficiencies that can cause damage to the dual control
• Receipts from some level of fraud as the cost of ‘doing business’.
• Outdated and ineffective control action that do not meet globally accepted standards.
• Increased staff turnover which technically could cause shortages
• Aggressive accounting records of all bids in to post a profit.
FRAUD ALERTS
The following are the characteristics of fraud staff have to put the controller and the associated alert:
1. An employee who regularly borrow small amounts of cash from other peer
2. An employee who asks to “save” his personal checks before it negotiates
3. A staff that is often too late to close and not go on vacation.
4. Low or inadequate levels of employee salaries
5. Employees who show resentment at not treated fairly or taken advantage of
6. Superiors who have no respect and appreciation for employees
7. Very dominate senior management
8. Employees who seemed to live, and spending above their means
9. Split purchases
10. Deviations bid process
11. Same bidder time and time again
12. Payment of an invoice from the copies and not original
13. Unusual sequence of numbers on the vendor invoice
IMPACT OF FRAUD
Fraud has far reaching effects on organizations and society at large.
• Fraud can deplete working capital of each organization that will culminate in the end to the distress.
• release of staff and social hazards associated with staff and depending on Him.
• Loss of trust from customers, suppliers, creditors, contractors and shareholders in the organization and industry.
ALERT AND FRAUD PREVENTION TIPS
1. Assume that everyone can commit fraud in the right situation.
2. Use your knowledge of internal controls to “think dirty” and then check your suspicions.
3. Remember that the documentation does not mean something good to happen, just that someone said that to happen.
4. Note the document itself and the supporting documents, observing the consistency of numbers, the number of dates.
5. Consider the reasonableness of account balances and accounting records, especially the adjustment
6. Develop relationships and pay attention to clues or rumors of an error. Follow-up. Remember that people are often torn between their moral standards and their reluctance to get involved. They rarely tell all they knew in the first interview.
7. Check out hunches, first impressions are often correct.
8. Be the first to investigate, do not easily accept the explanation, especially if you do not understand them.
9. Use of statistical sampling to force you to view items that are generally otherwise not be examined
10. Look for patterns of unusual transactions. (If you wonder, that’s amazing!)
Incoming search terms:
