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WHAT TO DO IF YOU SUSPECT A FRAUD IN

YOUR OFFICE

OR

THERE IS NO WAY A FRAUD CAN HAPPEN

HERE

2

TODAY’S PRESENTORRansom McClung

• FSU Office of Audit Services, Director of Investigations and Training – retired 2010

• BA in Accounting and MS in Criminology.• CPA, CFE, CFF and Cr.FA. certifications• Assistant Instructor College of Business, Department of

Accounting, Florida State University.

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Session Rules

Ask Questions

Have fun!!!

Give Answers

Have fun!!!

Who Am I????

Mistakes are Okay

Agenda

Our Fraud ResponseWhat do we do before the Investigators arrive

Our Investigative ResponseWhat we do after the Investigators arrive

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Our Fraud Response

Our Fraud Response

Know Your Organization's Fraud Policy– Who to report

– How to report

– Where to report

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Our Fraud Response

Never ever Accuse Anyone of an Impropriety – In Public– Danger Mr. Bill

– Lawsuit Mr. Bill

– All innocent until proven guilty

Our Fraud Response

Contract Organization’s General Counsel Office– They know the laws, rules, regulations

– They can keep you out of trouble

– They know how to avoid legal issues

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Our Fraud Response

Contract Organization’s CPA– Can they do the forensic investigation

• WHO???

– Ask them to recommend someone –me??

– Assist in triage, investigation, court, controls

Our Fraud Response

Work from Copies– Protect the Evidence

– Do not mark originals

– Safely store the evidence

– Don’t loose the evidence (the Court wants the originals)

– Electronic evidence

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Our Fraud Response

Take detailed Notes– Everything related to the fraud

– Criminal justice system is slow

– People come and people go

Our Fraud Response

Read you Fidelity Bond or contact your risk management department– Review provisions

• Look for time lines to file a claim

• Look for any reporting requirements

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Our Fraud Response

Contact Your Human Resources Department– What do I do?

– What can I do?

– How should I act?

– EAP????

Our Fraud Response

Quiet Please– Don’t discuss in office, cubicle or other

work areas- coffee pot

– Lunch - restaurant

– Use private office, conference room

– Limit access to offender's office

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Our Fraud Response

Witnesses– Always have one when talking to

suspect

– Male vs. female conference

– Attorney, CPA, person knowledgeable of the case

Our Fraud Response

Protect Yourself and Employees– No violence here, please

– Contact law enforcement, if a hint

– Police presence

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Our Fraud Response

Change Computer passwords– Contact IT department

– No accessing from off-site

– Eliminate access to any systems, files

Our Fraud Response

Limit Access to Building– Get the Keys

– Get the ID card

– Talk to security

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Our Fraud Response

Confronting the Suspect– Be careful of any scenes

– After hours

– Friday afternoon

Our Fraud Response

Get the Organization’s property– Keys

– Lap tops

– Credit cards

Change the Locks

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Our Fraud Response

Personal property– Two employees go the offender’s office

– Get purse, wallet, keys, book bag

– No accusation of theft of cash

– Non essential property (pictures) in a couple of days

Our Fraud Response

Escort Perpetrator from the Office– Never allow back into office

– Evidence, evidence, evidence

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Our Fraud Response

Conference notes– Who, where, when, names

– Detailed notes of meetings

– Remember who wants the notes –attorneys, investigators

Our Fraud Response

Risk management– Contact

– File claim

– Try to get the money back

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Our Fraud Response

Prosecute– Well maybe

– Administrative actions

– Give a good recommendation

Our Fraud Response

Reconstruct the crime– What went wrong

– How to prevent

– Controls – what are they???

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Investigative Response

Investigative Response

To determine source of losses To identify the perpetrator (s) To gather evidence To recoup losses To identify control weaknesses To comply with laws and regulations

Federal statutesSEC regulations

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Investigative Response

Resolving allegations of fraud from tips, complaints or accounting clues– Documentary evidence– Interviewing witnesses– Writing investigative reports– Testifying– Assisting in the detection and

prevention of fraud

Investigative Response

T

Observation

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Investigative Response

Planning and Organization

Information and Evidence Gathering

Analysis of Gathered Evidence

Findings and Reporting

Remediation

Investigative ResponsePlanning and Organization

Do we investigate?

Who will be involved in the investigation?

What will be the investigation strategy?

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Investigative ResponsePlanning and Organization

Include only those individuals who:Can legitimately assist in the investigation

Have a genuine interest in the outcome of the investigation

Primary goal is to resolve fraud allegations as thoroughly and efficiently as possible

Investigative ResponseObtaining Evidence

Covert operationsSurveillanceUsing informants“Dumpster diving”SubpoenasSearch warrantsVoluntary consent

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Investigative ResponseObtaining Evidence

To be admissible in court, evidence must be preserved and handled correctly.

Properly identifiedChain of custody maintainedProven relevant and material to case

Obtain original documents when feasible.Do not touch originals any more than necessary.Maintain a good filing system.

Investigative ResponseAnalyzing Evidence

Segregate documents either by witness or by transaction.Make a “key document” file.Establish a database early on in the investigation.Create chronology of events.Utilize and frequently update to-do lists.Use computer software to organize documents and data.

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Investigative Response Findings and Reporting

Report must be accurate and understandable, and must “speak for itself”A good report:

Conveys evidenceAdds credibilityAccomplishes objectives of the caseIs written with the expected reader (s) of the report in mind

Investigative Response Findings and Reporting

Report should be written as though it will be used in civil or criminal trial.State only the facts.No errors.Include a follow-up section.

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Investigative Response Remediation

Analyze what went wrong

Improve or correct procedures

Separate written report.

Questions ??

Comments !!

Concerns !!??