Welcome to Unit 3

Proactive and Reactive InvestigationsSURVEILLANCE

Unit 2 Review•Fraud Controls•Chapters 4-5•Discussion Board – 2 topic•Quiz•Seminar•We learned about the importance of good internal controls and how to monitor employee activity. We also identified the symptoms that lead to the detection of fraud and how lifestyle changes help in detecting fraud.

Unit 3 Preview•Proactive and Reactive Investigations•Chapters 6-7•Discussion Board – 2 topic•Quiz•Seminar•We will be comparing and contrasting proactive and reactive investigations. You will learn how analysis of financial instruments can detect fraud. We will also look surveillance and covert operations as they relate to fraud investigations. Finally, you will see how physical evidence can be used in a fraud investigation

UNIT 3 SEMINAR

SURVEILLANCEChapter 7 – Under “Debates,” page 227Discount Plus Company scenarioWe will be discussing the benefits of and

drawbacks to the Discount Plus Company’s use of surveillance and covert operations to uncover a suspected fraud.

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The Discount Plus Scenario

Discount Plus Company has been concerned for some time about its cash flows. Since the company began five years ago, Discount’s business has increased steadily, yet cash flows have remained virtually the same every year. You have been hired by Discount Plus to detect possible fraud within the company. Discount’s management is almost certain that one of its accountants is embezzling cash and has informed you that it has already begun installing surveillance.

The Discount Plus Scenario

a)What problems or dilemmas is Discount’s management facing by installing cameras and implementing a covert (undercover) operation?

b)What privacy issues are there to consider?

The Discount Plus Scenario

FIRST QUESTION, HOWEVER,

IS THIS A PROACTIVE OR REACTIVE INVESTIGATION?

Surveillance and Covert Operations

Rely on the senses—especially hearing and seeing

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Surveillance

The three types of surveillance:(1)stationary or fixed point

– Record events occurring at a scene– Log includes time, place, and events

(2)moving or tailing– Following the suspect– Should only be done by professionals

(3)electronic surveillance– Video camera

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The Discount Plus ScenarioDiscount Plus Company has been concerned for some time about its cash flows. Since the company began five years ago, Discount’s business has increased steadily, yet cash flows have remained virtually the same every year. You have been hired by Discount Plus to detect possible fraud within the company. Discount’s management is almost certain that one of its accountants is embezzling cash and has informed you that it has already begun installing surveillance. a)What problems or dilemmas is Discount’s

management facing by installing cameras and implementing a covert (undercover) operation?

b)What privacy issues are there to consider?

Thanks and Happy New Year!