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Forensic Audit Report (example)

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This report is made available as an example of a forensic audit report.

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Forensic Auditing
The fastest growing area in the accountancy & auditing profession
Curated by Jim Wesberry
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The Rise of Forensic Accounting [Infographic]

The Rise of Forensic Accounting [Infographic] | Forensic Auditing | Scoop.it
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Nigel Darby's curator insight, May 17, 8:40 PM

Interesting article. Highlighting the importance of diligent search capabilities. 

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Ohio inspector general investigates business activity by department of taxation auditor - The Highland County Press

The Ohio inspector general has issued a report of investigation initiated after receiving a complaint from the Ohio Department of Taxation.

Administrators at the agency alleged an audit division employee was working on matters involving a private business while at work for the state agency.
Ohio Department of Taxation administrators explained the employee, Lu Zhang, a certified public accountant, received prior approval after her superiors determined the private business would not present a conflict.

Approval was given on the condition that, among other things, Zhang not conduct the private business during state agency work hours or use state government resources. However, a forensic analysis by investigators showed that within 24 hours of receiving approval to pursue the private business, Zhang began immediately using state-issued equipment and the government’s email system to work on her private business.

These activities were also pursued during days and times when Zhang claimed to be at work for, and received pay from the state of Ohio.

The inspector general also found evidence showing Zhang exploited her ability to access Ohio Department of Taxation database records to review the confidential tax filings for a number of entities in direct competition with her private business.
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​Lessons From Toshiba: When Corporate Scandals Implicate Internal Audit

​Lessons From Toshiba: When Corporate Scandals Implicate Internal Audit | Forensic Auditing | Scoop.it
In Toshiba's case, it appears that an excessive reliance on the rotational staffing model left the internal audit department vulnerable in terms of resources and competency in accounting and in the company's ability to conduct effective audits, according to the report.

Additionally, the report found Toshiba's governance structure relied too heavily on internal audit as a consulting service rather than as an assurance provider. The audit department focused primarily on providing consulting services to various Toshiba's companies as part of operational audits, without assessing the appropriateness of accounting processes. While an effective internal audit function often provides advice and consultancy services for key stakeholders, internal audit will often struggle to address a company's critical risks if little or no assurance is provided to management and the board on the overall effectiveness of mitigating controls.

Despite a limited focus on assurance, audits by the department twice identified instances of irregularities that could have highlighted the company's accounting problems much earlier. However, they were dismissed as not significant enough to report.
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Forensic Investigation

Forensic Investigation | Forensic Auditing | Scoop.it
What is forensic investigation? The IICFIP (www.iicfip.org) defines forensic investigation under FAQs No 3 as " the systematic application of financial accounting, forensic accounting, auditing, digital forensics and investigative skills to the gathering of evidence for use in litigation cases in support of or against an allegation." One will however note that forensic investigation can be defined in different ways using different words. What is and must be common in all definitions is 'use by the court or in the language of the court' since the word forensic refers to the court.

It is, therefore, expected that any forensic investigation will lead to testifying in a court of law either as a prosecution or defense witness. It will much depend on the person who hired the forensic investigator. This does not mean that when a Certified Forensic Investigation Professional (CFIP) is hired by the defense, he must always testify in support of the defense case! In some cases, the investigation does show that the accused person is most likely to be guilty and all evidence collected supports that position. In such cases the CFIP will only advise the defense team that the case is weak on their side and let them decide on what to do. He is therefore, not allowed to go ahead and doctor evidence collected to look like the accused person did not perpetrate the alleged crime. That will be not only unethical but professionally suicidal.

Please turn my post about the 9 Steps of Forensic Investigation for more information on forensic investigation.
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Anti-fraud specialist offers tips for nonprofits - News-Sentinel.com

Anti-fraud specialist offers tips for nonprofits - News-Sentinel.com | Forensic Auditing | Scoop.it
What's at stake when nonprofits are the victims of fraud can be reputation, the faith of donors, even the existence of the organization.
At very least, there's money on the line, said Brenda Buetow. Even when fraud is uncovered, it doesn't mean a group will recover its money. In 2014, she said, 58.4 percent of organizations victimized by fraud recovered no money at all. Less than 20 percent of organizations victimized by fraud last year recovered all the money lost.
Buetow is in a position to know. Buetow is a forensic accountant based in Indianapolis and is a senior manager in the Risk Compliance Group at Crowe Horwath LLP. She came to Fort Wayne on Friday and presented a seminar on reducing the risk of fraud in nonprofit organizations. Her appearance was sponsored by the Fort Wayne Community Foundation.
Strengthening protections against fraud need not be a staggering new layer of overhead for nonprofits. “There are way to implement controls that are zero cost,” she said.
The most fundamental protection is to separate duties so that multiple people have roles in authorizing and checking expenditures. If one person authorizes payments, another writes checks and a third reconciles expenditures, much of the opportunity to commit easy frauds disappears.
Lacking these kinds of protections, nonprofits can be gutted by fraud. Buetow told the story of one organization's controller -- she omitted the names of victims in all anecdotes -- who created a ghost vendor then wrote checks for fictitious services to the imaginary vendor, which he pocketed.
How did he pull off 19 years of these frauds? He surrounded himself with a staff without advanced accounting skills. He maintained tight control of all financial activities and shared no responsibility. For years, he intimidated auditors and prevented full scrutiny of his organization's finances. In the end, he cost his employer $8.9 million, she said.
When the end came for his reign of deception, he had a file in his desk with the full details of the phony vendor and a record of all the checks he cut for his invention. He was so sure of himself, Buetow said, that “he didn't even bother to take it off premises.”
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The FIFA Scandal: Five Lessons for Internal Audit

The FIFA Scandal: Five Lessons for Internal Audit | Forensic Auditing | Scoop.it
1.     Internal audit must raise a yellow card when corporate culture creates susceptibility to corruption. It did not take long for fallout from the indictments to reach the top of the FIFA hierarchy with almost immediate calls for the ouster of FIFA President Sepp Blatter. Blatter was reaffirmed as the organization's president in a Friday vote, and he has said he knew nothing of the alleged corruption.

But allegations of corruption within FIFA were not unheard of before the DOJ indictments, and I have to wonder if they were ever brought to Blatter's attention. The bottom line is that no organization can afford to practice "willful ignorance" about serious challenges for long without paying a high price.

The lesson for internal audit: A frank and honest analysis of corporate culture must be part of internal audit's purview, and it must raise its voice when erosion of the culture becomes an organizational risk.

2.     Internal audit must act quickly to address reputational risk. A number of media accounts of the evolving scandal have described long-held concerns about corruption at FIFA. I have no insight into the efforts of FIFA's internal audit function, but the potential for significant reputational harm should have been identified and brought to management and the board of directors by those charged with providing assurance to management and governance officials.

The lesson for internal audit: The internal audit function cannot afford to allow risks to organizational reputation to go unchallenged.

A secondary lesson is one that FIFA's sponsors are learning. Reputational risk is not just about your organization. The behavior of the organizations you partner with can impact your reputation, as well.

3.     Internal audit must play a significant role in crisis planning and execution. Internal audit's role in crises cannot be one of simply grading after the fact how a crisis plan was carried out. Internal audit can and must provide insight into the development of such plans and be consulted even as a crisis is unfolding. Having good communications protocols in place can help an organization mitigate reputational and other potential risks in a crisis. But proper execution of the plan also plays a vital role in its success.

Lesson for internal audit: Internal audit must assess all risks — including the risks of not addressing adversity swiftly and effectively.

4.     Internal audit must stay current with anti-corruption legislation. While the FIFA crackdown was facilitated by the strength of the FCPA, internal audit functions must be cognizant of growing anti-corruption efforts worldwide. This is especially important for businesses that operate globally. The June issue of Internal Auditor magazine offers an excellent article, "Beyond the FCPA", on the topic.

According to the article, Canada and Brazil each passed anti-bribery legislation in 2013 that aligns more closely to the FCPA and the United Kingdom's 2010 Bribery Act is even broader in scope. The latter not only penalized the bribe payer, but the bribe receiver, as well.

Lesson for internal audit: Changing legal landscapes in the countries where we do business can develop into risks if the organization does not keep abreast of those changes.

5.     Internal audit must be courageous. It is not hard to imagine that anyone within FIFA charged with assurance on the effectiveness of compliance and controls must have been under great pressure. The issue of courage for heads of audit has been a recurring theme in a number of my blogs.

Lesson for internal audit: Those aspiring to be heads of audit must have the courage to do what needs to be done or say what needs to be said no matter the consequences.
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PHILIPPINES: Trillanes: Binay used HUDCC post to grant loans to allies; Pag-IBIG chief disputes claim

PHILIPPINES: Trillanes: Binay used HUDCC post to grant loans to allies; Pag-IBIG chief disputes claim | Forensic Auditing | Scoop.it
Senator Antonio Trillanes IV, part of the Senate investigating panel, himself made a new presentation against Vice President Jejomar Binay, this time citing alleged irregularities in the granting of development loans and the choice of insurance broker by the Housing and Urban Development Coordinating Council (HUDCC).

Trillanes alleged that Binay used his position as chairman of HUDCC to give development loans to his allies. He asked the Commission on Audit (COA) to audit these.

However, PagIBIG CEO Darlene Berberabe defended the vice president’s actions and said the loan recipients were known companies and already used to getting loans from PagIBIG. She said all of the loans listed by Trillanes are either fully paid or current.

Grilled for three hours, Berberabe detailed the flow of the approval process for such loans, stressing that because of the agency's strict adherence to these, not even the vice president, assuming he were inclined to, can influence the grant of such development loans.

She said even the Commission on Audit in January had turned down a request of Trillanes for a special audit, as the team that went through the agency's records said no such process was necessary.

The Senate Blue Ribbon subcommittee chaired by Sen. Aquilino “Koko” Pimentel III also discussed the alleged P5-billion overprice in the construction of the College of Nursing in the University of Makati, and the joint venture between UMak and STI.

Meanwhile, Interior and Local Government Secretary Manuel “Mar” Roxas II, COA Commissioner Heidi Mendoza, National Housing Authority general manager Chito Cruz, former Makati City administrator Marjorie De Veyra, Greenergy Holdings Inc. chairman Antonio Tiu, Dr. Jack Arroyo of Philippine HealthCare Educators Inc., STI’s Eusebio Tanco, and several others did not attend the hearing.
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Financial Fraud

Financial Fraud | Forensic Auditing | Scoop.it
Forensic Accountants Follow the Money


In complex financial fraud investigations, FBI agents have an invaluable resource—the Bureau’s core of forensic accountants. These highly trained professionals are located in all 56 field offices and are experts at following the money.

The relationship between agents and forensic accountants “is a vital partnership,” said Special Agent Kevin Legleiter, who relied on Forensic Accountant Janetta Maxwell in the Willard Leonard Jones investigation and has partnered with her for two decades in other financial fraud investigations.

The Bureau’s forensic accounting program was established in 2009 to advance the FBI’s financial investigative capabilities. There are more than 500 forensic accountants in the program, and nearly half are certified public accountants. Many have additional training such as being certified fraud examiners.

Besides the ability to analyze complex financial records and documents, forensic accountants can testify to their findings in court and assist investigators in many other ways. “As a forensic accountant, I have the ability to issue subpoenas and conduct interviews,” Maxwell said.

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Corruption Currents: Former Soccer Team Owner Drops Appeal

Corruption Currents: Former Soccer Team Owner Drops Appeal | Forensic Auditing | Scoop.it
Cybercrime/Data Privacy:

JPMorgan Chase saJPM -0.26%id it will begin converting customer debit cards to include chip technology, and expects to replace 70% of its existing cards by the end of the year. (Top Tech News)

The U.S. needs to work closer with its allies to develop norms of behavior that could be adopted in the fight against nation-state cyberattacks, a State Department official said during a Senate subcommittee hearing. (GovInfoSecurity)

Many companies are lagging behind in making the switch from passwords to other ways to secure and protect data, said one cybersecurity expert. (Government Technology)

Some U.K. police are going to cybercrime boot camp. (IT Pro Portal)

Sanctions:

Some banks may not want to risk doing business with Iran should sanctions be lifted, some industry executives and advisers said. (Trade Arabia)

The U.S. House of Representatives passed a bill requiring Congress to review any potential nuclear deal with Iran. (NJ.com)

Could economic sanctions on some African nations lead to a further breakdown of law and order in those countries? (Modern Ghana)

Whistleblowers:

Lawmakers in India have introduced a bill to amend the country’s 2011 law protecting whistleblowers. (Economic Times)

General Anti-Corruption:

Ukraine’s Cabinet of Ministers has approved a new anti-corruption program. (Interfax)

Barcelona soccer team in Spain was ordered to stand trial on charges of tax fraud associated with the team’s signing of star player Neymar. (AFP)

An Italian gambler convicted of defrauding a casino had his seven-year prison sentence shortened to six years this week. An agency official said the department is considering the judge’s ruling. (Malta Today)
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Financial Fraud

Financial Fraud | Forensic Auditing | Scoop.it
Forensic Accountants Follow the Money


In complex financial fraud investigations, FBI agents have an invaluable resource—the Bureau’s core of forensic accountants. These highly trained professionals are located in all 56 field offices and are experts at following the money.

The relationship between agents and forensic accountants “is a vital partnership,” said Special Agent Kevin Legleiter, who relied on Forensic Accountant Janetta Maxwell in the Willard Leonard Jones investigation and has partnered with her for two decades in other financial fraud investigations.

The Bureau’s forensic accounting program was established in 2009 to advance the FBI’s financial investigative capabilities. There are more than 500 forensic accountants in the program, and nearly half are certified public accountants. Many have additional training such as being certified fraud examiners.

Besides the ability to analyze complex financial records and documents, forensic accountants can testify to their findings in court and assist investigators in many other ways. “As a forensic accountant, I have the ability to issue subpoenas and conduct interviews,” Maxwell said.
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Banco Espírito Santo Management Possibly Broke Rules, Audit Finds

Banco Espírito Santo Management Possibly Broke Rules, Audit Finds | Forensic Auditing | Scoop.it
A section of the forensic audit document, which was sent to a parliamentary commission set up to investigate the collapse of the bank and seen by The Wall Street Journal, shows that Banco Espírito Santo continued to increase its exposure to other entities of the group despite clear orders from Bank of Portugal to stop doing so. It also shows the bank continued to sell debt from the Espírito Santo group to retail clients after February 2014, when the group’s difficulties were already evident. Many of these clients invested their entire savings into Espírito Santo commercial paper, and some are now facing financial uncertainty.
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Nigeria: Akaniyene - How Senate, Forensic Audit, Vindicated NNPC

Nigeria: Akaniyene - How Senate, Forensic Audit, Vindicated NNPC | Forensic Auditing | Scoop.it
Fifteen months later, the PricewaterhouseCoopers forensic audit report not only affirmed NNPC's long held position that allegations of unremitted crude oil revenue or missing oil revenue - whether $49.8bn or $20bn or $12bn or $10.8bn - was a farce from day one, it also answered the questions on kerosene subsidy.

The report asserted that the entire revenue accruable to the Federation Account during the period under investigation was $50.81 billion and not $48.9 billion as alleged by Sanusi. The amount has been fully accounted for and clearly categorised under the various components of the accruable revenue.



The report confirmed the earlier position of the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, that subsidy on kerosene was still in force as the Presidential directive of October 19, 2009, was not gazetted as required by law, and that there exists no other legal instrument cancelling subsidy on kerosene. The PwC report did also raise the issue of 'outstanding $1.48 billion' being 'signature bonus due for divested assets and taxes/royalties' which it recommended should be remitted by NNPC to the Federation Account. Was that not an indictment on NNPC? The NNPC Group Managing Director, Dr. Joseph T. Dawha in his explanation described the $1.48 billion as comprising of signature bonus, taxes, and royalties on the oil wells divested by Shell, which NNPC acquired and transferred to its upstream subsidiary, the Nigeria Petroleum Development Company, NPDC. Signature bonus, according to Dr. Dawha, represents the book value of the assets and was estimated at $1.847 billion by the Department of Petroleum Resources (DPR). However, NNPC raised issues with the parameters used in calculating the signature bonus since the assets involved were old wells. NNPC had paid $300 million pending when both parties would come to terms on a mutually acceptable estimate of the book value of the assets. The NNPC boss submits, therefore, that the $1.48 billion was not part of the alleged unremitted revenue from crude oil sales or missing oil revenue. And going by the explanation, the $1.48 is not an amount willingly withheld by NNPC but rather an amount which was in dispute by two sister agencies and so the recommendation of the PwC forensic audit report can be seen as a resolution of the dispute. It is, therefore, erroneous for anyone to see it as an indictment of the NNPC in anyway.
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Forensic Investigation

Forensic Investigation | Forensic Auditing | Scoop.it
Based on the dictionary definition, the word ‘Investigation’ is a Latin word which means ‘tracking’ or ‘tracing.’  Meaning, for an effective investigation, one must be competent in the fundamental tasks of finding out. one must have the facts concerning the matter. It is therefore a prerequisite that you obtain these facts through systematic inquiry, detailed observation, and reflective analysis of information derived from the case and /or those involved with it.

The investigator’s skills are thus continuously put to the test through consultations,  purposeful conversations or investigative interviews with. This is done alongside the key witnesses and parties in the case, their client (who may well become part of the investigation) – and third-parties

Fraud involves misrepresentation with intent to deceive. For instance,  If a company makes specific promises about a product in their advert, yet the know that the product cannot perform to the standard, they guilty of fraud.

A fraud investigation tries to determine whether fraud has taken place and tries to gather or collect evidence if fraud has occurred.

In most cases, fraud investigations is commenced with a meeting between the investigator and the client;  The person launching the investigation explains to their investigators why they suspect fraud has taken place and hand over any evidence they have to the investigator. Normally, a good fraud investigator will use this initial information to find more evidence and more facts.

A fraud investigator may use surveillance, asset searches, background checks, employee investigations, forensic accounting, data mining, business investigations, and other types of methods to get to the bottom of a case. In most cases, fraud investigations are investigations of white collar crime, which involves surveillance and careful consideration of complicated financial records.
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2015: The Year for the Innovative Financial Crime Professional

2015: The Year for the Innovative Financial Crime Professional | Forensic Auditing | Scoop.it
Many people believe the financial services industry is under attack. Some assert that the attackers are regulators, while others think the industry is being threatened from rogue elements within. Money launderers, fraudsters and now, more than ever before, cyber criminals, pose a constant threat. To counter these threats professionals must
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Forensic interviews: Plan to succeed

Forensic interviews: Plan to succeed | Forensic Auditing | Scoop.it
Knowing whom to question and how to go about it in a fraud investigation can save money and time. This article shows how to make the most of interviewing in fraud engagements.

An investigative plan for a fraud engagement should incorporate both the interview strategy and the related analysis of financial information. Following are three best practices for plan development: The investigative team should develop and agree upon the plan before the first interview; The plan must be flexible enough to incorporate continual changes dictated by information unearthed at each stage of the engagement; and The team should meet regularly during the engagement to consider the possibility of changes in the interview program. - See more at: http://www.journalofaccountancy.com/issues/2015/aug/forensic-interviews-fraud-investigations.html?sthash.bzXnADI1.mjjo#sthash.bzXnADI1.v4Markz8.dpuf

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New E-Book: The Art of the Internal Investigation - Corruption, Crime & Compliance

New E-Book: The Art of the Internal Investigation - Corruption, Crime & Compliance | Forensic Auditing | Scoop.it
I am pleased to announce the release of my new e-book — The Art of the Internal Investigation — by Corporate Compliance Insights.  To download a free copy, please visit here. Conducting an internal...
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How people rationalize fraud - Kelly Richmond Pope - YouTube

View full lesson: http://ed.ted.com/lessons/how-people-rationalize-fraud-kelly-richmond-pope If you ask people whether they think stealing is wrong, most of ...
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Former regional mental health CFO took $550,000 in apparent kickbacks, says state audit

Former regional mental health CFO took $550,000 in apparent kickbacks, says state audit | Forensic Auditing | Scoop.it
A former money manager with a publicly funded regional mental health agency took nearly $550,000 in apparent kickbacks from two contractors who were paid about $1 million to renovate agency buildings, according to a state audit released Tuesday.

The audit also says the former chief financial officer at Eastpointe Human Services, which serves several Eastern North Carolina counties, failed to report on his income tax returns the money he received from contractors.

The audit does not name the CFO, but agency documents identify Bob Canupp as the CFO during the period the audit examined.

The apparent kickbacks were from an LP-gas serviceman and a firefighter who each handled contracting work on the side, according to the audit. The unlicensed and uninsured contractors were paid nearly $1 million by Eastpointe for renovations that took place between July 2009 and June 2013.

The audit describes a pattern of payments from Eastpointe to the contractors for agency work followed by a check from the contractor back to the CFO.

The audit states, “The former CFO may have violated several state laws including fraud, misrepresentation and obtaining property by false pretenses.” The audit findings were referred to the State Bureau of Investigation, the Internal Revenue Service and the N.C Department of Revenue to determine if criminal charges are warranted.

Eastpointe did not follow its own procedures to ensure that money was being spent properly, State Auditor Beth Wood said in an interview.

“There was no monitoring,” she said. “No one was ensuring (the work) had been properly bid. No one was ensuring the work was getting done that had been paid for.”
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Beyond the FCPA - Internal Auditor Magazine

Beyond the FCPA - Internal Auditor Magazine | Forensic Auditing | Scoop.it

Strong internal controls and effective internal audit are critical factors in global anti-corruption efforts.

Recent aggressive, anti-bribery actions by various governments are indicative of new challenges that businesses with global operations or supply chains are encountering. Although the U.S. Foreign Corrupt Practices Act (FCPA) has been the preeminent anti-corruption law for most companies with international operations or financial ties, in recent years other countries have become assertive in enforcing their own regulations, further complicating an organization’s governance, risk management, and compliance efforts (see “Sharper Focus on Foreign Bribery” below).

This growing complexity reinforces the importance of a system of strong internal controls backed by an effective, independent internal audit function. An internal auditor supplies to an organization’s governing body and senior management comprehensive assurance that anti-bribery controls are in place, designed appropriately, and operating as prescribed.

The International Standards for the Professional Practice of Internal Auditing (Standards) points out that although internal auditors are not expected to have the expertise of a person whose primary responsibility is detecting and investigating fraud, they must possess the requisite knowledge to evaluate the potential for fraud — including corruption — to occur, along with the methods the organization uses to manage fraud risk. Enforcement actions by authorities in several nations provide valuable insight into the tools, processes, and procedures regulators expect organizations to follow to manage fraud risk. By reviewing such actions in the context of recent global anti-corruption trends, internal auditors can build the knowledge needed to meet their professional responsibilities.

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Forensic Accountants Follow the Money

Forensic Accountants Follow the Money | Forensic Auditing | Scoop.it

Accountants have been woven into the fabric of the FBI since its creation in the summer of 1908, when a dozen bank examiners were included among the original force of 34 investigators. Today, around 15 percent of agents employed by the Bureau qualify as special agent accountants.

Non-agent accounting positions at the FBI date back to the early 1970s, when we created a cadre of accounting technicians to help agents working increasingly complex financial cases. During the savings and loan crisis of the 1980s and 1990s, the FBI’s ability to address complex, sophisticated financial investigations was elevated further with the addition of financial analysts to our ranks.

Post-9/11, the criminal landscape changed again with large-scale corporate frauds and a multitude of other complex financial schemes. And once again, we adapted by adding new resources and skills. One key element was the 2009 creation of a standardized, professional investigative support position known as a forensic accountant.

At the FBI, our forensic accountants conduct the financial investigative portion of complex cases across a wide variety of Bureau programs—investigating terrorists, spies, and criminals of all kinds who are involved in financial wrongdoing.  Through their work, forensic accountants contribute to the FBI’s intelligence cycle.

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PANAMA: Five former ministers being investigated in helicopter case

PANAMA:  Five former ministers being investigated in helicopter case | Forensic Auditing | Scoop.it

A report by the comptroller has implicated five former ministers in irregularities connected to the rental of helicopters during the administration of Ricardo Martinelli.

The report also implicates four rental companies. The ministers were not named.

The estimated economic damage to the state is $10 million. That estimate is based on a forensic audit carried out by the comptroller and covers a time frame from 2009 to 2014.

According to the document, the rentals were paid for by the National Assistance Program (PAN). It states that the government paid an average of $3,000 per hour when the market rate was $1,800.

Also, records with the Civil Aviation Authority cast doubt into whether some of the flights actually took place.

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State auditor's new team to battle waste of public money

State auditor's new team to battle waste of public money | Forensic Auditing | Scoop.it
Yost announced the creation on Tuesday of a new “Public Integrity Assurance Team,” uniting several existing sections and staffs in the auditor’s office.

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“This brings all disciplines of our office into one team with one mission,” Yost said. “When you can’t work any harder, you’ve got to work smarter.”

He said the team should provide higher quality and speedier investigations at no additional cost. The auditor’s office has uncovered $10.5 million in misspending through special audits since Yost took office in 2011.

Yost made the announcement during a speech to local officials attending the 15th Annual Fraud Investigation & Prevention Conference in Columbus.

Headed by Brendan Inscho, Yost’s deputy chief legal counsel and a former assistant prosecutor, the public-integrity team will include forensic auditors, investigators and attorneys from the former special-audit section, special-investigations unit and portions of the office’s legal staff. Their mission is to promote clean, ethical government while exposing corruption and wrongdoing.
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Railroad forensic audit calls for changes - The Ely Times

Railroad forensic audit calls for changes - The Ely Times | Forensic Auditing | Scoop.it
The long awaited city-ordered forensic audit of the Nevada Northern Railway’s finances and operations was released in a special meeting put on by the railroad trustees on March 5 inside the armory. The 69-page document, which was distributed at the meeting but can also be found on the city’s website, details the current financial status of the railroad and includes recommendations in areas the auditing firm of Larry Bertsch, CPA & Associates LLP found lacking. Bertsch, along with fellow auditor Nick Miller, gave a presentation to both the Railroad Board of Trustees and the Railroad Management Board, presenting their findings and analysis of the way the NNRY has been operated through Nov. 17, 2014, which is the end date of the findings from the report.

When asked by City Councilman and Railroad Trustee Sam Hansen how Bertsch would categorize the railroad’s current financial situation, the auditor replied that unless changes are made, the railroad is on a “going out of business curve.”

“If the things that we found continue and if you do not take the opportunity to go through some strategic planning, you are going to have an insolvent company very shortly,” Bertsch answered.

Yet despite his answer, the auditor stressed that things don’t have to go down that path. He offered the trustees an analogy to try and give them the proper perspective with how to handle the report’s findings.

“When you drive your car down the road, if you are only looking in the rear view mirror, you are going to have an accident. You need to look forward and work on this together  so we never end up in this situation ever again,” Bertsch continued.
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Editorial: Banking on forensics

Editorial: Banking on forensics | Forensic Auditing | Scoop.it
At least two large banks have special units that spearhead the recovery of bad debts. In a recent instance, after trying to recover around R4,200 crore from a company and conducting a forensic audit, banks have decided to file a complaint with the CBI alleging cheating and misappropriation of funds. While it would be wholly inappropriate to paint all borrowers with the same brush, it makes sense for banks to conduct forensic audits for companies where it believes everything may not be kosher. While the Corporate Debt Restructuring (CDR) cell may want to have such audits done for all cases that are brought before it, banks for their part should perhaps initiate them for companies where they have even the smallest reason to believe everything may not be above board. Ushering in a culture of scrutiny and investigation cannot hurt and can act as a deterrent. To make the process more effective though, the courts need to act quickly.
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PwC’s Forensic audit report on NNPC: Matters Arising - Vanguard News

The idea of a forensic audit of NNPC was the brainchild of the Coordinating Minister of the Economy and Minister of Finance, Dr.Ngozi Okonjo-Iweala, who suggested during the Senate probe of the allegation of non-remittance of $49.8bn oil revenue into the Federation Account levied by the former Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, against NNPC. Dr.Okonjo-Iweala had submitted before the Senate Committee on Finance that considering the level of interest and controversy that the allegation had generated it was good to have a forensic audit carried out on NNPC’s books to get to the bottom of the issue once and for all.

In order to understand the issues raised and the recommendations made in the PwC forensic audit report, it is pertinent to note that the starting point of the issues that led to the audit was the allegation of unremitted $49.8bn revenue from crude oil sales between January 2012 and 31 July 2013. Though the former CBN Governor (now Emir of Kano) who made the allegation had variously changed the figures of alleged unremitted revenue to $10.8 and $20bn, it must not be forgotten that he started the allegation with $49.8bn.

The summary of the forensic audit report which the Auditor General of the Federation, Mr. Samuel Ukura, presented to the public recently indicated that the allegation of unremitted $49.8bn, $10.8bn or $20bn was false. The report was emphatic that the total amount that accrued from crude oil lifting was $67bn out of which a total of $50.81bn was remitted into the Federation Account. The balance, the report stated, was used for petrol and kerosene subsidies and NNPC operations expenses.This position as reflected in the forensic audit report is consistent with the position that NNPC has always canvassed regarding the alleged “missing oil revenue”.

The other issue thrown up in the forensic audit report is the $1.48bn which the audit firm recommends that NNPC should pay into the Federation Account. This is where there has been so much misunderstanding which led to the various screaming headlines that the report indicted NNPC. The $1.48bn, according to the report, is “unremitted NPDC signature bonus due for divested assets and taxes/royalties”.
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Big Data 101: Using Large-Scale Data Mining to Find Fraud

Big Data 101: Using Large-Scale Data Mining to Find Fraud | Forensic Auditing | Scoop.it

You may have heard the term “big data” or “data mining,” but what do those terms mean? Today’s WatchBlog sheds light on how GAO analyzes large amounts of data to identify instances of potential improper payments or fraud.

What Is Data Mining and How Does GAO Use It? Data mining allows us to quickly identify relevant patterns in large databases, typically compiled from multiple sources. We’ve used this technique multiple times to identify potential improper payments or fraud on a large scale. For example, we’ve used data mining to

-   Identify people who may be receiving multiple federal payments. For example, by comparing data from different sources—such as benefit rolls for various programs and death files—we identified 59,251 individuals who received concurrent disability payments totaling $3.5 billion in fiscal year 2013, and over 2,600 people with potentially invalid identifying information who received $21 million in relief following Hurricane Sandy;
-   Identify outliers or other particular patterns. For example, we found that about 83,000 Department of Defense employees and contractors who held or were determined eligible for secret, top secret, or other clearances had more than $730 million in unpaid federal tax debt as of June 30, 2012; and
---Create maps that allow us to easily determine whether there are suspect patterns. For example, the map below shows an expected distribution of greater numbers of people living along the coast receiving relief funds following Hurricane Sandy.

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D Michael Brown's curator insight, March 10, 11:53 AM

Love the science of big data!  I might suggest to almost all corporations to start looking for MBA students with a focus on big data analysis who are graduating this year and next!

Alexa Earl's curator insight, May 26, 6:40 PM

This map really depended by understanding and made me take into account the ranges.