1. Carol Zhang

2. Fraud is a crime that is seldom observed. John J . Hall (1996) Fraud symptomsthe specific, observable signs that fraud might be presentmay he of the actual fraud or of the cover-up attempt. (p.85) 3. 1. Accounting anomalies 2. Internal control weaknesses 3. Analytical anomalies 4. Unusual behavior 5. Extravagant lifestyle 6. Tips and complaints 4. Common anomaly frauds involve: Irregularities in source documents Faulty journal entries Inaccuracies in ledgers 5. Irregularities in source documents Normal Fraud 6. Faulty journal entries 7. Inaccuracies in ledgers 8. Internal control fraud symptoms include : Lack of segregation of duties Lack of physical safeguards Lack of independent checks Lack of proper authorization Lack of proper documents and records Overriding of existing controls (most common) Inadequate accounting system 9. CFO and treasure stolen more than $6 millions in less than 5 years. False tractions frequently but in small amount 10. Relatives of CFO-A Relatives of CFO-A Relatives of treasure-A Relatives of Treasure-B CFO Company A treasure Company B Company DCompany C Billing Payment Authorization Symptoms ? 11. Three simple procedures to prevent small business fraud 1. Owners should open and reconcile bank statements 2. Pay everything by check so there is a record 3. Owners should sign every check themselves 12. Ernst and Young was not been negligent in performing the audit 13. ? Year end 2004/G corporation Book: more than $40M Bank: around $400 Bank officer Lent to other Stock Market FM conspire PWC Send confirmation 14. Sarbanes-Oxley Act of 2002 imposes potentially serious penalties on firm executives with fines of up to $5 million and/or imprisonment up to 20 years At the same time, this legislation requires that these firms tighten their internal controls over financial reporting. 15. Strange financial statement relationships Cash shortages or overages Excessive late charges Unreasonable expenses or reimbursements Excessive turnover of executives Physical abnormalities 16. How to calculate the stone pour into river? Sufficient paper documents 17. RM not enough Shipping in bad weather Ships were not enough Fraud 18. Case in 2013 Expense padding by Kevin Richard Halligen Former CEO of a security consulting and crisis management firm-RDI 2.1 millions with 1.7 millions buying a house for herself 19. Elements of fraud Theft act Concealment Conversion Company employees are in the best position to detect fraud 20. Symptoms rather than evidence People hesitant to come forward: Not Sure about the fact Fear reprisal for being a whistle-blower Intimidated by the perpetrator May regard squealing is wrong Not easy within organization 21. Law protect Whistle-Blowers and Promote Fraud Detections Whistleblower Representation of SEC 22. Barra, R. A. (2010). The impact of internal controls and penalties on fraud. Journal of information Systems, 24(1), 1-21. Ge. C.(2005). Audit as a leader. China: Jixie Industry. Former CEO of London based company pleads guilty to federal charge in 2.1 million fraud scheme, (2013). Press releases of FBI Retrieved from http://www.fbi.gov/washingtondc/press-releases/2013/former-ceo-of- london-based-company-pleads-guilty-to-federal-charge-in-2.1-million- fraud-scheme Whistleblower Representation of SEC Retrieved from http://www.youtube.com/watch?v=8fsIKSXM1gk&list=PL97A225800A DE733F Hall, J. J. (1996). How To Spot Fraud: Many managers consider some level of" shrinkage" as normal. Journal of Accountancy, 182, 85-85. Hongtao.Hou (2007). The analysis of legal responsibility of CPA: G- Waigaoqiao Corporation VS PWC .Journal of Accounting and Finance ,2010(4),49-59