Tampa Bay Chapter - ACFE       http://TampaBayCFE.org          March 2010

THE DENIAL OF FRAUD AND THE CONSEQUENCES AND
COSTS OF IGNORING ITS EXISTENCE 

Why do some businesses choose to ignore the existence of potential fraud?  Is it because they truly believe that fraud would never happen to them or, is it that if fraud was discovered the cost of discovery would be viewed negatively?  Regardless of the reason, fraud or at least the potential to commit fraud can exist anywhere and in any organization.   

Identifying the vulnerability of an organization is one of the first steps that can be taken in order to create an action plan for the future health of the organization.  Once a clear and concise plan of avoidance is set up, this can define the tone throughout the company and help prevent the risk for exposure.  In an October 2007 article for the Journal of Accountancy, Joseph T. Wells and John D. Gill state that fraud can be classified into three broad categories: asset misappropriation, corruption and fraudulent financial statements. In the 2007 edition of the Fraud Examiners Manual published by the Association of Certified Fraud Examiners, there are 15 questions that every organization can ask when assessing your fraud health risks.   

  • Do one or two key employees appear to dominate the company?

  • Do any key employees appear to have a close association with vendors?

  • Do any key employees have outside business interests that might conflict with their job duties?

  • Does the organization conduct pre-employment background checks to identify previous dishonest or unethical behavior?

  • Does the organization educate employees about the importance of ethics and anti-fraud programs?

  • Does the organization provide an anonymous way to report suspected violations of the ethics and anti-fraud policies?

  • Is job or assignment rotation mandatory for employees who handle cash receipts and accounting duties?

  • Has the company established positive pay controls with its bank by supplying the bank with a daily list of checks issued and authorized for payment?

  • Are refunds, voids and discounts evaluated on a routine basis to identify patterns of activity among employees, departments, shifts or merchandise?

  • Are purchasing and receiving functions separate from invoice processing, accounts   payable and general ledger functions?

  • Is the employee payroll list periodically reviewed for duplicate or missing Social Security numbers?

  • Are there policies and procedures addressing the identification, classification and handling of proprietary information?

  • Do employees who have access to proprietary information sign nondisclosure agreements?

  • Is there a company policy that addresses the receipt of gifts, discounts and services offered by a supplier or customer?

  • Are the organization’s financial goals and objectives realistic?  

Each day more and more cases of fraud creep into our society and are seemingly perpetrated by those individuals who we trust or rely on the most. Ignoring potential fraud can have devastating consequences.  Take for example Texas billionaire Sir R. Allen Stanford who, along with five others was accused of swindling some 30,000 investors out of an estimated $7 billion. Fraud happens, and it happens when we may least expect it and from whom we least consider capable.  In these devastating times, the potential for fraud can creep into our lives at any moment. Consider fraud like this – if your home had a slow water pipe leak, it could go undetected for months before you might discover the leak.  By the time of detection, the damage can be catastrophic and discovering the cause of the problem can be more costly than the repairs.  Creating a healthy business environment should include assessing potential risk factors as well as acknowledging that fraud can and will exist if you remain unprepared for its consequences.

For more information on understanding and fighting fraud, the January/February 2010 issue of   Fraud Magazine has an interview with Dr. Timothy Pearson, Executive Director of the Institute for Fraud Prevention, discussing the root causes and business tools for fighting fraud.  

Author

Judith A. Botham, MBA, CFE
Coordinated ChildCare of Pinellas, Inc.

Association of Certified Fraud Examiners
Journal of Accountancy
Fraud Magazine

TRAINING OPPORTUNITIES

Tampa Bay Chapter

Dinner Meeting March 9, 2010- Crime Stoppers of Tampa Bay - Debbie Carter

 Dinner Meeting April 20, 2010- Arson Fraud - Lt. Eric Saccasyn

11th Annual Fraud & Computer Crimes Seminar

May 11-12, 2010
Ruth Eckerd Hall
Clearwater, Florida
1111 McMullen Booth Road
Clearwater, FL 33759
 

Association of Certified Fraud Examiners

21st Annual ACFE Conference
July 25-30, 2010
Washington DC

2009 - 2010
OFFICERS & DIRECTORS

PRESIDENT
Steve Hooper, CIA, CFE, CCSA, CGAP
Clerk of the Circuit Court Hillsborough County, FL
(813) 276-2029 x3703

VICE PRESIDENT
 Christine Dever, CPA/CFF, CFE
City of Tampa
(813) 274-7166

SECRETARY
 Ellen Wilcox, CFE
Florida Department of Law Enforcement
(727) 298-2482

TREASURER
Laura Krueger Brock, CPA/CFF, CFE, CVA
Kirkland, Russ, Murphy & Tapp, P.A.
(727) 572-1400

DIRECTOR
 Mark Dubina, CFE
Tampa Port Authority
(813) 241-1893

DIRECTOR
 Sharon M. Shaw, CFE
OAG Statewide Prosecution
Tel: (813) 287-7960

DIRECTOR
Debbie Venanzio, CFE
Branch Banking & Trust Co.
Tel: (727) 302-5498

DIRECTOR
Bill Miles, CFE
Florida Department of Law Enforcement
Tel: (863) 701-1474

DIRECTOR
Gary Chapman, CIA, CGAP, CFE
City of Tampa
Tel: (813) 274-7163

CHAPTER TRAINING
Wayne Boytim, CFE
Retired
(813) 274-7167

Chapter News

Totes for Hope  

The Hillsborough Association of Women Lawyers has a new spring community service project this year called Totes for Hope.  We will be collecting new or gently used handbags, shoes, and accessories for Dress for Success.  We will also be collecting new or gently used duffle bags and handbags for foster children who are supported by Voices for Children.  

Click here for more details.  Donations can be dropped off at our Chapter Dinner Meeting on March 9, 2010.

CFE Exam Prep Study Group

Our CFE Exam Prep Study Group is going strong with participants attending the weekly three-hour session. The Group meets every Tuesday (except on dinner meeting nights) at 6pm at the Fifth Third Bank on Kennedy Blvd, which is close to the Westshore Blvd intersection. The Group is facilitated by two distinguished CFE members, Pamela Ranney and Consuelo Herrera who volunteer their time each week. If you are interested in joining us, contact me at hooper@hillsclerk.com or at the chapter email address tampacfe@tampabaycfe.org.

The session are open to anyone, member or not, who are interested in pursuing the CFE designation. We systematically cover all four-parts of the exam, through presentations, discussion, and reviews of exam questions and answers.

Second Anti Fraud and Corruption Conference in Mexico, D.C.

I was honored to participate as one of the speakers at the Second Anti Fraud and Corruption Second Conference in Mexico, D.C. The ACFE president, Mr. James T. Ratley gave an excellent presentation sharing some of the tactics for uncovering fraud and red flags identifiers. Mr. Ratley broke down his presentation into three main points for detection of fraud:

  • Tips or complaints

  • Turns himself/herself in

  • Assessment of “red flags”

With respect to tips and complaints, he gave several examples on how complaints have been known to be some of the best sources of fraud and should be taken seriously. Mr. Ratley also added that motives of the complaints may be suspicious; however, the allegations usually have a merit that warrant further investigation. 

When he spoke about how perpetrators turn themselves in, he mentioned that when someone commits fraud it takes a continued effort to keep a fraud hidden. This constant concern prevents fraudsters for taking vacations. They don’t even allow themselves the possibility of being sick because of the increased likelihood of detection.

Another reason why some fraudsters turn themselves in is because they find that they cannot deal with the emotional expense of the fraud, eventually, they rather face the consequences of fraud than the continuing effort of keeping it hidden.

Mr. Ratley covered the assessment of red flags with the following topics:

  • Employee Fraud Indicators,

  • Accounting and analysis anomalies,

  • Weak internal controls,

  • Extravagant lifestyles, and

  • Unusual behavior.

In closing, Mr. Ratley emphasized the importance of paying attention to red flags because they constitute warnings that something could be or is wrong. Ignoring red flags or no properly monitoring them sends the wrong sign to employees who are led to the conclusion that it is okay to game the system or that they will not be caught. According to Mr. Ratley, if a little fraud is left to grow, it becomes a large fraud.

History of ACFE Mexican Chapter

Recognizing the achievements of the ACFE Mexico is easy because they are many and they are tangible.  A group of committed professionals had set a precedent in the Hispanic community. Under the leadership of its President and Vice-president,  Mr. Juan Manuel Portal Martinez and Lic. Muna D. Buchahin, respectively, the ACFE Mexico is devoted to grow a strong membership that will position the CFE designation as one of the most trusted in the Hispanic community.

What Their Numbers Say?

The ACFE-CAPÍTULO MÉXICO, A.C. was launched  in February 2008 with the purpose of serving the community through the promotion of improvement in the detection and dissuasion of fraud based on expanding knowledge and its members’ interaction.

Their membership has sky rocked. As of the end 2009 they reached 180 members and, with less than two years of existence, that is remarkable. The ACFE Mexico has hosted two national conferences, which have been a success as a result of the devotion and hard work of the Chapter Board of Directors and each one of its members.

The tone set by the chapter is demonstrated by its members’ backgrounds. Several of them hold important positions within the federal government, educational institutions, and the private sector. The core values of the ACFE throughout the world have been honored by the Mexican chapter.

Congratulations to the founders and each one of the members who have been putting many, many hours of their own to reach these numbers that speak aloud:

Founded: 2008
Active Members: 180
Goals: Increase the chapter membership and give back to the community and reach partnerships with other chapters toward knowledge sharing and development.
Events: Two national Conferences:

2008 First Annual Conference: United Against Fraud and Crime

  • Forensic Accounting and Psychology of Fraud

  • Fraudulent Financial Statements

  • Using data analysis techniques to identify potential areas of fraud

  • Information leakage and fraud variable: reasons and dynamics

  • How to identify dishonesty: Potential Risks in organizations

  • Risk factors and red flags in business

  • Cybercrime

  • Financial transactions and fraud schemes

  • The integration of the file: Evidence needed to document fraud

  • How to conduct an internal investigation

  • Similarities and differences in the treatment of fraud and money laundering

  • Fraud in public works

  • Interviewing Techniques for internal auditors and professionals in the prevention of illicit continuous monitoring and fraud prevention

2009 Second Annual Conference: Prevention, Detection and Deterrence of Fraud: A Comprehensive Approach

  • Business continuity

  • Learn how to spot and stop fraud and corruption.

  • What should know the Board and the Director General Fraud?

  • Application of standards and policies to prevent fraud in business.

  • Application of Data Analysis Techniques to Detect Fraud.

  • Our nation does not support Draft Fraud.

  • Money laundering and its connection with the fraud.

  • Fraud: The power of lies.

  • Tracking illicit infrastructure.

  • The Internal Control in fraud prevention.

  • Case study of insurance fraud related to Information Technology.

  • How to implement a security model for your organization.

The Tampa and Mexican Chapters’ Opportunities

Opportunities for information, knowledge, and skills sharing are just the beginning of many instances of camaraderie and possible business opportunities for those seeking to grow their businesses in Latin America. This initial step is just the beginning of a strong relationship between our local Chapter and the Mexican chapter. We are proud of the ACFE Mexico, D.C. and extend our congratulations to its distinguished members.

Author: Consuelo.herrera@fraudawareness.org

Dinner Meeting Information

Our next Dinner Meeting is scheduled for March 9, 2010

Debbie Carter will be presenting "Crime Stoppers of Tampa Bay"

Debbie Carter has been employed with the Sheriff's Office for over 20 years in the Public Information Office. She currently serves as the Public Information Officer in the Nations 12th largest media market. She is a member of the National Information Officers Association and the Florida Law Enforcement Public Information Officers Association. As a member of the Public Information Officers Associates, Ms. Carter is utilized by law enforcement agencies throughout the state as a trainer for new Public Information Officers. She currently serves as the Co-Chair of the Tampa Bay Regional Domestic Security Task Force Public Affairs Committee.

Ms. Carter is the President of Crime Stoppers of West Central Florida, a not for profit organization involving law enforcement, businesses and media to publicize information about wanted criminals to the community through television and printed media. She also serves on the Executive Board of Directors for the Lynn Sowers Memorial Foundation.

She is a member of the Fraternal Order of Police, Lodge 108 and Regional Critical Incident Team. At the inception of the Sheriff's Office Peer Support Team in 1995 Ms. Carter served as the assistant coordinator and has served as the Team Coordinator since 1997.

The dinner meetings will be held at The Ramada Tampa Westshore Inn & Conference Center, 1200 N. Westshore Blvd. Registration and social begin at 6:00 PM, followed by the buffet dinner at 6:30, and presentation at 7:00.

To make your reservation, please complete the registration form here.  You can also make your reservation by emailing Gary Chapman by 1:00 PM the Friday before the meeting date. Reservations will not be accepted after 1:00 PM on Friday. Walk-ups are always welcome, but will only be accommodated if space is available.

"No Show" Policy

The subject of “no shows” (that is making a reservation but failing to attend) at dinner meetings has been discussed previously in CFE NEWS. On the Friday prior to the meeting, we make our best guess as to the number attending. With that said, the Board implemented the following policy:

"No Show" is defined as not attending a meeting after making a reservation and not canceling the reservation by noon on the day of the dinner meeting. The first "no show" will be considered as a “grace” miss and will not be billed. Upon a subsequent "no show" the Chapter will bill $32.00 (actual cost to the Chapter) for both missed meetings and for any meetings missed after that.

Summary of the February 9, 2010 Dinner Meeting

At our February 9, 2010 Dinner Meeting Steve Hooper our Chapter President gave a lively presentation about the (Un)becoming of a Department Manager.  Steve explained how the misappropriation started off as an attempt to help the victim organization but may soon  have become for personal benefit.  The organizations policy stated that any remaining funds at the end of the year had to be returned to the county so in an effort to help the organization the Treasurer initially used the funds to buy items for the organization.  Later this turned into using the money for personal benefit. 

The lack of controls and accountability enabled falsified checks to be submitted for reimbursement.  The perpetrator was a nineteen year veteran who was well liked and respected.  There was a severe lack of financial records and little oversight.

News from the ACFE


ACFE Awards - Nomination Period NOW Open

The nomination period for the ACFE Awards is now open and ACFE members are encouraged to nominate their fellow members for the following awards:
          
           CFE of the Year
           Educator of the Year
           Outstanding Achievement in Outreach/Community Service
           Chapter of the Year
           Chapter Newsletter of the Year

New! 2010 CFE Exam Prep Course, U.S. Edition

Associate members get certified in 2010 with the new 2010 CFE Exam Prep Course. Featuring the updated Fraud Prevention and Deterrence section (formerly Criminology and Ethics), the 2010 CFE Exam Prep Course is the most comprehensive study tool available to prepare you for the CFE Exam. Purchase the CFE Exam Prep Course at the ACFE Bookstore and start working toward your CFE credential today.

21St ACFE Annual Conference 

CPE Credit: 4-40
 7/25/2010 - 7/30/2010

Join your fellow anti-fraud professionals at the 21st Annual ACFE Fraud Conference & Exhibition, to be held in Washington, D.C., July 25-30, 2010. Address the challenges and critical issues faced by anti-fraud professionals during top-level educational sessions and participate in unparalleled networking opportunities with the premier practitioners and thought leaders in the fight against fraud.
 

More Training & Information

Free Training on Benford's Law 

My name is Hyo-Jeong Kim, a PhD student at University of Colorado Denver. My professors and I are conducting an experimental research on the effect of advanced feature training of generalized audit software such as ACL and IDEA. We are providing free online training of Benford's Law in ACL and IDEA.

Click here for more information. 

Expert Witness: Effective Courtroom Testimony  

It’s not enough to have the right evidence: an Expert Witness must be able to present evidence persuasively without confusing the jury.

See the full article here DFI News 

15th Annual International Anti-Money Laundering Conference 

15th Annual Money Laundering Conference

GovSec/U.S. Law Conference

http://www.govsecinfo.com/Home.aspx

FRAUD NEWS

Daily Planet Hit by Massive Payroll Fraud 

The Berkeley Daily Planet has discovered that the company that has prepared its payroll for eight years vanished from its Oakland office shortly after the first of this year, leaving behind a trail of unpaid taxes and embezzlement charges. The Planet is not the only victim of what looks like a major fraud and a possible Ponzi scheme worthy of Bernie Madoff—the company claimed that it had more than 100 clients. Most of them are small businesses or nonprofits, and it seems likely that most of them have been stung. The total take could be in the millions of dollars. 

Click here for the full article 

341,956 blank EU travel documents in criminal hands 

A classified Dutch government report has revealed that criminals stole 341,956 passports, identity cards, visa stickers and drivers' licenses from European government facilities since 2000. 

Click here for the full article

Q4 2009 Mortgage Fraud Risk Report 

Click here for the full report

BAE to Pay $446 Million to Settle U.S., U.K. Charges  

Feb. 5 (Bloomberg) -- BAE Systems Plc, Europe’s biggest defense company, agreed to pay almost $450 million in fines to resolve six-year-old bribery and fraud investigations by U.K. and U.S. prosecutors.  

Click here for the full article

Federal Trade Commission links wide data breach to file sharing 

The Federal Trade Commission said Monday that it has uncovered widespread data breaches at companies, schools and local governments whose employees are swapping music, software and movie files over the Internet.  

Click here for the full article

President's Message

In 1998, our chapter had a membership of only 48 members. Today, we stand as a strong 190. This, by far, is the highest and strongest membership the Chapter has experienced. I want to again express my gratitude by thanking all the members who are getting the word out about our profession and to those who invite new guests to come see for themselves what the Association, the Chapter, and the CFE designation has to offer. Let’s continue to grow!

The forty something (sorry, I didn’t get the official count) attending February’s dinner meeting were enthusiastically entertained with an upbeat presentation titled “Behavior (UN) Becoming of a Department Manager.” It was my pleasure to present this small dollar ethical dilemma to you. Based on your evaluations, you too thought of it as a fun presentation and enjoyed it as much as I enjoyed presenting it. Of course, the bottom line was that a basic management misunderstanding of risks and controls was the culprit that allowed the fraud to happen. Charles Tremper. PhD and a CIO once said that “the first step in the risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning.” This volunteer association did not acknowledge the reality of the risk before them, since the perpetrator had been a 20 year volunteer. Remember, controls are there to mitigate or reduce risk. Plain and simple!

I would like to acknowledge our new members:

·         Alex McCaffrey, (NEW CFE), from Garcia & Ortiz, P.A.,
    Raquel Garrido, from WellCare Health Plans

Also, I would like to acknowledge our first time attendees:

·         Alan Bridges, from Profit Shield
    Christina Cooper from Freedom Roads/Camping World
    Kathy Griffin, from First Coast Service Options
    Kimberly Symonds, from Intellistaf, (Guest of Alexander McCaffrey)
    Patricia Lefort from WellCare Health Plans (Guest of Raquel Garrido)
    Janet Wagner, from First Coast Service Options (an IMA Chapter Member)

On behalf of the chapter, I would like to thank our new members, guest, and all first time attendees for visiting with us. We hope to see you again at one of our upcoming Chapter sponsored events.  

Our acclaimed two day “Fraud and Computer Crimes” seminar will be held May 11 & 12, 2010. Your Vice President, Christine Dever and the Board are putting together another dynamic two day event that will be held at the Ruth Eckert Hall.  Speakers and topics will be posted soon. From what I seen so far, it will again be a world class seminar that all of you should attend. It is the cheapest CPE hours available (by design) for our CFE and Associate Members (or nonmembers as far as that goes).

This is my official reminder to the membership. During our Annual Administrative Meeting that will be held during our regularly scheduled dinner meeting April 20, 2010, results of our Chapter elections will be released. The election process is governed by our By-Laws. I will be appointing a nominations committee soon and information on the election will be posted to our website early March 2010.    

Don’t forget the CFE study group is still accepting participants. We have added two new participants over the last two weeks. So if you are looking for some help in your studies or you just like classroom study, send a chapter email (provided on the website) and we will get you in touch with Consuelo or Pamela. Also, as always, we are still looking for CFEs to present topics that cover relevant elements of the test. Please volunteer your time for this rewarding experience. 

I again would like to reiterate the call to keep this chapter moving forward.  Walt Disney once said “We keep moving forward, opening new doors, and doing new things, because we're curious and curiosity keeps leading us down new paths.” So recruit a new member. Let’s reach 200 in membership before the end of this Chapter year. Also, volunteer!  I again request that you get involved by mentoring students or assisting with our study group. Our webmaster, who publishes this newsletter every Chapter month, needs an assistant webmaster to help now and in the future with article research and  solicitation of our own members’ written fraud articles. Contact me if you are interested.   

Our next dinner meeting will be held on March 9th.  Debbie Carter from the Hillsborough County Sheriff's Office will present “Crime Stoppers of Tampa Bay.” I hope to see you there. Make your reservations early.  Thanks to all of you who makes this chapter the “best in the world.” 

Steve Hooper, CFE, CIA, CGAP, CCSA

President, Tampa Bay Chapter - ACFE 

© 2010 Tampa Bay Chapter - Association of Certified Fraud Examiners