Managing and assessing the risk of fraudulant financial statements

1. Managing and Assessing the Risk of Fraudulent Financial Statements Presented by: W. James Lloyd, CPA/ABV/CFF, CFE, ASA And Doug Arnold, CPA, CFE, CMA, CBA, CFSA

7. The Fraud Triangle 39 th Annual Virginia Accounting and Auditing Conference September 28-29, 2009 Page Management or other employees have an incentive or are under pressure Circumstances exist – ineffective or absent control, or management ability to override controls – that provide opportunity Culture or environment enables management or other employees to rationalize committing fraud Rationale Opportunity Incentive

15. Small Organizations Suffered Disproportionately Large Losses Source: Association of Certified Fraud Examiners 2008 Report to the Nation

16. Small Organizations Suffered Disproportionately Large Losses Source: Association of Certified Fraud Examiners 2008 Report to the Nation

17. Distribution of Dollar Losses Source: Association of Certified Fraud Examiners 2008 Report to the Nation

18. Median Loss by Method of Fraud 39 th Annual Virginia Accounting and Auditing Conference September 28-29, 2009 Page Source: Association of Certified Fraud Examiners 2008 Report to the Nation

40. FRAUD PREVENTION 39 th Annual Virginia Accounting and Auditing Conference September 28-29, 2009 Page

49. Financial Statement Fraud from an Auditor’s Perspective

75. QUESTIONS?