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SYSTEMS AUDIT FRAUD

SYSTEMS AUDIT FRAUD

Course Overview

Introduction:

Fraud is predictable, not as to occurrence but how it will occur in a specific situation. Auditors are better able to uncover fraud when they have been educated in how fraud occurs in core business systems. Auditors have a responsibility to respond to the risk of fraud but many do not know how to properly identify fraud schemes. This training will help professional accountants, internal auditors and CPA firms uncover and identify fraudulent transactions in core business systems.

Prerequisite: None

Learning Level: Basic

Advanced Preparation: None

Duration: 3 Weeks

COURSE OBJECTIVES

Upon completion of this programme, participants will be able to:

  • Provide a conceptual framework of internal controls in a computer environment
  • Discuss the primary steps in conducting a risk assessment of an IT system
  • Review the audit implications of recent technological changes
  • Review the evaluation and testing procedures for General and Business Process Application Controls
  • Apply critical thinking skills and solve auditing problems through the use of case studies
  • Demonstrate the use of the Auditing, Assurance and Ethics Handbook. Demonstrate the ability to undertake research on significant auditing issues and to keep up-to-date with developments in auditing theory and practice.

COURSE OUTLINE/CONTENTS

Module 1: Understanding How Fraud Occurs: Fraud Risk Identification

  • Integrating the fraud theory into your audit
  • Incorporating the fraud audit matrix
  • Comparing approaches: internal audit, fraud audit, and forensic investigation
  • The fraud triangle: opportunity, pressures, and rationalization
  • Identifying who commits fraud
  • Fraud in plain English
  • Identifying what actually constitutes fraud in your organization
  • How perpetrators conceal fraud
  • The premise of concealment and concealment strategies
  • Conversion: how perpetrators benefit from the fraud scheme
  • Identifying types of conversion and understanding different audit and industry strategies

Module 2: Building Fraud Scenarios: Integrating fraud testing into the audit program and preparing the fraud risk assessment

  • Understanding the fraud risk structure
  • The inherent fraud schemes in every business system
  • How to build fraud scenarios for individual audit programs

Module 3: Incorporating Fraud Risk Assessment into the Audit Program

  • Fraud scheme approach
  • The fraud opportunity approach
  • Techniques to assess the risk of fraud
  • Linking internal controls to fraud risk
  • Linking the audit response to fraud risks
  • Individual and aggregate fraud risks
  • Business risk factors

Module 4: Integrating Fraud Testing into Your Audit Program

  • Using red flags to identify fraud
  • How to build and analyze red flags for specific fraud schemes
  • Fraud data analysis: approaches and strategies
  • How to build the fraud data profile: the step approach for data mining
  • Identifying the response to fraud based on the fraud risk assessment: control vs. Fraud approach
  • Incorporating fraud steps into the audit program
  • How to design fraud audit procedures to pierce the concealment strategy
  • Linking the audit program to the risk assessment
  • Sampling designed to locate fraud
  • Testing and evaluating the design of your anti-fraud controls
  • Identifying suspicious transactions through fraud audit procedures
  • Protocol for resolving a suspicious transaction
  • Writing fraud audit findings and the legal considerations involved

Module 5: Internal Controls and Fraud: Conducting an internal fraud investigation

  • How controls are related to the fraud theory
  • Fraud control: prevention, detection, deterrence, prosecution, and approval
  • Fraud prevention programs and policies
  • How to design controls to minimize fraud
  • Managing fraud costs
  • Developing fraud awareness programs

Module 6: Financial Statement Fraud

  • Fraud in the revenue cycle
  • Inventory fraud schemes
  • Expenditure fraud schemes
  • Journal entry fraud schemes
  • Management fraud: incentive, opportunity and rationalization

Module 7: Fraud Investigation

  • Identifying resources to conduct an investigation
  • Focusing on fraud theory and development
  • Using private investigators
  • Types of interviews and the appropriate approach
  • Understanding the interview methodology
  • Legal considerations when conducting an interview
  • Appropriate collection and analysis of documentation
  • Forensic examination of documentation
  • Individual rights during investigations
  • Understanding the civil court process
  • How the legal system works

Module 8: Fraud auditing in core business systems

METHODOLOGY AND EVALUATION

Approach

This Course is conceived for face-to-face training, hence allowing a constructive interaction and exchange of experiences between Facilitators and Participants. The course will combine individual presentations by Professors and Managers and Participants, Panel Discussions, and Group Work on selected Modules. Prescribed material is made available during the course, and includes notes, articles, statutes and excerpts from textbooks. The programme uses training methods chosen to ensure effective learning, to reinforce understanding, to develop practical skills to promote critical evaluation of information. Interest is maintained throughout each session by use of a variety of formats, including:

 Case studies

 Practical exercises

 Discussions

Throughout the course, you will learn from others in your group as they share practical experiences in their work environment. You will learn by doing and by applying what you learn to your own work environment. Thus, the training methodology is based on interactive learning. Furthermore, learners will use examples from their own organisations, thus ensuring that the learning is anchored at their workplace. This course will strive to effect actual change back at the workplace through effective and practical outcomes based training.

Language

The lectures are presented in English (should numbers justify it, separate classes will be presented in either Swahili or French) and study guides and class notes are made available in English. Prescribed material is made available in the original language. Participants may participate in Swahili, French or English, and complete assignments in either of these languages.

Assessment

The course involves preparing some sort of in-class and out of class assignments which include drafting “from scratch”, drafting using forms, and redrafting. Some short assignments contribute to the work on longer, full documents. Assignments receive written evaluation and serve as the basis for class discussion as well. You are to type and double-space all written drafting assignments unless otherwise instructed. Bring two copies of each assignment to class on the date due, one to turn in and the other to keep and have available during class discussion.

Evaluation

In conformity with KIBYA’s procedures, an evaluation of the course will be carried out at the end of the Programme to determine the perceived relevance of course contents to Participants’ needs and the effectiveness of the methodology and materials employed in achieving the course’s training objectives.