FRAUD: It can’t happen to us . . . CAN IT? Michael T. Lewis, CFA, Partner Christina Solomon, CPA, CFE, Manager February 15, 2008

Objectives Prevalence of fraud Identify fraud schemes and risk factors Value of internal controls

2

Common Myths Our people won’t commit fraud Fraud is immaterial Fraud is complex and undetectable Prosecuting deters others

3

The Fraud Triangle Opportunity

Motive

Rationalization

Source: “Why Employees Commit Fraud” by Joseph T. Wells, www.ACFE.com

4

Organization Type

Impact on Victim Organization Not-For-Profit

$100,000

Government

$100,000

Public Company

$200,000

Private Company

$210,000 $0

$50,000

$100,000

$150,000

Median Loss Source: 2006 ACFE Report to the Nation on Occupational Fraud & Abuse

5

$200,000

$250,000

Impact on a Victim Organization Number of Employees