ACFE/IIA Joint Meeting

Park Inn Regency Lodge

Tuesday, November 16^th, 2004

 

 

 

On Tuesday, November 16^th, 2004, a joint meeting of the Heartland Chapter-ACFE and the Ak-Sar-Ben Chapter-IIA was held at the Park Inn Regency Lodge.  There were approximately 100 people in attendance.  Dr. Steve Albrecht of Brigham Young University was our featured speaker on the topic of "New Developments in Detecting Fraud.  Dr. Albrecht made several interesting observations: 

 

 

·        Of the ten largest corporate frauds of all time, six occurred in 2002, shortly after the stock market bubble burst and these frauds could no longer be kept hidden. 

 

·        Undetected frauds almost always multiply exponentially over time. 

 

·        There are no small frauds, only large frauds that are caught early.  

 

·        Fraud should be viewed as a business problem.  The business must generate a huge amount of additional revenue to make up for a typical fraud loss.  It is much cheaper to simply put greater resources into fraud prevention. 

 

·        The fraud epidemic has created huge new opportunities for fraud professionals.  Fraud investigations are conducted more than ever before in cases of divorce, bankruptcy, and tax liability, creating a greater need for expert witnessing. 

 

 

Dr. Albrecht stated that there are only two ways to detect fraud:  reactive and proactive.  The traditional approach to fraud detection has always been reactive.  According to the ACFE report on fraud detection, the largest number of frauds(26%) are detected as a result of an anonymous tip.  However, under the Sarbanes-Oxley Act of 2002, companies must now proactively look for fraud.  The act has driven up spending on internal auditing and related fraud prevention activities.  Forensic auditing is also being incorporated as an element of GAAS auditing.

 

Dr. Albrecht characterized the new approach as "Strategic Fraud Detection".  This technology based fraud detection approach focuses on both people and transactions which indicate anomalies.  Dr. Albrecht also gave several interesting examples of cases he has consulted on recently to illustrate his points.  His presentation was very timely, informative, and well received.