Rudi Phadmanto

ACFE Fraud Tree

Descriptors Financial Fraud Asset
Misappropriation
Corruption
Fraudster Executive
Management
Employees 2 Parties
Sizes of Fraud Largest Smallest Medium
Freq of Fraud 7,9% 92,7% 30%
Motivation Stock Prices,
Bonuses
Personal Pressures Challenge,
Business
Materiality Likely Unlikely Depends
Benefactors Company and
fraudster
Fraudster (against
company)
Fraudster
Size of victim
company
Large Small Depends
IT Auditing & Assurance, 2e, Hall & Singleton
FRAUD TREE
Asset misappropriation fraud
1. Stealing something of value usually cash or inventory (i.e.,
asset theft)
2. Converting asset to usable form
3. Concealing the crime to avoid detection
4. Usually, perpetrator is an employee
Financial fraud
1. Does not involve direct theft of assets
2. Often objective is to obtain higher stock price (i.e., financial fraud)
3. Typically involves misstating financial data to gain additional
compensation, promotion, or escape penalty for poor performance
4. Often escapes detection until irreparable harm has been done
5. Usually, perpetrator is executive management
Corruption fraud
1. Bribery, etc.
FINANCIAL STATEMENT SCHEME
Timing Difference
Fictitious Revenues
Concealed Liabilities
In adequate disclosure
Improper Assets Valuation
Timing Differences (Improper
Treatment of Sales)
1. Channel Stuffing: Memindahkan inventory kepada
cabang atau Sales People dan dicatat sebagai
penjualan.
2. Early revenue recognition : Kontrak penjualan jasa
selama 3 tahun dianggap sebagai sales tahun
berjalan.

Fictitious Revenues
1. Recording sales that never ocurred.
2. Sebuah perusahaan reasuransi, membuat polis
asuransi aspal, dan dicatat sebagai penerimaan
perusahaan.
Concelaed Labilities (Improper
Recording of Liabilities)
1. Menunda mencatat Utang Dagang.
2. Memindahkan Utang Dagang ke perusahaan anak.
3. Sengaja tidka mencatat adanya Utang Dagang.
Inadequate Disclosure
Tidak mengungkapkan seluruh informasi yang sesuai
standar akuntansi harus diungkapkan.
Standar mengatakan bahwa perusahaan harus
mengungkapkan apabila ada aktiva tetap atau piutang
yang dijaminkan dll.
Improper Assets Valuation
1. Inflating the value of receivables, inventory, and long
lived assets.
2. Caranya dengan mendebet rekening asset dan
mengkredit rekening equity.
3. WorldCom: Meyakinkan biaya sewa telpon yang
jumlahnya Milyaran dolar menjadi aktiva. Sehingga
daftar R/L menjadi tampak lebih baik.
CORRUPTION SCHEME
Conflict of Interest
Bribery
Illegal Gratuities
Economic Extortion
Conflict of Interest
1. If employee, manager, or executive has undisclosed
economic or personal interest in transaction that
adversely affects the company.
a. Purchases Scheme
b. Sales Scheme
c. Other Schemes
Bribery
Offering, giving, receiving, or solisiting anything of
value to influence an official act or business decision.

Illegal Gratuities
Similar to Bribes but not necessarily there is an intent
to influence a busnisess decision.
Menerima hadiah setelah suatu keputusan terjadi.
Termasuk ilegal karena menerima hadiah di atas
jumlah tertentu pada entity tertentu dilarang.
Economic Extortion
Economic extortion is the opposite of bribery fraud.
Instead of a vendor offering a bribe, the employee
demands payment from a vendor in order to favor the
vendor.
ASSET MISAPPROPRIATION
SCHEMES
DEFINITION
The act of misappropriating or turning to a wrongful
purpose ; wrong appropriation, a term that does not
necessarily mean peculation, although it mean that.
The term may also embrace the taking and using of
anothers property for sole purpose of capitalizing
unfairly on good will and reputation ov propertu
owner. (Blacks Law Dictionary)
to appropriate wrongly (as by theft of embezzlement)
(Websters Dictionary)
ASSET MISAPPROPRIATION
SCHEMES
DEFINITION
Misappropriation includes more than teheft or
embezzelment. It involves the misuse of any company
asset for personal use. (Joe Wells).
ASSET MISAPPROPRIATION
SCHEMES
CASH
Larceny: intentional taking of an employers cash.
Fraudulent Disbursement: a distribution of funds is
made from some company account in what appears to be
normal manner.
Billing Scheme: using companys accounting system to
steal funds by submitting bogus claims to pay the
vendor.
Payroll Scheme: using companys accounting system to
steal funds by submitting bogus claim to pay the
employee.

ASSET MISAPPROPRIATION
SCHEMES
CASH
Expense Reimbursement Scheme: taking funds from the
company by submitting falsified business expense and
gain fraudulent reimbursement check from the victim.
Check Tempering Scheme: Fraudster preparing
fraudulent check.
Register Disbursement Scheme: removing moey from a
register, where the removal is recorded on the register
system.
Skimming: Stealing funds before booking entry is made.
Receivables: Lapping Scheme

ASSET MISAPPROPRIATION
SCHEMES
INVENTORY AND OTHER ASSETS
Misuse: usually involves equipment.
Larceny