MODELING THE FRAUD COUNTERACTION:
"DINEV'S INTEGRATED MODEL FOR FRAUD
COUNTERACTION (DIMFC)" Dr. Dimiter Dinev, CFE, EFE
Founder & Chairman of Association for Counteraction to Economic Fraud (ACEF)
XII INTERNATIONAL CONGRESS ON INTERNAL CONTROL, INTERNAL AUDIT, FRAUD AND ANTI-
CORRUPTION ISSUES - KRAKOW 26-27 September 2013
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IX-XII PIKW CONGRESSES IN KRAKOW2
KRAKOW IX -XII PIKW CONGRESSES3
KRAKOW IX -XII PIKW CONGRESSES4
KRAKOW XII PIKW CONGRESS5
KRAKOW - XII PIKW CONGRESS6
KRAKOW XII PIKW CONGRESS7
KRAKOW XII PIKW CONGRESS8
KRAKOW XII PIKW CONGRESS9
2009-2013 ACEF MODELS Dinevs Compass for Fraud Detection - Fraud
Magazine, ACFE, 1/2009
Dinevs Puzzle for Fraud Investigation-2010, Krakow
3D Fraud Risk Assessment Model- Krakow 2011
Dinevs Integrated Model for Fraud Counteraction - Krakow 2013 today
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Dinev Integrated Model for Fraud Counteraction - DIMFC
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Dinev Integrated Model for Fraud Counteraction - DIMFC
INTEGRATES THE PROCESSES OF:
PREVENTION
DETECTION
INVESTIGATION
LEGAL PROSECUTION
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Dinev Integrated Model for Fraud Counteraction - Goals COMPREHENSIVE
COMPLETED
SIMPLE AND UNDERSTANDABLE
WORLD WIDE APPLICABLE
COST EFFECTIVE
USABLE, OF COURSE13
DIMFC - Prevention
Prevention & Detection - chicken-or-egg conundrum
Ethics
Compliance
3D Fraud Risk Assessment Model
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DIMFC - Prevention - Ethics
Values - integrity,...
Virtues - responsibility,...
Moral principals - temptations, ...
Rules and regulations - duties, ...
Ethical practices - ethics programs, ...
Rules of conduct - conflicts of interest15
DIMFC - Prevention - Compliance
Ethics is the science of conduct, and the art of life
Process compliance
Financial compliance
Regulatory compliance
Inputs, Processes, Outputs, Outputs, 3E's16
DIMFC - Prevention - 3D Fraud Risk Assessment Model
A stand-alone business engagement developed in 3 dimensions:
Functional,
Methodological and
Timing17
DIMFC - Prevention - 3D Fraud Risk Assessment Model - Basics
Functional Dimension comprises of activities which grouped and conducted in the following sequence (iteration):
Fraud Exposure, Awareness and Recognition
Fraud Risk Data Analysis
Fraud Risk Data Assessment
Fraud Risk Response18
DIMFC - Prevention - 3D Fraud Risk Assessment Model - Goals
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DIMFC - Prevention - 3D Fraud Risk Assessment Model - Fraud Scenario
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DIMFC - Prevention - 3D Fraud Risk Assessment Model - Methodological
Dimension (How To Do?) 3D FRAM is based on the design of a fraud risk assessment process which encompasses eight elements:
1. The kind of information about fraud to be acquired,
2. The sources of information (for example, documents, types of respondents),
3. The methods to be used for sampling sources (for example, discovery sampling),
4. Methods of collecting information (for example, Internet search, interviews, questionnaires, specialized software),
5. The timing and frequency of information collection,
6. The analysis of the data,
7. The ranging the risk comparing outcomes with and without a fraud (what-if, cause-and-effect questions), and
8. The conclusions and response recommendations. 21
DIMFC - Prevention - 3D Fraud Risk Assessment Model - Fraud Patterns
(Red Flags)
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DIMFC - Prevention - 3D Fraud Risk Assessment Model - Timing Dimension
(When To Do?)
Planning the Fraud Risk Assessment Engagement
Performing the Fraud Risk Assessment Engagement
Fraud Risk Assessment Conclusions and Recommendations
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DIMFC - Prevention Framework
There is no Prevention without Detection, Investigation and Legal Prosecution
Detection and Reactive approach
Prevention and Proactive approach
Investigation - Internal and External24
DIMFC - Detection - Dinevs Compass for Fraud Detection
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DIMFC - Dinevs Compass for Fraud Detection - 8 Points
The process of fraud detection is associated with:
1. The elements of the fraud;
2. Recognizing the types of fraud;
3. The phases of fraud commitment;
4. The method of detection;
5. Who first detects the fraud;
6. The evidence which should and can be collected;
7. The collusion and/or accomplices, if any; and,
8. The fraud exists without any tips and indicators.26
DIMFC - Dinevs Compass for Fraud Detection - The Path
Who notifies about the fraud indicators? (Who is the whistleblower?)
What are the indicators?
How the notification has been made?
Who is notified about the indicators?
Analysis of the available evidence
Decision to continue or cancel the fraud detection process
Stop the process of fraud detection
The Detection process continues
Selecting the methods for fraud detection
Collecting evidence for identified fraud indicators
Fraud predication?
Initiate fraud investigation27
DIMFC - Dinevs Compass for Fraud Detection - Methods & Techniques
Strategic methods (1-5)
Systematic methods (2-6)
Technological methods (3-7)
Reactive and proactive methods (4-8)
Intuitive and empirical methods
Quantitative and qualitative methods28
DIMFC - Dinevs Investigation Puzzle
Systematic process, accomplished after the phase of the detection and requires specialized knowledge, skills, ethics and experience.
Systematic process, which consists of
survey, interview, interrogation, inquiry and all procedures ,used
for objectively collecting, obtaining and analysis of sufficient evidence
as to determine the truth, and
to take the proper corrective measures preventive, administrative, civil or criminal claims
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DIMFC - Dinevs Investigation Puzzle - Goals
Reconstruction of the described and real committed actions and clarifying of the truth considering the legislation;
Determination of the true/false statements regarding the actions described in the tips/complaints as to fraud, abuse or another violation of the rules;
Preparation and submission of proposals for proper corrective measures, if necessary.
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DIMFC - Dinevs Investigation Puzzle - The Elements
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What happened?
Who is the perpetrator?
How much is the
damage?
Who else is an accomplice?
Where happened? Why is happened (the
intent) ?
When happened?
Who is the responder?
Who is the whistleblower?
How happened? What evidence is available?
What kind of violation?
DIMFC - Dinevs Investigation Puzzle - The Pieces32
DIMFC - Dinevs Investigation Puzzle - Outcomes
It could be stated that the reconstructed actions have been conducted in the way described in the tip, complaint or by a witness,
It could be stated that the reconstructed actions could be conducted in the way described in the tip, complaint or by a witness,
It could be stated that the reconstructed actions couldnt be conducted in the way described in the tip, complaint or by a witness and
It couldnt be stated that the reconstructed actions have been conducted in the way described in the tip, complaint or by a witness
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DIMFC - Legal Prosecution
CRIMINAL PROSECUTION
CIVIL PROSECUTION
PREVENTION IS STILL HERE
Dinev Integrated Model for Fraud Counteraction - DIMFC
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DIMFC - Who Will Be The Actors?
Anti-Fraud and Corruption Specialists
Risk Managers
Risk Analysts
Internal Experts
National Fraud Risk Assessment (Accountability) Experts and Evaluators
Certified Public Accountants as a responsibility according ISA 240 or SAS 99 and/or as a stand-alone engagement
Certified Management Accountants
IT, CISM and ISACA Specialists
Financial Controllers
Fraud Prevention Specialists
Certified Financial Services Experts
Certified in Financial Forensics Specialists
Forensic Accountants
Compliance Officers
Certified Fraud Examiners
Expert Fraud Examiners
Certified Internal Control Experts/ Specialists
External Experts WHAT
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Dinev Integrated Model for Fraud Counteraction - DIMFC
INTEGRATES:
ETHICS
COMPLIANCE
3D Fraud Risk Assessment Model
Dinevs Compass for Fraud Detection
Dinevs Investigation Puzzle
Legal Prosecution37
YOUR QUESTIONS AND MY ANSWERS, PLEASE!
I WOULD BE GLAD TO ANSWER YOUR QUESTIONS AND TO ACCEPT ALL OF
YOUR REASONABLE RECOMMENDATIONS!
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THANK YOU FOR YOUR KIND ATTENTION!
Dr. Dimiter Dinev, CFE, EFE
Chairman of ACEF
www.acefraud.org
www.iepinet.eu
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