Wednesday, April 13, 2011 - 12:37
Fraud auditing has moved into the spotlight since the Sarbanes-Oxley Act of 2002 became the law that would put a halt to large corporate frauds. When Enron imploded, it was a wake-up call to thousands of shareholders and retirees who found their savings evaporating before their eyes. Somewhat predictably, the implementation of the Sarbanes-Oxley Act provisions did not go smoothly. Major companies spent millions of dollars trying to comply with control requirements. The return on this investment has not been clear to those involved. Although there have been no recent corporate frauds of the Enron scale, that does not mean the Sarbanes-Oxley rules have solved the fraud problem. What it does mean is that there is significantly heightened awareness of the problem and fraud auditors need to parley their efforts off of this new or renewed awareness. Read more
Friday, December 4, 2009 - 10:43
You can help to reduce the incidence of credit card fraud, and thus reduce the losses to your bank, by taking steps that detect and deter efforts to obtain or use fraudulent credit cards. Some of these steps involve care in issuing credit cards. Other steps involve providing information to credit card holders or to merchants about how to avoid unauthorized use or misuse of credit cards. This excerpt from Electronic Fund Transfer Fraud Protection Manual, by Clayton P. Gillette, presents practical information to avoid credit card fraud. Read more
Friday, November 20, 2009 - 13:16
This checklist is excerpted from Electronic Fund Transfer Fraud Protection Manual, by Clayton P. Gillette, who is a co-author of Payment Systems and Credit Instruments, a leading casebook on payment systems, and the author of multiple articles concerning payments law and other areas of commercial transactions. He is the Max E. Greenberg Professor of Contract Law at New York University School of Law, where he teaches commercial law. Professor Gillette has also served as an expert witness and consultant in matters involving the use of fraudulent negotiable instruments. Read more
Wednesday, October 21, 2009 - 14:14
Internal auditors should be alert to the possibility of intentional wrongdoing, errors and omissions, inefficiency, waste, ineffectiveness, and conflicts of interest. They should also be alert to those conditions and activities where irregularities are most likely to occur.
However, fraud auditing is not a standard audit project. To the contrary, internal auditors are first responsible for performing financial audits to provide management with assurances that the institution's financial statements are accurate. Financial audits involve testing IT systems and evaluating internal controls and efficiencies Read more
Wednesday, October 21, 2009 - 13:20
Banks should implement appropriate controls consistent with the security process described in the Federal Financial Institutions Examination Council's (FFIEC) IT Booklet, "Information Security." Management for financial institutions should consider the following actions to help prevent, detect, and respond to the threat from email-related frauds: Read more
Wednesday, October 21, 2009 - 11:03
Consumer loans, mortgage loan transactions in particular, offer a fertile environment for fraud.Consumer loans are targets because the review of these applications is relatively brief, relying primarily on the information provided in an application and a credit report. With financial institutions soliciting applications by telephone, mail, and the Internet, many loan transactions now involve little or no in-person contact with persons who are not currently customers of the institution. Read more
Wednesday, July 22, 2009 - 08:12
The UCC is the main source of law on liability for checks with forged drawer signatures, forged endorsements (forged payee signatures), and alterations.
The UCC is quite complicated. Basic liability is followed by a variety of defenses, then followed by counter defenses and exceptions. Bankers need to understand these rules and defenses when they make decisions about check-handling procedures and about what actions to take when a forgery is reported. Read more
