Managing Fraud Risk in Procurement

INTRODUCTION

LEARNING OBJECTIVES

When one is handed with power, the natural temptation is to continuously test and enjoy the extent of its influence. Like Plato puts it “Access to power must be confined to those who are not in love with it”, if one is not careful, it will mark the beginning of a love affair with corruption. The emergence of cases from both public and private sectors involving figures from senior position shows that this love affair is all, but slowing down. What we have done so far is the same old strategies - “enhance control processes controls, increase supervision or adding extra manpower to oversee the processes”. But experiences had taught us that if such methods worked, we will not need to go through the vicious cycle of patching gaps over and over again. The truth of the matter is that this is not just a “process” or “system” problem but a human one. Anyone who manages the processes can choose to exploit them no matter how many times you changed thus what we need are strategies to minimise those opportunities. Thus the next question would be who is most qualified to tackle this matter. Our recommendation is if it is about fraud, it should always be a Certified Fraud Examiner.

During the course of our work as practicing fraud examiners, ICFE has always been a voice lobbying for focus on the procurement function as an area more prone to corruption in almost all facets of both the private and public sectors. Corruption and procurement fraud are like evil twins that challenges ethics and integrity. Business productivity drop dramatically and resources are wasted and misallocated. Thus, the livelihood of many men and women who just want to earn an honest living is threatened. If we are not careful and arrest this problem soon, this toxic could shake the foundation of our social ethos.

This seminar aims to assist participants to identify and deter fraud. It does not deal with the conventional topics on procurement process and contract management. We would like all participants to gain an understanding of Fraud Risk Management framework in detering fraud through this seminar.

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ICFE Group of CompaniesInternational Cybercrime & Forensics ExaminersSINGAPORE | MALAYSIA | HONG KONG

MANAGING FRAUD RISK IN PROCUREMENT

TRODUCTION

ARNING OBJECTIVES

n one is handed with power, the natural temptation is to continuously test and enjoy the exxtetentence. Like Plato puts it “Access to power must be confined to those who are not in love with itit””, if one ul, it will mark the beginning of a love affair with corruption. The emergence of casess frfrom both publte sectors involving figures from senior position shows that this love affair is alalll, bbut slowing down.

we have done so far is the same old strategies - “enhance control processesesess controls, increase superding extra manpower to oversee the processes”. But experiences had taugugugu ht us that if such me

ed, we will not need to go through theh vicious cycy le of papatchingng gggaps over andndndnd over again. The truther is that this is not just a “processs”” ororor ““sysyyststemem” proboblelemm bubut t aa huhuman onee... AAnyone who mananaggesses can choose to exploit them no mamattttere hhowow manany y titimemes s yyouu changed thussss wwwhat we neeedd aare stranimise those opportunities. Thus thhee nenextxt qqueuestion n wowoululululdddd be wwhoho is ss momm stt qqqquau lifieedd toto tackle this mecommmmmenenenendation is if it is about fraudd, , ititt sssshohhohoululdd alwaysys bbeeee aaaa CeCeCeCertr ififiededdd FFFrar ud EExaxamminer.

g thhe courrrse ofofo oouru work as pprararactctcticicicininingg frauaudd exexamaminerrss, ICFE has always been a voice lobbying for focrrrocooo uremennnnt fufunction aass anannna aarereaa momorre pproronene ttoo cocorrrrupuptitioon in almost all facets of both the private and rs. CoCCC rrupppption andd proooroocuucuremementnt ffraraudud arere lllikikkkee ee eveee il ttwiwinsns tthat challenges ethics and integrity. Bu

ucccctitititivivivivitytytyty ddddroopppp dramaticalallala lyly aandndnd resesouourcrccesess aree wwasastetedddd ananana dd misaallocated. Thus, the livelihood of many meeennnnn whwhwhwwho jujuuujuststststst wwanant ttt t tot eaaaarra nn anan hhononesest lilivivivingngg iiissss ththththreeatatenenededd... IfIfIff wwe are not careful and arrest this problemoxic could shake the ffoundndatatioionnn ofof oourur sssocociaiaiall etethohos.s

seminar aims to assist participants toify and deter fraud. It does not deal with conventional topics on procurement

ess and contract management. We would ll participants to gain an understanding of

d Risk Management framework in detering through this seminar.

MIA Members enjoy 16 units of CPE hours!

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Website: www.icfe-cg.comEmail: [email protected]: (603) 2282 5406 Fax: (603) 2282 5407

ICFE Group of Companies

ICFE Malaysia Sdn. Bhd. Co. Reg. No. 871789-X

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*Register by 20 October 2014 for

EARLY BIRD DISCOUNT!

20 - 21 November 2014 Best Western Premier Dua Sentral, Kuala Lumpur

COURSE OUTLINEDAY 1 DAY 2PROCUREMENT FRAUD What is Procurement Fraud? Identifying the main perpetrators of Procurement Fraud Myths about Procurement Fraud How effective are internal controls in deterring/preventing Procurement Fraud?

UNDERSTANDING THE HUMAN FACTOR OF FRAUD Why does a person commit fraud? Fraudster profile – is there one? Red Flags to help you identify potential fraudster

GET TO KNOW YOUR ORGANISATION Knowing your organisation’s policies, codes and practices How do Internal Audit, Risk Management and Compliance functions affect procurement? Fraud Risk Management and how it affects procurement

FIGURING OUT WHERE WENT WRONG Weaknesses in procurement process How are these weaknesses being exploited Are victims just losing money in Procurement Fraud? Best practices to minimize exploitation

CASE DISCUSSION IN CORRUPTION Collusion between employees and external parties Steps in handling allegation of corruption Suspected Conflict of Interest: • How would you perform the suggested investigative tasks? • If there is a rumour of “people close to the tender” receiving kickbacks from vendors, what would be your strategies to investigate this allegation?

RECAP OF DAY 1

INVESTIGATING PROCUREMENT FRAUD Steps taken when suspecting Procurement Fraud Conducting preliminary fact finding interviews • Gathering evidences • Selecting interviewees • Preparing the interview • What to do during interviewValuable tool for investigation - Differentiating truth and lies • How and why people lie • Gentle profiles of liars • Different types of liars • How to spot a liarOther useful resources for investigating Procurement Fraud

WHAT ARE SOME INTERNATIONAL EFFORTS IN COMBATINGPROCUREMENT FRAUD THE FRAUD RISK MANAGEMENT FRAMEWORK (PROCUREMENT) Overview of the framework Functionality and application Identifying and rectifying risk Implementation and review Aims of framework: • Preventing • Detection • Disruption • Identification • Civil Action / Criminal Prosecution

TRY OUT EXERCISE : PROPOSING A FRM FRAMEWORK FOR PROCUREMENT



► Risk Management Professionals► Compliance Officers► Accountants► Anyone who wants to gain insight on the subject

► Management & Executive Staffs► Top Management ► Human Resource Professionals► Internal or External Auditors

WHO SHOULD ATTEND?► Finance Professionals► Procurement Personnels► Investigators► Legal Officers

ICFE PROFILEThe ICFE Group of Companies is a think-tank group of firms dedicated to Fraud Risk Management, Investigation and Prevention. Headquartered in Singapore with regional offices in Malaysia and Hong Kong, ICFE Group of Companies was formed with the intention of combating fraudulent activity and maintaining good corporate governance, and consequently providing professional training and value-adding consultancy services at affordable rates. Our principal consultants are trained by the Association of Certified Fraud Risk Examiners (ACFE).

ICFE aims to share its expertise with working professionals or organisations who wish to stay abreast of the latest developments in corporate skills and anti-fraud measures. We do this by organising various public training programmes, seminars, and customised in-house training programmes which are tailored to suit companies in their respective industries.

At ICFE, we focus on five areas of professional development:1. Fraud Prevention2. Anti-Money Laundering3. Corporate Governance & Business Ethics4. Digital Forensics5. Corporate Skills & Leadership Development

Every member of ICFE is dedicated to bringing about a wholesome experience to all clients via Inspirational training, Innovative consultative work and programmes that build Intelligent minds.

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STANLEY CHIA

TRAINER Cer fied Fraud Examiner (CFE) with the Associa on of Cer fied Fraud Examiners (ACFE) Member, ACFE Advisory Council since 2014 Cer fied Member (CAMS) with Associa on of Cer fied An -Money Laundering Specialists (ACAMS) Cer fied Financial Crimes Inves gator (CFCI) with Interna onal Associa on of Financial Crimes Inves gator (IAFCI) Cer fied An -Corrup on Manager (CACM) with American An -Corrup on Ins tute (AACI) Member, Associa on of Cer fied Financial Crime Specialists (ACFCS) Interna onal Crime Preven on Specialist (ICPS) with Interna onal Crime Preven on Prac oner, Inc (ICPP) Member of GRC Ins tute Associate Member, Singapore Ins tute of Directors Associate Member, Singapore Ins tute of Management PSMB Cer fied Trainer (Malaysia Human Resource Development Fund)

As a Certified Fraud Examiner since 2007, Stanley thrives in the complexity of the fraud examination profession as a result of his sheer passion. Endowed with an inquiring mind, eye for details and valuable insights, he is thoroughly convinced that he has the necessary skill sets to assist organisations to mitigate fraudulent practices.

Well versed in financial products and compliance methodologies, Stanley specialises in investigative interviewing & profiling techniques and has handled numerous cases for both local and foreign financial institutions. His professional experience, helmed through his time in large institutions like AIA Insurance, Singapore Exchange and United Overseas Bank, extends across anti-money laundering, compliance, enforcement and fraud investigation work. In that time, he solved numerous cases that involved millions of US dollars.

Realising he could do much more as a private practitioner, his entrepreneurial spirit got the better of him and he founded the ICFE Group of Companies in 2008. In a three short years, he transformed the ICFE Group of Companies into a think-tank group that has offices in Singapore, Malaysia and Hong Kong. Today, the ICFE Group provides multi-consultancy solutions to companies world-wide. His clientele includes Listed Companies in a host of industries like Aviation, Energy, Banking, Government Funds, REITS, and Hospitality among many others.

Apart from field investigation work, Stanley understands the need for training and education. He is often invited to speak at conferences and seminars in Singapore, Malaysia, Hong Kong, Shanghai, Taipei and Thailand, where he teaches Fraud investigation & prevention, Investigative interviewing & profiling techniques, White collar crimes, Procurement fraud, Internal control, Fraud investigation and Corporate fraud. In 2012, Stanley was invited by Malaysia’s Ministry of Education to be a panel member to advise and assist in the development of digital forensics curricula for its polytechnics across the country. He is also currently developing resources for professionals in the areas of interviewing techniques and body language. Stanley holds a Master of Commerce, specialising in Business Law and also a Bachelor of Economics,majoring in Money & Banking and Accounting.

ICFE Group of CompaniesInternational Cybercrime & Forensics ExaminersSINGAPORE | MALAYSIA | HONG KONG

STANLEY CHIA

Cer fied Fraud Examiner (CFE) with the Associa on of Cer fied Fraud Examiners (ACFE) Member, ACFE Advisory Council since 2014 Cer fied Member (CAMS) with Associa on of Cer fied An -Money Laundering Specialists (ACAMS) Cer fied Financial Crimes Inves gator (CFCI) with Interna onal Associa on of Financialll Crimes Inves gator (IAFCI) Cer fied An -Corrup on Manager (CACM) with American An -Corrup onononon IIIInnnns tute (AACI) Member, Associa on of Cer fied Financial Crime Specialists (ACFCSCSCSCS)))) Interna onal Crime Preven on Specialist (ICPS) with Internaaa onal Crime Preven on Prac oner, Inc (ICPP) Member of GRC Ins tute Associate Member, Singapore Ins tuuuutetetete oooof f f f DiDiDiDirererectcctororsss Associate Member, Singaporee InInInsss tututut tetetet oooof f Managemememementntntnt PSPSPSPSMBMBMBMB CCCCCerererer fifififiedededede TTraraininerer (((((MaMaMaMalalalalaysysysysysiaiaiaia HHHHumumumananann RRRResesesesource Develol pmennnt t t FuFuFuF ndd)

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Well verseddddd in fififinfifi anciciciciciallalll prrodododododdo ucucucuccu tststt ananaaa d ccompliancncncnccee eeeeee mmmmmmmetetetettetthohohohohodododododoloolololooggigig essss, SStannlnn ey specialises in investigative interviewinngnn & profilingggg tetetetet chchhhninininin quququququuq eseseseses aaandndnnd hhas handldlldldledededededd nnnnnumumu eerere ououss caseeeess fofofofor both local and foreign financial institutiooonns. His professiiiiononnono alalalal eeeexpxpxpxppppererererrrieieieieencncncncnn eee,ee hhele memedd ththhthhroorough hihihiiss ss tititimmem in large institutions like AIA Insurance, Singapapapapoooroo e Exchange andndnddnd UUUUUUninininiiiteteteeteeeddddd OvOvOvOvOvO ererererersesseseseaaasaa Bank, eexxxtxx ends across anti-money laundering, compliance, enforcccccememememement and fraud innnnvevevevevestststtstigigigigi atatatatiooioonnnnn work. In tthahat t t titimememmemee, hehehehe ssssolololo vevv d numerous cases that involved millions of US dollllllars.

Realising he could do muuchc mmoororore as a pppppriririririvavavavavav tetetetete pppppractctctctcttiiti ionener, hhhhis entrepreneurial spirit got the better of him and he founded the ICFE GrGroupp ofofoffof CCCCommommpapapapanininininn eseeses in 200080 . In a tthhhhree short years, he transformed the ICFE Group offoffoo CoCCC mpanies into a think-k tat nk grgrououppp ttthahahat ttt hhhhasasasas offio ces innnn Singapore, Malaysia and Hong Kong. Today, the ICFEEEE GGGrororoupupup pprovides multtti-consulltatancncncncn yyyy sosososos lluululuutitititiit onoonononons to companies world-wide. His clientele includes Listed Companies in a hostt tt ofooff iindndndusuusustrtrtrtrtrtrtrtrieieieesss lilililikkkek Aviviviiv attatta iion, EEEneneneeeergrgrgrgy, BBBBanking, Government Funds, REITS, and Hospitality among many others.

Apart from field investigation work, Stanley yyy uunuuuu derstands the need for training and education. He is often invited to speak at conferences and seminars in Singapore, Malaysia, Hong Kong, Shanghai, Taipei and Thailand, where he teaches Fraud investigation & prevention, Investigative interviewing & profiling techniques, White collar crimes, Procurement fraud, Internal control, Fraud investigation and Corporate fraud. In 2012, Stanley was invited by Malaysia’s Ministry of Education to be a panel member to advise and assist in the development of digital forensics curricula for its polytechnics across the country. He is also currently developing resources for professionals in the areas of interviewing techniques and body language.

Stanley holds a Master of Commerce, specialising in Business Law and also a Bachelor of Economics,majoring in Money & Banking and Accounting.





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Managing Fraud Risk in Procurement