Fraud investigation

 

 

 

Fraud happens, especially in the glitzy, cash-laden world of casinos. But it doesn't have to. We are able to give precise instructions on how to fight fraud, how to detect it, and how to prevent it from affecting your casino organization. We offer a lengthy list of insider and outsider scams (more than 50) and we note the list will never be complete. "Fraud is never-ending and always changing. It's the ultimate chess match, the cat-and-mouse game that goes on and on."

And there are as many reasons for fraud occurring as there are different types of scams. The gaming industry is particularly vulnerable to rip-offs from outsiders and employees because of its rich image, insider fraud is perhaps the bigger problem for several reasons, but largely because casino managers tend to "fire the problem" of internal fraud, allowing dishonest employees to move on to other jobs.

As stories of white-collar crime continue to surface…the picture is becoming increasingly clear— the act of hiring the wrong employees who may very well have a history of fraudulent activity, the tendency to under staff 'expense' departments without implementing corresponding controls, and a general refusal by casino management to accept the fact that insider theft may far exceed any outsider misdealing is catching up to the industry.

So, marshalling management's support for the daily battle against fraud is the obvious, and most critical, first step in creating a fraud-intolerant environment. Training the internal audit staff to understand the nature of fraudulent activities and reassessing how your audit time is spent are other requirements for the fight.

With our broad understanding of the gaming industry and fraud, we note that although insider fraud typically occurs within the gaming elements of an organization, there is the "black sheep" of fraud opportunity, which occurs in the "back of the house," where less attention is focused. Areas such as company bank accounts, accounts receivables, and payroll all are targets for the dedicated rip-off artist.

Internal auditors and fraud investigators looking for internal fraud especially should always consider the business environment and ask these questions:

• Who has the power to commit the fraud?
• Who has the opportunity and access to assets?
• Who has financial need or reason to commit fraud?

Who has the power to commit the fraud?Who has the opportunity and access to assets?Who has financial need or reason to commit fraud?

Careful planning also is critical to the ultimate success of any fraud-fighting activity. It should involve assessing the staff's level of expertise, locating prior audit reports related to the area under scrutiny, determining whether outside technical help will be needed, and coordinating with other parties in case covert activities are required.

With the fundamentals outlined, we provide details to keep internal auditors from reinventing the wheel, so to speak, as they work to uncover nefarious activities. We give specific examples of how to track and monitor gaming operations, as well as the operations in the "back of the house."

Fraud auditing is different from typical internal audits in that it always should be considered as the foundation of a legal case against the perpetrator(s). Every step the fraud auditor takes is likely to be "analyzed very closely." Practitioners will find detailed lists of what kinds of actions and documents are necessary to prepare a legal case.

Much is focused on deterring in-house fraud, but we also offer tips on detecting and preventing scams from the outside. One tip is to walk around the casino on a regular basis and get to know the people on the floor. Simple observation can uncover more than one might expect.

Some internal auditors may wonder why they should be involved in detecting and preventing outsider fraud in casinos. Our opinion is that an internal auditor can augment the security function. You may well be present at a time and place where you can see this type of activity occurring. … At that point, you can relay the information to the necessary department. Protecting the casino from this type of activity is not just in the job description of a select few. Fraud prevention is everyone's job, and that being knowledgeable of these scams is a good way to add value to an organization's operations.

Professional scepticism and scrupulous attention to detail are the most essential tools internal auditors can bring to their work of protecting their organizations. That advice easily applies to any auditor's job, regardless of the industry or the auditor's professional level. Swiss Gaming Corporation has the expertise and experience to discover fraud in your casino.