[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:05.26,0:00:06.64,Default,,0000,0000,0000,,What is fraud?
Dialogue: 0,0:00:07.09,0:00:09.57,Default,,0000,0000,0000,,Fraud is any intentional act to deceptively
Dialogue: 0,0:00:09.57,0:00:12.32,Default,,0000,0000,0000,,or unfairly take another's property or money.
Dialogue: 0,0:00:12.62,0:00:14.72,Default,,0000,0000,0000,,The fraud triangle highlights how pressure,
Dialogue: 0,0:00:14.78,0:00:15.76,Default,,0000,0000,0000,,rationalization,
Dialogue: 0,0:00:15.89,0:00:18.64,Default,,0000,0000,0000,,and opportunity combine to heighten fraud risk.
Dialogue: 0,0:00:18.81,0:00:20.57,Default,,0000,0000,0000,,When these three components converge,
Dialogue: 0,0:00:20.69,0:00:22.12,Default,,0000,0000,0000,,fraud will likely occur.
Dialogue: 0,0:00:22.37,0:00:25.61,Default,,0000,0000,0000,,Removing one or more of these components can deter fraud.
Dialogue: 0,0:00:26.00,0:00:30.22,Default,,0000,0000,0000,,We often attribute fraudulent activity to individuals who are simply dishonest.
Dialogue: 0,0:00:30.39,0:00:30.88,Default,,0000,0000,0000,,However,
Dialogue: 0,0:00:31.03,0:00:32.07,Default,,0000,0000,0000,,over long careers,
Dialogue: 0,0:00:32.47,0:00:36.22,Default,,0000,0000,0000,,everyone will face incentives or pressures to do things they would normally not do.
Dialogue: 0,0:00:36.47,0:00:37.83,Default,,0000,0000,0000,,With the right conditions,
Dialogue: 0,0:00:37.99,0:00:41.35,Default,,0000,0000,0000,,even historically honest people will make poor decisions.
Dialogue: 0,0:00:41.51,0:00:45.31,Default,,0000,0000,0000,,Pressures may be created by family illness and related medical bills,
Dialogue: 0,0:00:45.47,0:00:46.38,Default,,0000,0000,0000,,excessive debt,
Dialogue: 0,0:00:46.67,0:00:48.39,Default,,0000,0000,0000,,addiction to drugs or gambling,
Dialogue: 0,0:00:48.40,0:00:50.22,Default,,0000,0000,0000,,or simply a lavish lifestyle.
Dialogue: 0,0:00:50.67,0:00:54.46,Default,,0000,0000,0000,,Don't fall into the trap of thinking that simply hiring honest people is enough.
Dialogue: 0,0:00:54.67,0:00:55.39,Default,,0000,0000,0000,,It isn't.
Dialogue: 0,0:00:56.14,0:00:58.81,Default,,0000,0000,0000,,While employees may face pressures to act poorly,
Dialogue: 0,0:00:58.98,0:01:01.74,Default,,0000,0000,0000,,if they rationalize why it's acceptable to act upon them,
Dialogue: 0,0:01:01.83,0:01:03.39,Default,,0000,0000,0000,,the pressures are enhanced.
Dialogue: 0,0:01:03.74,0:01:06.69,Default,,0000,0000,0000,,Some individuals may initially intend to pay back stolen money,
Dialogue: 0,0:01:06.94,0:01:09.05,Default,,0000,0000,0000,,while others may believe the amount is insignificant,
Dialogue: 0,0:01:09.11,0:01:10.14,Default,,0000,0000,0000,,and no one will notice.
Dialogue: 0,0:01:10.99,0:01:13.06,Default,,0000,0000,0000,,Some may believe they've been treated unfairly,
Dialogue: 0,0:01:13.27,0:01:15.22,Default,,0000,0000,0000,,and they deserve what they're able to steal.
Dialogue: 0,0:01:15.67,0:01:18.82,Default,,0000,0000,0000,,Individuals may feel wronged if they're passed over for a promotion
Dialogue: 0,0:01:19.07,0:01:21.43,Default,,0000,0000,0000,,or feel underpaid when compared to a coworker.
Dialogue: 0,0:01:22.47,0:01:25.34,Default,,0000,0000,0000,,Opportunity exists when an individual has the ability
Dialogue: 0,0:01:25.34,0:01:28.23,Default,,0000,0000,0000,,to take cash or other assets without detection.
Dialogue: 0,0:01:28.59,0:01:29.69,Default,,0000,0000,0000,,To minimize opportunity,
Dialogue: 0,0:01:29.87,0:01:33.05,Default,,0000,0000,0000,,an entity should ensure internal controls are properly designed,
Dialogue: 0,0:01:33.27,0:01:33.90,Default,,0000,0000,0000,,implemented,
Dialogue: 0,0:01:33.98,0:01:35.12,Default,,0000,0000,0000,,and enforced.
Dialogue: 0,0:01:35.75,0:01:37.90,Default,,0000,0000,0000,,Imagine you're at a high school football game.
Dialogue: 0,0:01:38.15,0:01:41.02,Default,,0000,0000,0000,,If the gate attendant collects cash as people enter the game,
Dialogue: 0,0:01:41.27,0:01:44.06,Default,,0000,0000,0000,,there's nothing that will prevent the attendant from stealing the cash.
Dialogue: 0,0:01:44.42,0:01:44.94,Default,,0000,0000,0000,,However,
Dialogue: 0,0:01:45.27,0:01:48.55,Default,,0000,0000,0000,,most high schools have a ticket office that sells pre-numbered tickets which
Dialogue: 0,0:01:48.55,0:01:51.59,Default,,0000,0000,0000,,are given to the gate attendant who admits people into the game.
Dialogue: 0,0:01:52.18,0:01:56.05,Default,,0000,0000,0000,,The control is completed when the number of tickets sold is multiplied by
Dialogue: 0,0:01:56.05,0:01:59.32,Default,,0000,0000,0000,,the cost of admission to determine how much money should be received.
Dialogue: 0,0:02:00.01,0:02:02.51,Default,,0000,0000,0000,,This amount is then compared to actual receipts,
Dialogue: 0,0:02:02.52,0:02:04.95,Default,,0000,0000,0000,,and significant differences are investigated.
Dialogue: 0,0:02:05.36,0:02:09.88,Default,,0000,0000,0000,,Opportunity is the only fraud triangle component entirely within management's
Dialogue: 0,0:02:09.88,0:02:12.75,Default,,0000,0000,0000,,control and must be present for fraud to occur.
Dialogue: 0,0:02:13.32,0:02:15.51,Default,,0000,0000,0000,,Imagine a justice court clerk is responsible
Dialogue: 0,0:02:15.51,0:02:18.20,Default,,0000,0000,0000,,for receiving court fine payments from defendants
Dialogue: 0,0:02:18.48,0:02:21.47,Default,,0000,0000,0000,,and has done so for many years without any known problems.
Dialogue: 0,0:02:21.80,0:02:24.40,Default,,0000,0000,0000,,The judge periodically orders fine adjustments,
Dialogue: 0,0:02:24.41,0:02:26.00,Default,,0000,0000,0000,,and the clerk is made responsible for
Dialogue: 0,0:02:26.00,0:02:28.48,Default,,0000,0000,0000,,entering these adjustments into the accounting system.
Dialogue: 0,0:02:28.92,0:02:31.37,Default,,0000,0000,0000,,In addition to already receiving the payments,
Dialogue: 0,0:02:31.62,0:02:33.75,Default,,0000,0000,0000,,the clerk now has opportunity to zero
Dialogue: 0,0:02:33.75,0:02:36.26,Default,,0000,0000,0000,,out the defendant's account in the accounting system
Dialogue: 0,0:02:36.47,0:02:38.46,Default,,0000,0000,0000,,and steal cash without detection.
Dialogue: 0,0:02:39.03,0:02:40.54,Default,,0000,0000,0000,,After a few years of employment,
Dialogue: 0,0:02:40.70,0:02:45.35,Default,,0000,0000,0000,,the clerk has a child become ill and begins to incur high medical expenses.
Dialogue: 0,0:02:45.51,0:02:47.47,Default,,0000,0000,0000,,These expenses make it impossible for the
Dialogue: 0,0:02:47.47,0:02:49.91,Default,,0000,0000,0000,,family to meet its basic financial obligations,
Dialogue: 0,0:02:50.11,0:02:52.03,Default,,0000,0000,0000,,which adds pressure to the situation.
Dialogue: 0,0:02:52.66,0:02:56.89,Default,,0000,0000,0000,,The clerk eventually decides to borrow the money and rationalizes the decision
Dialogue: 0,0:02:56.89,0:02:59.36,Default,,0000,0000,0000,,with an intention to pay the money back in the future.
Dialogue: 0,0:02:59.57,0:03:00.97,Default,,0000,0000,0000,,As a result of opportunity,
Dialogue: 0,0:03:01.25,0:03:01.65,Default,,0000,0000,0000,,pressure,
Dialogue: 0,0:03:01.69,0:03:02.92,Default,,0000,0000,0000,,and rationalization,
Dialogue: 0,0:03:03.20,0:03:05.48,Default,,0000,0000,0000,,the clerk made the poor decision to steal.
Dialogue: 0,0:03:05.93,0:03:06.44,Default,,0000,0000,0000,,Remember,
Dialogue: 0,0:03:06.65,0:03:08.32,Default,,0000,0000,0000,,management can limit opportunity,
Dialogue: 0,0:03:08.53,0:03:10.73,Default,,0000,0000,0000,,the most important fraud triangle component.
Dialogue: 0,0:03:11.17,0:03:13.97,Default,,0000,0000,0000,,Too often people we least suspect commit fraud.
Dialogue: 0,0:03:14.17,0:03:16.12,Default,,0000,0000,0000,,Your entity may have honest people,
Dialogue: 0,0:03:16.28,0:03:20.32,Default,,0000,0000,0000,,but to effectively protect employees from a momentary lapse of judgment,
Dialogue: 0,0:03:20.45,0:03:22.56,Default,,0000,0000,0000,,sufficient oversight is a must.
Dialogue: 0,0:03:22.97,0:03:23.56,Default,,0000,0000,0000,,Remember,
Dialogue: 0,0:03:23.85,0:03:27.44,Default,,0000,0000,0000,,just the safety equipment is necessary to keep construction workers safe,
Dialogue: 0,0:03:27.54,0:03:29.00,Default,,0000,0000,0000,,an entity must design,
Dialogue: 0,0:03:29.17,0:03:29.80,Default,,0000,0000,0000,,implement,
Dialogue: 0,0:03:29.85,0:03:33.44,Default,,0000,0000,0000,,and enforce internal controls to keep honest employees safe.
Dialogue: 0,0:03:33.69,0:03:34.68,Default,,0000,0000,0000,,For more information,
Dialogue: 0,0:03:34.97,0:03:37.48,Default,,0000,0000,0000,,see our fraud risk assessment implementation guide
Dialogue: 0,0:03:37.48,0:03:39.57,Default,,0000,0000,0000,,and separation of duties digital short.