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Course 2020-2021 a.y.

20563 - FRAUD DETECTION AND RISK ASSESSMENT

Department of Accounting

Course taught in English


Go to class group/s: 31

CLMG (6 credits - I sem. - OP  |  SECS-P/07) - M (6 credits - I sem. - OP  |  SECS-P/07) - IM (6 credits - I sem. - OP  |  SECS-P/07) - MM (6 credits - I sem. - OP  |  SECS-P/07) - AFC (6 credits - I sem. - OP  |  SECS-P/07) - CLELI (6 credits - I sem. - OP  |  SECS-P/07) - ACME (6 credits - I sem. - OP  |  SECS-P/07) - DES-ESS (6 credits - I sem. - OP  |  SECS-P/07) - EMIT (6 credits - I sem. - OP  |  SECS-P/07) - GIO (6 credits - I sem. - OP  |  SECS-P/07) - DSBA (6 credits - I sem. - OP  |  SECS-P/07) - PPA (6 credits - I sem. - OP  |  SECS-P/07) - FIN (6 credits - I sem. - OP  |  SECS-P/07) - CYBER (6 credits - I sem. - OP  |  SECS-P/07)
Course Director:
NICOLA PECCHIARI

Classes: 31 (I sem.)
Instructors:
Class 31: NICOLA PECCHIARI


Suggested background knowledge

To feel comfortable in this course, you should be familiar with financial accounting and financial statement analysis (basic) and corporate governance (basic).


Mission & Content Summary
MISSION

The course major educational objective is the analysis of the risk assessment, internal controls and investigation methodologies with a specific focus on those corporate frauds. In general terms, risk assessment (and internal control) principles and techniques are fundamental in order to prevent adverse results (losses) that are the consequence of errors and frauds in the areas of: 1. Strategic and operational objectives (business objectives) 2. Reporting objective (reliability of managerial and financial reporting) 3. Compliance (with laws and regulations) objectives. From a conceptual perspective, fraud risk assessment, fraud prevention (the role of internal controls) and fraud detection (investigation) are interesting in order to understand the strength and quality of the corporate risk management and managerial control processes. That is why these topics and the related techniques and tools for identifying errors and frauds are relevant for several professionals: external and internal auditors, financial accountants and controllers, fraud examiners, compliance specialists, private equity and M&A specialists and more. Particular relevance is given to the analysis and discussion of case studies for real companies in order to develop students' skills in identifying critical fraud risks and evaluating their impact.

CONTENT SUMMARY
  • Session 1 - Introduction to the course and to some definitions
  • Sessions 2-7 - Focus on Prevention - risk management, risk assessment and internal controls: principles and  methodologies for both qualitative and quantitative risk analysis (examples of quantitative techniques: sampling for internal controls and Monte Carlo simulation for risk assessment);
  • Sessions 8-14 - Focus on Detection -  a framework for fraud risk management and detection (the fraudster’s Fraud Triangle, the  detection process: from a suspected fraud to the proof of intentionally): principles and methodologies for both qualitative and quantitative investigations (examples of quantitative techniques: computer forensic, data mining, big data, network analysis);
  • Sessions 15-21 - Focus on some Fraud Schemes (lessons learned from famous scandals): analysis of some fraud schemes in order to understand the failure of governance, risk management and internal controls; examples: internal transactions frauds, Ponzi’s scheme, Accounting Scandals, Concealment of financial distress, Money Laundering and more…)
  • Sessions 22-24 - Presentation of Group Assignment and conclusions

Intended Learning Outcomes (ILO)
KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...
  • Understand the main methodoligical steps of risk assessment and risk management
  • Understand Understand what are the most common corporate frauds.
  • Understand the difference between fraud prevention and fraud detection (and what are the the relevant methodologies and techniques).
  • Understand the difference between earnings management and fraudulent financial reporting.
APPLYING KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...
  • Make an overall assessment of business risks and fraud risks (fraudsters, opportunities, fraud schemes and red flags).
  • Apply some fraud detection techniques based on financial analysis and data analytics.

Teaching methods
  • Online lectures
  • Exercises (exercises, database, software etc.)
  • Case studies /Incidents (traditional, online)
  • Group assignments
  • Interactive class activities (role playing, business game, simulation, online forum, instant polls)
DETAILS

Students are required to understand how to use some easy tools of Data Analytics.

 

An online forum will stimulate students to questions and discussione about concepts, problems and possibile solutions.

 

In order to promote active participation to classes and to improve the quality of learning, students are asked to accompany their class participation with 1 group assignment. This assignment is estimated to require on average 10-days working time and is evaluated by instructors, thus becoming an integral part of the final individual evaluation. The assignment will be supported by written guidelines and formats prepared by instructors and uploaded on the course website. Each group delivers the written output of the assignment to the instructor according to the guidelines received. Each group must be ready to make a brief presentation to the classroom according to a schedule that will be defined and communicated by the instructors. Groups may choose one of following assignments:

1.Detection of a financial fraud (with a quantitative Network Analysis);

2.Detection of an accounting fraud (with a qualitative Network Analysis)

3.Risk analysis for a business process (with Monte Carlo Simulation);

4.Data mining for fraud detection in a specific business process.


Assessment methods
  Continuous assessment Partial exams General exam
  • Written individual exam (traditional/online)
  •     x
  • Group assignment (report, exercise, presentation, project work etc.)
  •     x
    ATTENDING STUDENTS

    Attending Students are those students with a grade from the group assignment.

    The faculty team determines student grades by using a combination of assignments and final exam. 
    Students' evaluation is based on
    1. Individual written exam (essay questions; it lasts approximately 1 hour): 50%.
    2. Overall group assignment evaluation:  50%.
     

    NOT ATTENDING STUDENTS

    Individual written exam (essay questions; it lasts approximately 1 hour and 30 minutes): 100%.
    This exam will include additional questions based on a list of 4 papers (provided by the teachers).
     


    Teaching materials
    ATTENDING STUDENTS
    • Slides, readings, case studies and other materials are provided during the course. Students need to refer to each specific session in the elearning Blackboard platform.
    NOT ATTENDING STUDENTS
    • Slides, readings, case studies and other materials are provided during the course. Students need to refer to each specific session in the elearning Blackboard platform.
    • 4 additional papers provided by the teachers on the Blackboard platform.
    Last change 17/07/2020 14:25