Chapter VI: General Indicators of Fraud

No: 381000103246

Date(g): 13/7/2017 | Date(h): 19/10/1438

Status: In-Force

Internal Fraud	Governance& Organizational Structure	- An individual or a group of individuals monopolizes running operations or taking financial decisions.
		- Company’s strategy is inconsistent and changes rapidly.
		-Company’s organizational structure is complex.
		- Managers, members of staff, external businesses, and contractors have conflict of interest.
		- Board of directors or management displays dominant management style, discouraging critical or opposing views from employees.
	Operational Management	- Training provided for employees is weak.
		- Activities of the Finance Company are inconsistent with its declared policies.
		- Staff turnover at the department level is high, especially in finance or accounting departments.
		- Tasks and transactions are complex and require special skills to be understood.
		- Original documents are lost and replaced with copies.
	Accounting& Finance	- Costs are unjustifiably high or are higher than those of competitors.
		- Financial results and ratios are unmatched.
		- Company’s return is much lower than that of its counterparts in the market.
	Internal Audit	- Internal control structure is weak.
		- Information from prior audits is insufficient.
		- Results of internal audits are weak or missing.
		- Internal auditors are not completely independent.
		- Board of directors or managers place undue pressure on auditors.
		- Board of directors or managers display aggressive attitude toward the Company’s financial reporting.
	Employees’ Conduct	- Unjustified wealth of employees and sudden change in their lifestyle.
		- Employees frequently work outside official working hours.
		- Employees do not go on leaves.
		- New employees resign quickly.
	Information Technology	- Information and asset security system is weak.
External Fraud	Finance Procedures	- Consumer age and qualifications are not compatible with the number of his/her work years.
		- Employer’s address provided is a postal box only.
		- Use of consumer’s personal phone number as the employer phone number.
		- Applicant’s handwriting is not similar on different documents.
		- Attempt by consumer to pay all financial obligations in cash other than usual means, especially in early repayment.
		- Installments are paid by another individual or party and not by the consumer.
		- Consumer’s income and credit record are not consistent with his/her personal profile.
		- Signatures on finance documents are different.
		- Information Provided by the Consumer is not Consistent in Different service Request forms Submitted to the finance company.
		- Transfer of the ownership of financed assets immediately after the completion of sale, indicating that the consumer has obtained the finance for an ineligible third party.
	Valuation	- Valuer is not one of the accredited valuers by theFinance Company.
		- Valuer is not familiar with the region of the financed asset and the local market value.
		- Valuation is based only on making adjustments to the financed asset.
		- Valuation is based on data of more than 9 months in a rapidly changing market.
		- Valuation of the financed assetis based on comparison with previous valuations carried out by the same valuer.
		- Mismatch between the pictures of the financed asset and the description provided in the valuation report.
		- Valuation fee is based on a specified percentage of the estimated value of the financed asset.
		- There are indications that the financed asset has been sold more than once during a short period of time, indicating that its value does not reflect the actual value of the asset in the market.
	Job Information	- The employment letter is not printed on employer’s letter head.
		- The date of the employment letter is old.
		- The signature on the employment letter is not accompanied by the name or position of the signee.
		- The employment letter contains handwritten modifications.
		- The original copy of the employment letter is not provided.

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