A guide to forensic accounting investigation:
Gespeichert in:
| 1. Verfasser: | |
|---|---|
| Format: | Buch |
| Sprache: | English |
| Veröffentlicht: |
Hoboken, NJ
Wiley
2006
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| Schlagworte: | |
| Online-Zugang: | Inhaltsverzeichnis |
| Beschreibung: | XXII, 554 S. graph. Darst. |
| ISBN: | 0471469076 9780471469070 |
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MARC
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| 245 | 1 | 0 | |a A guide to forensic accounting investigation |c Thomas W. Golden ; Steven L. Skalak, and Mona M. Clayton |
| 264 | 1 | |a Hoboken, NJ |b Wiley |c 2006 | |
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Datensatz im Suchindex
| _version_ | 1804135185293246464 |
|---|---|
| adam_text | CONTENTS
Preface xv
Acknowledgments xix
1 Fraud: An Introduction 1
Fraud: What Is It? 2
Fraud: Prevalence, Impact, and Form 3
Fraud in Historical Perspective 4
Types of Fraud 5
Root Causes of Fraud 6
A Historical Account of the Auditor s Role 7
Auditing: Ancient History 7
Growth of the Auditing Profession in the Nineteenth Century 8
Federal and State Securities Regulation before 1934 9
Current Environment 10
Auditors Are Not Alone 12
Deterrence, Auditing, and Investigation 13
Conceptual Overview of the Fraud Deterrence Cycle 14
Corporate Governance 15
Transaction Level Controls 16
Retrospective Examination 16
Investigation and Remediation 16
First Look Inside the Fraud Deterrence Cycle 17
Corporate Governance 17
Transaction Level Controls 18
Auditing and Investigation 20
2 The Roles of the Auditor
and the Forensic Accounting Investigator 21
The Patrolman and the Detective 22
Complexity and Change 25
Auditor Roles in Perspective 28
Not All Good People 29
Each Company Is Unique 30
Role of Company Culture 30
Estimates 32
Choices 33
What Auditors Do 35
Fraud versus Error 35
Reasonable Assurance 36
Materiality 38
iii
iv Contents
Bedrock of an Effective Audit 40
Professional Skepticism 40
Knowledge and Experience 40
Independence and Objectivity 41
SPADE 42 ;
Auditing Standards Take a Risk Based Approach to Fraud 42 .
Management Override 44 ¦
Regulatory Reaction to Fraud 45
Financial Benefits of Effective Fraud Management 46 I
Conclusion 46
3 Psychology of the Fraudster 47
Calculating Criminals 48
Case 1: It Can t Be Bob 49
Situation Dependent Criminals 49
Power Brokers 50
Fraudsters Do Not Intend to Harm 51
Case 2: For the Good of the Company 51
Case 3: Personal Catastrophes 51
Case 4: An Educated, Upstanding Citizen 52
Kinds of Rationalization 55
Auditors Need to Understand the Mind of the Fraudster 55
Conclusion 57
4 Financial Reporting Fraud
and the Capital Markets 59
Targets of Capital Market Fraud 60 :
Securities Investment Model 61
Overview of Financial Information
and the Requirement to Present Fairly 62
Overview of Fraud in Financial Statements 64
Accounting Irregularities as an Element of Financial Fraud 68
Some Observations on Financial Fraud 71
Fraud from Within 71
Summary 72
5 Auditor Responsibilities and the Law 75
6 Independence, Objectivity, Skepticism 87
SEC Final Rules for Strengthening
Auditor Independence 88
SEC Regulation of Forensic Accounting Services 88
Consulting versus Attest Services 92
Integrity and Objectivity 93
Independence Standards for Nonattest Services 94
Professional Skepticism 95
J
i
Contents v
Trust but Verify: A Case Study 96
Trust but Verify: Exploring Further 99
Loose Thread Theory of Auditing 103
Further Thoughts on the Loose Thread Theory 106
7 Forensic Investigations and Financial Audits:
Compare and Contrast 109
8 Potential Red Flags and Fraud Detection Techniques 119
* Types of Fraud Revisited 120
Fraud Detection: Overview 121
Laying a Foundation for Detection 124
Assessing the Risk of Fraud 125
Fraud Risk Factors 125
A Word on Information Technology 126
Interpreting Potential Red Flags 127
Importance of Professional Skepticism 129
Revisiting the Fraud Triangle 132
Incentive and Pressure 132
Opportunity 134
Rationalization and Attitude 135
Identifying and Evaluating Risk Factors 137
Discussion among Audit Team Members 138
Information Gathering 140
Other Sources 143
Analytic Procedures 144
Current Company Data versus Company Data from Prior Periods 147
Company Data versus Company Budgets, Forecasts, or Projections 147
Company Data versus Industry Data
and/or Comparable Company Data 147
Company Financial Data versus Company Operational Data 148
Company Data versus Auditor Determined Expected Results 148
Analytic Techniques 148
Assessing the Potential Impact
of Fraud Risk Factors 150
Evaluating Controls 152
Addressing the Identified Fraud Risks 153
Unpredictable Audit Tests 154
Observation and Inspection 155
Financial Statement Fraud: Detection Techniques 157
Revenue Recognition 157
Corruption 158
Summary 160
9 Internal Audit: The Second Line of Defense 161
What Do Internal Auditors Do? 162
[
i
i Contents
Internal Audit Scope of Services 164
The Handoff to Forensic Accounting Investigators
and Legal Counsel 166
Perception Problem 167
Complex Corporate Fraud and the Internal Audit 168
WorldCom and the Thornburgh Report 169
Case Studies: The Internal Auditor
Addresses Fraud 170
No Segregation of Duties—and a Very Nice Car 170
Odd Transportation System 171
A Tragic Circumstance 1 72
How Many Lunches Can You Buy? 173
Making the Numbers Look Right 1 73
How Not to Earn a Bonus 174
A Classic Purchasing Fraud 175
The Loneliness of the Internal Auditor 176
Hitting the Jackpot in the Gaming Industry 1 77
Reporting Relationships: A Key to Empowering
Fraud Detection 1 78
Tomorrow s Internal Auditor,
Tomorrow s Management and Board 180
10 Financial Statement Fraud: Revenue and Receivables 183
Improper Revenue Recognition 185
Timing 186
Revenue Recognition Detection Techniques 188
Side Agreements 191
Liberal Return, Refund, or Exchange Rights 192
Channel Stuffing 195
Bill and Hold Transactions 196
Early Delivery of Product 198
Partial Shipments 199
Contracts with Multiple Deliverables 200
Improper Allocation of Value in Multiple Element
Revenue Arrangements 201
Up Front Fees 202
Improper Accounting for Construction Contracts 202
Related Party Transactions 204
Revenue and Receivable Misappropriation 206
Revenues 207
Receivables 208
Fictitious Sales 209
Lapping 210
Redating 211
Inflating the Value of Receivables 211
Extended Procedures 212
Round Tripping 215
I
1 Contents vii
Improperly Holding Open the Books 216
Consignments and Demonstration Goods 21 7
Summary 218
11 Financial Statement Fraud: Other Schemes
and Misappropriations 219
Asset Misstatements 219
Inventory Schemes 219
I Investment Schemes 224
1 Recording Unrealized Declines in Fair Market Value 226
Recording Fictitious Fixed Assets 226
Depreciation and Amortization 226
Hanging the Debit 227
Software Development Costs 227
Research and Development Costs 228
Start Up Costs 228
Interest Costs 228
Advertising Costs 229
Understatement of Liabilities and Expenses 229
Off Balance Sheet Transactions 230
Two Basic Accounting Models 231
Cookie Jar Reserves 233
Improper and Inadequate Disclosures 234
Materiality 235
Disbursement Schemes 236
Invoice Schemes 236
Check Tampering 239
: Expense Reimbursement Schemes 240
Payroll Schemes 242
12 When and Why to Call In
Forensic Accounting Investigators 243
Today s Auditors Are Not Forensic Accounting Investigators 244
Auditors Are Not Authenticators 244
Auditors Have Limited Exposure to Fraud 245
Auditors Are Not Guarantors 246
Historically, Audits May Have Been Predictable 247
Potential Trigger Points of Fraud 248
Reliance on Others 255
Conclusion 257
1 3 Teaming with Forensic Accounting Investigators 259
Forensic Accounting Investigators Cooperation
with Internal Auditors 261
Internal Audit s Position and Function 261
Resource Models 262
Working Together 263
iii Contents
Forensic Accounting Investigators Cooperation
with External Auditors 264
Client History 264
The External Auditor in Today s Environment 265
Objectives of All Interested Parties 266
Forensic Accounting Investigators Objectives 266
Objectives of Other Parties to the Investigation 267
How Should the Investigation Objectives Be Defined? 269
Who Should Direct the Investigation and Why? 270
Ready When Needed 271
Where to Find Skilled Forensic Accounting Investigators 272
Internal Audit 272
Engaging External Forensic Accounting Investigators 273
Accounting and Auditing Firms 273
14 Potential Missteps: Considerations
When Fraud Is Suspected 277
Confronting Suspects 277
Dismissing the Target 281
Assumptions 281
The Small Stuff Could Be Important 286
Materiality: More on a Key Topic 287
Addressing Allegations 288
The Case of the Central American General Manager 289
Exercising Skepticism 293
Case Outcomes 294
15 Investigative Techniques 295
Timing 295
Communication 296
Early Administrative Matters 296
Predication 297
What Should You Know before You Start? 299
Gaining an Understanding 299
Gathering and Securing Information 300
Coordination 303
Other 303
A Word about Insurance 304
Exceptions and Other Considerations 305
Document Review 306
ComQuest 306
CPA Services 308
How to Read a Check 308
Airline Tickets 310
Conclusion 311
1
Contents ix
16 Anonymous Communications 313
Typical Characteristics of Anonymous Tips 314
Federal Statutes Related to Anonymous Reporting
and Whistle Blower Protections 315
Receipt of an Anonymous Communication 318
Initial Understanding of Allegations 320
Determine Whether Any Allegation Requires
Immediate Remedial Action 320
Development and Implementation
of the Investigative Strategy 321
The Investigation Team 321
Disclosure Decisions 322
Prioritize the Allegations 323
Interviewing Employees 325
Follow UpTip 329
Conclusion 330
17 Background Investigations 331
Commercial Media Databases 332
Other Public Records 335
Commercial Database Providers 339
Other Sources 342
Unique Internet Sources 342
Other Government Agencies 345
International Investigations 346
Conclusion 346
18 The Art of the Interview 349
Difficulty and Value of Obtaining an Admission 350
Planning for the Interview 351
Types of Interviews 353
The Information Seeking Interview 353
The Admission Seeking Interview 354
Others May Wish to Attend Interviews 358
Interview Process 358
Documenting the Interview 364
Summary 364
19 Analyzing Financial Statements 365
Developing Effective Analytic Procedures 366
Vertical Analysis 368
Horizontal Analysis 369
Ratio Analysis 369
Reasonableness Testing 369
Data Mining Analysis 370
Contents
Using Financial Ratios as Measures of Risk
or Indications of Fraud 371
Identifying Other Relationships That Might Indicate Fraud 375
Margin Analysis 376
Focus on Disparity of Net Income to Cash Balances 377
Evaluate Increases in Accounts Receivable in Relation
to Sales Increases 377
Evaluate Interim Results and Seasonality 377
Common Analytic Pitfalls 377
Identifying Signs of Earnings Management 378
The Beneish Research 378
20 Data Mining: Computer Aided Forensic Accounting
Investigation Techniques 385
Benefits and Pitfalls 386
Benefits 387
Other Considerations 387
Nearly Every Investigation Can Benefit
from Forensic Technology 388
Effective Data Mining 389
What Relevant Data Might Be Available? 389
Audit Trails (Traffic Data) 390
Faster/Better/Cheaper 390
Access to Relevant Data 390
Assessing Data Quality and Format 392
Scope of Available Data 393
Quality of Available Data 394
Time Required and Data Requests 394
Data Cleaning 398
Eliminating Duplicate Information 399
Testing the Data for Completeness and Accuracy 400
Understated Amounts 401
Overstated Amounts 402
Incomplete Responses 402
Incomplete Data Sets 402
Skills of the Forensic Technologist 402
Technical Skills 403
Communication Skills 403
Effective Use of Data Analysis Results 404
Role of Data Analysis in the Investigation 404
Data Mining in Action 405
Check Disbursement File 405
Examining the Vendor Master File and Payments History 410
General Ledger Searches 411
Keyword Searches 412
Deleted/Slack/Unallocated Space 414
Data Sorting 415
Choice of Tools 418
Contents xi
Presenting Results 419
Reviewing the Essentials 420
Conclusion 420
; 21 Building a Case: Gathering
} and Documenting Evidence 423
Critical Steps in Gathering Evidence 424
Considerations at the Time of Retention 424
Document Retention Considerations 425
Planning Considerations 425
Creating a Chain of Custody 427
Whose Evidence Is It? 430
Evidence Created by the Forensic
Accounting Investigator 431
Working Papers 431
Reports 432
What Evidence Should Be Gathered? 433
Investigations of Vendors 433
Investigations of Foreign Corrupt Practices Act Violations 434
Investigations of Improper Related Party Activity 434
Investigations of Employee Misappropriations 434
Investigations of Specific Allegations 435
Investigations of Financial Statement Errors 435
Important Considerations regarding Documents
and Working Papers 435
Conclusion 438
22 Supporting a Criminal Prosecution 439
Key Considerations 440
Deterrent Effect of Appropriate Response 440
U.S. Sentencing Commission Guidelines 440
Expense and Possible Outcomes 442
Referrals for Prosecution May Attract Public Attention 442
Referral Considerations 443
Refer the Matter to State, Local, or Federal Prosecutors? 444
Prosecutors Must Prioritize Cases 445
Forensic Accounting Investigator May Increase
the Success of a Referral 446
Reputational Benefits 446
Plea Agreements 447
Filing a Civil Lawsuit 447
23 Report of Investigation 449
Types of Reports 450
Importance of Adequate Preparation 450
1
Contents
Standards of Reporting 451
AlCPA Consulting Standards 451
ACFE Standards 453
The Written Report of Investigation 455
Basic Elements to Consider for Inclusion in a Report
of Investigation 455
Summarizing Your Findings 457
Written Report of Expert Witness Opining ;
for the Plaintiff on a Civil Fraud Claim 458
Affidavits 460
Informal Reports 461
Giving a Deposition 462
Be Prepared 463
It s Your Deposition 463
Objectives of a Deposition in Civil Litigation 464
You Are Being Measured 464
Reviewing Your Deposition Transcript 465
Other Considerations 465
Mistakes to Avoid in Reporting 466
Avoid Overstatement 467
Avoid Opinion 467
Identify Control Issues Separately from Investigative
Findings of Fact 467
Use Simple, Straightforward Language Focused on the Facts 467
Avoid Subjective Comments 468
Working Papers 469
Signed Engagement Letter 469
Relationship Review 471
Substantive Working Papers 471
Each Working Paper Should Stand on Its Own 471
Testimony Binder 473
Interview Memorandums 473
24 Working with Attorneys 475
In the Company of Lawyers 475
Confidentiality Requirements 477
Forming the Investigative Team 477
Documentation 483
Civil Litigation 485
Interviewing 485
External Audit Firm 486
Working for or Interacting with Law Enforcement
or Government Agencies 489
Disagreements with Counsel 490
Conclusion 491
I Contents xiii
j 25 Conducting Global Investigations 493
I On International Assignment 494
j Getting Started 495
Coordinating the Engagement 496
Logistics 497
Work Plan 497
Preliminary Work Plan Example 498
Foreign Corrupt Practices Act 501
Internal Accounting Control Provisions 502
Antibribery Provisions 502
Record Keeping Provisions 502
1 Additional Considerations 503
Planning the Engagement 503
Accounting Issues 503
Knowledge of Corporate Personnel 504
Understand Company Policy 504
Understand the Company s Network 504
Local Licenses 505
Schemes and Other Matters 505
Personal Considerations 507
26 Money Laundering 509
Relationship between Fraud and Money Laundering 510
Placement 511
Layering 511
Integration 511
Varying Impact of Money Laundering on Companies 512
The Five Point Program for AML Regulated Businesses 514
Written Compliance Program 514
Minimum Standards of Customer Due Diligence 514
Activity Monitoring and Reporting 514
Training 515
Record Keeping 515
Impact of Money Laundering on Financial Statements 51 7
AML and Forensic Accounting Investigation 518
At the Request of the Regulator 518
At the Request of the Institution 518
Review of Transactions and Records 519
Decision Making 519
The AML Reporting Process 519
Corporate Culture and AML Corporate Governance 520
Legal Arrangements Lending Themselves to Anonymity 520
Potential Red Flags 521
Auditing and Money Laundering 522
Relationship between Fraud Investigation and AML 523
xiv Contents
27 Other Dimensions of Forensic Accounting 525
Construction 526
Environmental Issues 527
Intellectual Property 528
Government Contracting 529
Insurance and Business Interruption 530
Marital Dissolution 530
Shareholder Litigation 531
Business Valuation 532
Business Combinations 532
Cybercrime 533
28 Looking Forward: The Future
of Forensic Accounting Investigation 535
Evolving Discipline 536
New Tools 538
Education and Training: To Better Support
the New Discipline 538
Regulation and Enforcement 539
Changing Corporate Environment 540
Internal Audit 541
Corporate Judgment Calls 542
Forensic Accounting Investigators Serving
Individual Corporate Clients 542
Nonfinancial Operating Data 543
Responsibility for Disclosure and Validation of NFOD 544
Other Legal and Stock Exchange Requirements 545
Future of Forensic Accounting Investigation:
Increasingly Global 546
Index 547
|
| adam_txt |
CONTENTS
Preface xv
Acknowledgments xix
1 Fraud: An Introduction 1
Fraud: What Is It? 2
Fraud: Prevalence, Impact, and Form 3
Fraud in Historical Perspective 4
Types of Fraud 5
Root Causes of Fraud 6
A Historical Account of the Auditor's Role 7
Auditing: Ancient History 7
Growth of the Auditing Profession in the Nineteenth Century 8
Federal and State Securities Regulation before 1934 9
Current Environment 10
Auditors Are Not Alone 12
Deterrence, Auditing, and Investigation 13
Conceptual Overview of the Fraud Deterrence Cycle 14
Corporate Governance 15
Transaction Level Controls 16
Retrospective Examination 16
Investigation and Remediation 16
First Look Inside the Fraud Deterrence Cycle 17
Corporate Governance 17
Transaction Level Controls 18
Auditing and Investigation 20
2 The Roles of the Auditor
and the Forensic Accounting Investigator 21
The Patrolman and the Detective 22
Complexity and Change 25
Auditor Roles in Perspective 28
Not All Good People 29
Each Company Is Unique 30
Role of Company Culture 30
Estimates 32
Choices 33
What Auditors Do 35
Fraud versus Error 35
Reasonable Assurance 36
Materiality 38
iii
iv Contents
Bedrock of an Effective Audit 40
Professional Skepticism 40
Knowledge and Experience 40
Independence and Objectivity 41
SPADE 42 ;
Auditing Standards Take a Risk Based Approach to Fraud 42 .
Management Override 44 ¦
Regulatory Reaction to Fraud 45
Financial Benefits of Effective Fraud Management 46 I
Conclusion 46
3 Psychology of the Fraudster 47
Calculating Criminals 48
Case 1: "It Can't Be Bob" 49
Situation Dependent Criminals 49
Power Brokers 50
Fraudsters Do Not Intend to Harm 51
Case 2: "For the Good of the Company" 51
Case 3: Personal Catastrophes 51
Case 4: An Educated, Upstanding Citizen 52
Kinds of Rationalization 55
Auditors' Need to Understand the Mind of the Fraudster 55
Conclusion 57
4 Financial Reporting Fraud
and the Capital Markets 59
Targets of Capital Market Fraud 60 :
Securities Investment Model 61
Overview of Financial Information
and the Requirement to Present Fairly 62
Overview of Fraud in Financial Statements 64
Accounting Irregularities as an Element of Financial Fraud 68
Some Observations on Financial Fraud 71
Fraud from Within 71
Summary 72
5 Auditor Responsibilities and the Law 75
6 Independence, Objectivity, Skepticism 87
SEC Final Rules for Strengthening
Auditor Independence 88
SEC Regulation of Forensic Accounting Services 88
Consulting versus Attest Services 92
Integrity and Objectivity 93
Independence Standards for Nonattest Services 94
Professional Skepticism 95
J
i
Contents v
Trust but Verify: A Case Study 96
Trust but Verify: Exploring Further 99
Loose Thread Theory of Auditing 103
Further Thoughts on the Loose Thread Theory 106
7 Forensic Investigations and Financial Audits:
Compare and Contrast 109
8 Potential Red Flags and Fraud Detection Techniques 119
* Types of Fraud Revisited 120
Fraud Detection: Overview 121
Laying a Foundation for Detection 124
Assessing the Risk of Fraud 125
Fraud Risk Factors 125
A Word on Information Technology 126
Interpreting Potential Red Flags 127
Importance of Professional Skepticism 129
Revisiting the Fraud Triangle 132
Incentive and Pressure 132
Opportunity 134
Rationalization and Attitude 135
Identifying and Evaluating Risk Factors 137
Discussion among Audit Team Members 138
Information Gathering 140
Other Sources 143
Analytic Procedures 144
Current Company Data versus Company Data from Prior Periods 147
Company Data versus Company Budgets, Forecasts, or Projections 147
Company Data versus Industry Data
and/or Comparable Company Data 147
Company Financial Data versus Company Operational Data 148
Company Data versus Auditor Determined Expected Results 148
Analytic Techniques 148
Assessing the Potential Impact
of Fraud Risk Factors 150
Evaluating Controls 152
Addressing the Identified Fraud Risks 153
Unpredictable Audit Tests 154
Observation and Inspection 155
Financial Statement Fraud: Detection Techniques 157
Revenue Recognition 157
Corruption 158
Summary 160
9 Internal Audit: The Second Line of Defense 161
What Do Internal Auditors Do? 162
[
i
i Contents
Internal Audit Scope of Services 164
The Handoff to Forensic Accounting Investigators
and Legal Counsel 166
Perception Problem 167
Complex Corporate Fraud and the Internal Audit 168
WorldCom and the Thornburgh Report 169
Case Studies: The Internal Auditor
Addresses Fraud 170
No Segregation of Duties—and a Very Nice Car 170
Odd Transportation System 171
A Tragic Circumstance 1 72
How Many Lunches Can You Buy? 173
Making the Numbers Look Right 1 73
How Not to Earn a Bonus 174
A Classic Purchasing Fraud 175
The Loneliness of the Internal Auditor 176
Hitting the Jackpot in the Gaming Industry 1 77
Reporting Relationships: A Key to Empowering
Fraud Detection 1 78
Tomorrow's Internal Auditor,
Tomorrow's Management and Board 180
10 Financial Statement Fraud: Revenue and Receivables 183
Improper Revenue Recognition 185
Timing 186
Revenue Recognition Detection Techniques 188
Side Agreements 191
Liberal Return, Refund, or Exchange Rights 192
Channel Stuffing 195
Bill and Hold Transactions 196
Early Delivery of Product 198
Partial Shipments 199
Contracts with Multiple Deliverables 200
Improper Allocation of Value in Multiple Element
Revenue Arrangements 201
Up Front Fees 202
Improper Accounting for Construction Contracts 202
Related Party Transactions 204
Revenue and Receivable Misappropriation 206
Revenues 207
Receivables 208
Fictitious Sales 209
Lapping 210
Redating 211
Inflating the Value of Receivables 211
Extended Procedures 212
Round Tripping 215
I
1 Contents vii
Improperly Holding Open the Books 216
Consignments and Demonstration Goods 21 7
Summary 218
11 Financial Statement Fraud: Other Schemes
and Misappropriations 219
Asset Misstatements 219
Inventory Schemes 219
I Investment Schemes 224
1 Recording Unrealized Declines in Fair Market Value 226
Recording Fictitious Fixed Assets 226
Depreciation and Amortization 226
Hanging the Debit 227
Software Development Costs 227
Research and Development Costs 228
Start Up Costs 228
Interest Costs 228
Advertising Costs 229
Understatement of Liabilities and Expenses 229
Off Balance Sheet Transactions 230
Two Basic Accounting Models 231
Cookie Jar Reserves 233
Improper and Inadequate Disclosures 234
Materiality 235
Disbursement Schemes 236
Invoice Schemes 236
Check Tampering 239
: Expense Reimbursement Schemes 240
Payroll Schemes 242
12 When and Why to Call In
Forensic Accounting Investigators 243
Today's Auditors Are Not Forensic Accounting Investigators 244
Auditors Are Not Authenticators 244
Auditors Have Limited Exposure to Fraud 245
Auditors Are Not Guarantors 246
Historically, Audits May Have Been Predictable 247
Potential Trigger Points of Fraud 248
Reliance on Others 255
Conclusion 257
1 3 Teaming with Forensic Accounting Investigators 259
Forensic Accounting Investigators' Cooperation
with Internal Auditors 261
Internal Audit's Position and Function 261
Resource Models 262
Working Together 263
iii Contents
Forensic Accounting Investigators' Cooperation
with External Auditors 264
Client History 264
The External Auditor in Today's Environment 265
Objectives of All Interested Parties 266
Forensic Accounting Investigators' Objectives 266
Objectives of Other Parties to the Investigation 267
How Should the Investigation Objectives Be Defined? 269
Who Should Direct the Investigation and Why? 270
Ready When Needed 271
Where to Find Skilled Forensic Accounting Investigators 272
Internal Audit 272
Engaging External Forensic Accounting Investigators 273
Accounting and Auditing Firms 273
14 Potential Missteps: Considerations
When Fraud Is Suspected 277
Confronting Suspects 277
Dismissing the Target 281
Assumptions 281
The Small Stuff Could Be Important 286
Materiality: More on a Key Topic 287
Addressing Allegations 288
The Case of the Central American General Manager 289
Exercising Skepticism 293
Case Outcomes 294
15 Investigative Techniques 295
Timing 295
Communication 296
Early Administrative Matters 296
Predication 297
What Should You Know before You Start? 299
Gaining an Understanding 299
Gathering and Securing Information 300
Coordination 303
Other 303
A Word about Insurance 304
Exceptions and Other Considerations 305
Document Review 306
ComQuest 306
CPA Services 308
How to Read a Check 308
Airline Tickets 310
Conclusion 311
1
Contents ix
16 Anonymous Communications 313
Typical Characteristics of Anonymous Tips 314
Federal Statutes Related to Anonymous Reporting
and Whistle Blower Protections 315
Receipt of an Anonymous Communication 318
Initial Understanding of Allegations 320
Determine Whether Any Allegation Requires
Immediate Remedial Action 320
Development and Implementation
of the Investigative Strategy 321
The Investigation Team 321
Disclosure Decisions 322
Prioritize the Allegations 323
Interviewing Employees 325
Follow UpTip 329
Conclusion 330
17 Background Investigations 331
Commercial Media Databases 332
Other Public Records 335
Commercial Database Providers 339
Other Sources 342
Unique Internet Sources 342
Other Government Agencies 345
International Investigations 346
Conclusion 346
18 The Art of the Interview 349
Difficulty and Value of Obtaining an Admission 350
Planning for the Interview 351
Types of Interviews 353
The Information Seeking Interview 353
The Admission Seeking Interview 354
Others May Wish to Attend Interviews 358
Interview Process 358
Documenting the Interview 364
Summary 364
19 Analyzing Financial Statements 365
Developing Effective Analytic Procedures 366
Vertical Analysis 368
Horizontal Analysis 369
Ratio Analysis 369
Reasonableness Testing 369
Data Mining Analysis 370
Contents
Using Financial Ratios as Measures of Risk
or Indications of Fraud 371
Identifying Other Relationships That Might Indicate Fraud 375
Margin Analysis 376
Focus on Disparity of Net Income to Cash Balances 377
Evaluate Increases in Accounts Receivable in Relation
to Sales Increases 377
Evaluate Interim Results and Seasonality 377
Common Analytic Pitfalls 377
Identifying Signs of Earnings Management 378
The Beneish Research 378
20 Data Mining: Computer Aided Forensic Accounting
Investigation Techniques 385
Benefits and Pitfalls 386
Benefits 387
Other Considerations 387
Nearly Every Investigation Can Benefit
from Forensic Technology 388
Effective Data Mining 389
What Relevant Data Might Be Available? 389
Audit Trails (Traffic Data) 390
Faster/Better/Cheaper 390
Access to Relevant Data 390
Assessing Data Quality and Format 392
Scope of Available Data 393
Quality of Available Data 394
Time Required and Data Requests 394
Data Cleaning 398
Eliminating Duplicate Information 399
Testing the Data for Completeness and Accuracy 400
Understated Amounts 401
Overstated Amounts 402
Incomplete Responses 402
Incomplete Data Sets 402
Skills of the Forensic Technologist 402
Technical Skills 403
Communication Skills 403
Effective Use of Data Analysis Results 404
Role of Data Analysis in the Investigation 404
Data Mining in Action 405
Check Disbursement File 405
Examining the Vendor Master File and Payments History 410
General Ledger Searches 411
Keyword Searches 412
Deleted/Slack/Unallocated Space 414
Data Sorting 415
Choice of Tools 418
Contents xi
Presenting Results 419
Reviewing the Essentials 420
Conclusion 420
; 21 Building a Case: Gathering
} and Documenting Evidence 423
" Critical Steps in Gathering Evidence 424
Considerations at the Time of Retention 424
Document Retention Considerations 425
Planning Considerations 425
Creating a Chain of Custody 427
Whose Evidence Is It? 430
Evidence Created by the Forensic
Accounting Investigator 431
Working Papers 431
Reports 432
What Evidence Should Be Gathered? 433
Investigations of Vendors 433
Investigations of Foreign Corrupt Practices Act Violations 434
Investigations of Improper Related Party Activity 434
Investigations of Employee Misappropriations 434
Investigations of Specific Allegations 435
Investigations of Financial Statement Errors 435
Important Considerations regarding Documents
and Working Papers 435
Conclusion 438
22 Supporting a Criminal Prosecution 439
Key Considerations 440
Deterrent Effect of Appropriate Response 440
U.S. Sentencing Commission Guidelines 440
Expense and Possible Outcomes 442
Referrals for Prosecution May Attract Public Attention 442
Referral Considerations 443
Refer the Matter to State, Local, or Federal Prosecutors? 444
Prosecutors Must Prioritize Cases 445
Forensic Accounting Investigator May Increase
the Success of a Referral 446
Reputational Benefits 446
Plea Agreements 447
Filing a Civil Lawsuit 447
23 Report of Investigation 449
Types of Reports 450
Importance of Adequate Preparation 450
1
Contents
Standards of Reporting 451
AlCPA Consulting Standards 451
ACFE Standards 453
The Written Report of Investigation 455
Basic Elements to Consider for Inclusion in a Report
of Investigation 455
Summarizing Your Findings 457 \
Written Report of Expert Witness Opining ;
for the Plaintiff on a Civil Fraud Claim 458
Affidavits 460
Informal Reports 461
Giving a Deposition 462
Be Prepared 463
It's Your Deposition 463
Objectives of a Deposition in Civil Litigation 464
You Are Being Measured 464
Reviewing Your Deposition Transcript 465
Other Considerations 465
Mistakes to Avoid in Reporting 466
Avoid Overstatement 467
Avoid Opinion 467
Identify Control Issues Separately from Investigative
Findings of Fact 467
Use Simple, Straightforward Language Focused on the Facts 467
Avoid Subjective Comments 468
Working Papers 469
Signed Engagement Letter 469
Relationship Review 471
Substantive Working Papers 471
Each Working Paper Should Stand on Its Own 471
Testimony Binder 473
Interview Memorandums 473
24 Working with Attorneys 475
In the Company of Lawyers 475
Confidentiality Requirements 477
Forming the Investigative Team 477
Documentation 483
Civil Litigation 485
Interviewing 485
External Audit Firm 486
Working for or Interacting with Law Enforcement
or Government Agencies 489
Disagreements with Counsel 490
Conclusion 491
I Contents xiii
j 25 Conducting Global Investigations 493
I On International Assignment 494
j Getting Started 495
Coordinating the Engagement 496
Logistics 497
Work Plan 497
Preliminary Work Plan Example 498
Foreign Corrupt Practices Act 501
Internal Accounting Control Provisions 502
Antibribery Provisions 502
Record Keeping Provisions 502
1 Additional Considerations 503
Planning the Engagement 503
Accounting Issues 503
Knowledge of Corporate Personnel 504
Understand Company Policy 504
Understand the Company's Network 504
Local Licenses 505
Schemes and Other Matters 505
Personal Considerations 507
26 Money Laundering 509
Relationship between Fraud and Money Laundering 510
Placement 511
Layering 511
Integration 511
Varying Impact of Money Laundering on Companies 512
The Five Point Program for AML Regulated Businesses 514
Written Compliance Program 514
Minimum Standards of Customer Due Diligence 514
Activity Monitoring and Reporting 514
Training 515
Record Keeping 515
Impact of Money Laundering on Financial Statements 51 7
AML and Forensic Accounting Investigation 518
At the Request of the Regulator 518
At the Request of the Institution 518
Review of Transactions and Records 519
Decision Making 519
The AML Reporting Process 519
Corporate Culture and AML Corporate Governance 520
Legal Arrangements Lending Themselves to Anonymity 520
Potential Red Flags 521
Auditing and Money Laundering 522
Relationship between Fraud Investigation and AML 523
xiv Contents
27 Other Dimensions of Forensic Accounting 525
Construction 526
Environmental Issues 527
Intellectual Property 528
Government Contracting 529
Insurance and Business Interruption 530
Marital Dissolution 530
Shareholder Litigation 531
Business Valuation 532
Business Combinations 532
Cybercrime 533
28 Looking Forward: The Future
of Forensic Accounting Investigation 535
Evolving Discipline 536
New Tools 538
Education and Training: To Better Support
the New Discipline 538
Regulation and Enforcement 539
Changing Corporate Environment 540
Internal Audit 541
Corporate Judgment Calls 542
Forensic Accounting Investigators Serving
Individual Corporate Clients 542
Nonfinancial Operating Data 543
Responsibility for Disclosure and Validation of NFOD 544
Other Legal and Stock Exchange Requirements 545
Future of Forensic Accounting Investigation:
Increasingly Global 546
Index 547 |
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| dewey-sort | 3363.25 3963 |
| dewey-tens | 360 - Social problems and services; associations |
| discipline | Soziologie |
| discipline_str_mv | Soziologie |
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| illustrated | Illustrated |
| index_date | 2024-07-02T14:07:53Z |
| indexdate | 2024-07-09T20:36:29Z |
| institution | BVB |
| isbn | 0471469076 9780471469070 |
| language | English |
| lccn | 2004027090 |
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| spelling | Golden, Thomas W. Verfasser aut A guide to forensic accounting investigation Thomas W. Golden ; Steven L. Skalak, and Mona M. Clayton Hoboken, NJ Wiley 2006 XXII, 554 S. graph. Darst. txt rdacontent n rdamedia nc rdacarrier Bedrijfsleven gtt Fraude gtt Ondernemingen gtt Forensic accounting Auditing Fraud investigation Auditing Rechnungslegung (DE-588)4128343-0 gnd rswk-swf Betrug (DE-588)4006249-1 gnd rswk-swf Revision Wirtschaft (DE-588)4049674-0 gnd rswk-swf Betrug (DE-588)4006249-1 s Rechnungslegung (DE-588)4128343-0 s Revision Wirtschaft (DE-588)4049674-0 s DE-604 Skalak, Steven L. Sonstige oth Clayton, Mona M. Sonstige oth HBZ Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=014681471&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis |
| spellingShingle | Golden, Thomas W. A guide to forensic accounting investigation Bedrijfsleven gtt Fraude gtt Ondernemingen gtt Forensic accounting Auditing Fraud investigation Auditing Rechnungslegung (DE-588)4128343-0 gnd Betrug (DE-588)4006249-1 gnd Revision Wirtschaft (DE-588)4049674-0 gnd |
| subject_GND | (DE-588)4128343-0 (DE-588)4006249-1 (DE-588)4049674-0 |
| title | A guide to forensic accounting investigation |
| title_auth | A guide to forensic accounting investigation |
| title_exact_search | A guide to forensic accounting investigation |
| title_exact_search_txtP | A guide to forensic accounting investigation |
| title_full | A guide to forensic accounting investigation Thomas W. Golden ; Steven L. Skalak, and Mona M. Clayton |
| title_fullStr | A guide to forensic accounting investigation Thomas W. Golden ; Steven L. Skalak, and Mona M. Clayton |
| title_full_unstemmed | A guide to forensic accounting investigation Thomas W. Golden ; Steven L. Skalak, and Mona M. Clayton |
| title_short | A guide to forensic accounting investigation |
| title_sort | a guide to forensic accounting investigation |
| topic | Bedrijfsleven gtt Fraude gtt Ondernemingen gtt Forensic accounting Auditing Fraud investigation Auditing Rechnungslegung (DE-588)4128343-0 gnd Betrug (DE-588)4006249-1 gnd Revision Wirtschaft (DE-588)4049674-0 gnd |
| topic_facet | Bedrijfsleven Fraude Ondernemingen Forensic accounting Auditing Fraud investigation Auditing Rechnungslegung Betrug Revision Wirtschaft |
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