Expert Fraud Investigation E-Book

Tracy L. Coenen

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 341

Veröffentlichungsjahr: 2009

Beschreibung

A fraud investigation is aimed at examining evidence to determine if a fraud occurred, how it happened, who was involved, and how much money was lost. Investigations occur in cases ranging from embezzlement, to falsification of financial statements, to suspicious insurance claims. Expert Fraud Investigation: A Step-by-Step Guide provides all the tools to conduct a fraud investigation, detailing when and how to investigate. This guide takes the professional from the point of opening an investigation, selecting a team, gathering data, and through the entire investigation process. Business executives, auditors, and security professionals will benefit from this book, and companies will find this a useful tool for fighting fraud within their own organizations.

Leseprobe

Table of Contents

Praise

Title Page

Copyright Page

Dedication

Preface

Acknowledgements

CHAPTER 1 - Finding Fraud

Signs of Fraud

Looking for Suspects

Evaluating Fraud Tips

Should You Investigate?

Confronting Suspects

Skills of a Fraud Investigator

Differences between Audits and Investigations

Conducting a Fraud Investigation

CHAPTER 2 - Beginning the Investigation

Assessing the Engagement

Making Recommendations

Budgeting and Cost Control

Fees

Billing Practices

Engagement Letters

CHAPTER 3 - Managing the Case

Assembling the Team: Where to Start

Assembling the Team: Company Insiders

Assembling the Team: Key Participants

Assembling the Team: Outside Consultants

Importance of Credentials

Management and Supervision of Staff

Work Programs and Checklists

Document Management

Preserving Evidence

File Maintenance

Investigative Software

Professional Standards

When to Stop Investigating

CHAPTER 4 - Searching for Fraud

Analytical Review

Key Financial Ratios

Write-offs, Adjustments, and Miscellaneous

Manual Disbursements

What about Financial Statement Audits?

Looking for Fraud in Little Things

CHAPTER 5 - Sources of Information

Who Acquires Information

Internal Records

Private Records

Public Records

The Internet and Search Engines

CHAPTER 6 - Investigative Techniques

Corporate Background Checks

Individual Background Checks

Searching for Friends, Family, and Associates

Surveillance

Digital Data Analysis

Computer Forensics

Interviewing Witnesses and Suspects

Confirmation with Customers and Vendors

Creativity and the Fraud Investigator

CHAPTER 7 - Investigation of Asset Misappropriation Schemes

Cash Receipts Schemes

Disbursement Schemes

Noncash Schemes

CHAPTER 8 - Investigation of Financial Statement Fraud

Revenue Overstatement

Channel Stuffing

Round-Tripping

Asset Overstatement

Liability and Expense Understatement

Reserve Manipulation

Misrepresentation or Omission of Information

Improper Recording of Mergers and Acquisitions

Off-Balance-Sheet Items

Accounting Involves Judgment and Estimates

Earnings Management

Note

CHAPTER 9 - Investigation of Corruption Schemes

Bribes

Kickbacks

Extortion and Conflict of Interest

Related-Party Transactions

Money Laundering

Foreign Corrupt Practices Act (FCPA)

Prevention and Detection

Note

CHAPTER 10 - Investigation of External Fraud Schemes

Corporate Espionage

Investment Schemes

Pyramid or Ponzi Schemes

Securities Fraud

Hidden Income or Assets

Insurance Fraud

Bankruptcy Fraud

Note

CHAPTER 11 - Reporting and Litigation

Stick to the Facts

Keep It Simple

Background Information

Investigation Procedures

Opinions

Attachments

Draft Reports

Unfavorable Opinions

Follow-up to the Fraud Investigator’s Work

Being an Expert Witness

Preparing for Testimony

Deposition Testimony

Trial Testimony

Note

CHAPTER 12 - Other Issues

Moving Forward as a Company

Preventing Future Frauds

Marketing a Fraud Investigation Practice

Competing with Other Firms

Conducting a Global Investigation

Professional Liability Issues

Reducing Fraud with Investigations

Note

Appendix

Index

Additional Praises forExpert Fraud Investigation: A Step-by-Step Guide

“Crime is inherently dramatic. And since fraud is a crime, writing about the subject of fraud should not be mundane nor monotonous but rather riveting, exciting and informative. Tracy Coenen, in her new book Expert Fraud Investigation: A Step by Step Guide, may be the first to actually capture why the topic of fraud is not only exciting but also informative, thought provoking and most importantly a subject that no one can afford to not thoroughly understand. In an environment of fraud on Wall Street and on Main Street, this book literally levels the playing field by equipping everyone who wants to avoid becoming a future fraud victim. In times like these, this is a must read.”

—Barry Minkow, Co-Founder Fraud Discovery Institute

“This book should be required reading for anyone who is thinking about or is about to start on their fraud examiners career. She doesn’t talk down to the reader but lays out in clear concise points that must be considered before starting ones own firm as well as a fraud investigation. This is where Tracy’s experience and knowledge about fraud shine through.

She continuously establishes credibility with the season fraud examiner by being subtle yet informative with her own opinion which is based on years of practical experience. It is evident this book is not written by a college professor looking for tenure at a University. Instead it appears to be written by a seasoned professional with years of experience. I would strongly recommend it to the experienced fraud professional as well as it contains information needed throughout ones career.”

—David Bleser, President, Bleser & Associates, LLC

“Ms. Coenen’s book should be on every accounting and financial manager’s bookshelf. When you suspect fraud, call an expert. But this book explains the who, what, where, and why of financial frauds and the techniques professionals like Ms. Coenen use to help you investigate and prosecute it.”

—Francine McKenna, President, McKenna Partners LLC and Author of the blog, re: The Auditors

“Through an examination of common types of frauds and discussion of ‘best practice’ methods to identify fraud, this book provides excellent practical guidance on how to conduct a fraud examination. Such guidance is a valuable resource to auditors and security professionals involved in fraud examinations. I highly recommend this book to auditors, security professionals, management and board of directors who desire a practical, not theoretical, understanding of fraud examinations.”

—Michael D. Akers, PhD, CFE, CPA, Professor and Chair, Department of Accounting-Marquette University, Charles T. Horngren Professor of Accounting

Copyright © 2009 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Coenen, Tracy, 1972- Expert fraud investigation : a step-by-step guide / Tracy L. Coenen. p. cm. Includes index.

eISBN : 978-0-470-44784-0

1. Fraud. 2. Investigations. I. Title. HV6691.C54 2009 363.25’963-dc22 2008040311

.

For Grandma & Grandpa

Preface

Fraud investigation is a field that has gotten plenty of publicity since the big public company frauds uncovered in the early 2000s. Despite the media coverage and overall greater awareness of the issue, there are few books to date that have led readers through the process of conducting a fraud investigation. Expert Fraud Investigation: A Step-by-Step Guide changes all of that. It is the first book to really make the leap from theoretical discussion of fraud investigations to the actual nuts and bolts of performing an investigation.

This book is no substitute for real-world experience under the direction of a highly qualified forensic accountant or fraud investigator, but it is a tool to help professionals learn about fraud investigations. This guide takes the professional through the process of opening an investigation, selecting a team, gathering data, and the entire investigation.

It discusses the most common types of fraud cases, and points out some of the best methods for analyzing the books and records to search for proof of fraud. Business executives, auditors, and security professionals will benefit from this book, and companies should find this a useful tool for fighting fraud within their own organizations.

The basis for this book is more than a decade of fraud investigation experience, with cases ranging from those at small family-owned companies to large publicly traded corporations. Formal and informal training have helped refine my fraud investigation skills and add to my repertoire of techniques to ferret out fraud.

Acknowledgments

Thank you again to everyone at Wiley who has helped make writing this book easier than I ever imagined. You allow me the creative freedom to write according to my vision, and for that, I can’t thank you enough. It is an honor to be associated with such professionals.

I again thank my family, friends, and business associates, who support and encourage me each day. Special thanks goes out to Max, who makes each day worth living. You are the best!

CHAPTER 1

Finding Fraud

There are two different ways that a reactive fraud investigation starts. One type of investigation begins when an actual fraud has been identified, and maybe one or more perpetrators are identified, too. The other type of investigation starts with a strong suspicion of fraud, but no real proof of theft.

Both types of investigations are important to any organization that takes fraud prevention and control seriously. Companies with good fraud prevention controls actively monitor their systems and follow up on questionable data and unusual relationships between numbers. The investigation that starts this way should not be viewed as any less important than the one that begins with a definitive instance of fraud.

Signs of Fraud

Numerous signs can point to the possibility of fraud. Literally hundreds of different types of fraud schemes exist, so the number of possible red flags of fraud is huge. It would be impossible to cover them all in their entirety here, but some general signs of fraud can apply across all types of businesses and fraud schemes.