Fraud Examination Casebook with Documents E-Book

William H. Beecken

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Corporate F&A
• Sprache: Englisch

Seitenzahl: 163

Veröffentlichungsjahr: 2017

Beschreibung

A practical advantage for entry-level fraud examiners with start-to-finish casework Fraud Examination Casebook with Documents provides critical practice for students and new CPAs; criminal and insurance investigators; and attorneys seeking additional guidance on real-world fraud investigation. With five cases that include over 100 pages of documentation, this guide helps you put your conceptual knowledge to work as you conduct full-length Fraud Examinations from predication through report. Short instructional narratives guide you through tools like horizontal and vertical analysis, report writing, and other important tasks, while Excel templates streamline the process and kick start your investigation. Multiple-choice questions help you gauge your understanding and practical mastery, while expert guidance throughout prompts you to draw on your existing knowledge and apply it to casework. With a focus on asset misappropriation and financial statement fraud, these cases provide highly relevant experience for real-world practice. Learning concept isn't always enough to do the job effectively; "knowing" is different from "applying," yet few practical resources exist for new and aspiring fraud examiners--until now. This book provides the much-needed practice that helps examiners polish their skills, with expert guidance every step of the way. * Conduct actual Fraud Examinations * Perform horizontal and vertical analyses * Review checks and decode debit card transactions * Examine adjustments to electronic records * Perform simple forensic data analytics * Vouch to/from documentation * Write complete Fraud Examination reports * Prepare court-ready schedules and audio-visuals As you work your way through the cases, you'll develop the skills and instinct experienced examiners rely upon every day. You'll hone your analytical edge and master the essentials of report writing, leaving you fully equipped to conduct a thorough investigation and deliver your findings clearly, comprehensively, and authoritatively. Fraud Examination Casebook with Documents is a vital resource for students and new fraud examiners seeking a practical advantage in real-world skills.

Leseprobe

Table of Contents

Cover

Title Page

Copyright

Foreword

Memberships

Preface

Overview of the Serial Fraud Cases (A Family of Fraudsters)

Fraudulent Financial Statements

Check Fraud, Debit Card Fraud, Cash Larceny

Fraudulent Edits/Adjusting Journal Entries to Cash Receipts

Excel Pivot Analyzes and Summarizes a Huge Amount of Data

Tracing Excel Pivot Red Flags Back to Source Documents and Documenting the Flow of Money

Chapter 1: Case 1: Fraudulent Financial Statements

1-1 Larsen Convenience Store: Using Analytical Procedures in Detecting Financial Statement Fraud

1-2 How to Perform a Horizontal, Vertical, and Ratio Analysis

1-3 Exercises—Fraudulent Financial Statements (Larsen Convenience Store)

1-4 Exercise Templates

1-5 Review Questions

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Fraudulent Financial Statements (Larsen Convenience Store)

Chapter 2: Case 2: Check Fraud, Debit Card Fraud, Cash Larceny

2-1 Anderson Internal Medicine: Preparing a Bank Reconciliation and Spreading/Analyzing Transactions on Monthly Statements from Financial Institutions

2-2 How to Perform a Bank Reconciliation

2-3 How to Read Checks and Decode Debit Card Transactions

2-4 How to Spread and Analyze Check and Debit Card Transactions

2-5 Exercises—Check Fraud, Debit Card Fraud, and Cash Larceny (Anderson Internal Medicine)

2-6 Exercise Templates

2-7 Review Questions—Check Fraud, Debit Card Fraud, and Cash Larceny (Anderson Internal Medicine)

Chapter 3: Case 3: Fraudulent Edits/Adjusting Journal Entries

3-1 Anderson Internal Medicine (Edits/AJE): Vouching from a Schedule to Source Documents

3-2 How to Vouch/Trace between a Source Document and an Accounting Ledger, Journal, or Activity Log

3-3 Exercise—Fraudulent Edits (or AJE) (Anderson Internal Medicine)

3-4 Exercise Template

Chapter 4: Case 4: Using Data Analytics: Analyzing and Summarizing Data with Excel Pivot

4-1 Anderson Internal Medicine (Data Analytics): Using Data Analytics—Analyzing and Summarizing Data with Excel Pivot

4-2 How to Use Excel Pivot to Analyze and Summarize Data

4-3 Exercises—Using Data Analytics (Anderson Internal Medicine)

4-4 Review Questions—Using Data Analytics (Anderson Internal Medicine)

Chapter 5: Case 5: Tracing Data Analytics Red Flags Back to Source Documents Using Subpoenas

5-1 Anderson Internal Medicine and Larsen Convenience Store (Conspiracy and Loan Fraud): Trace Transactions Discovered during Data Analytics Back to Source Documents Using Subpoenas

5-2 How to Write Wording to Subpoena Documents, Information, and/or Objects

5-3 Exercise—Anderson Internal Medicine and Larsen Convenience Store (Conspiracy and Loan Fraud)

Chapter 6: Reports, Schedules, and Audiovisuals

6-1 Writing a Fraud Examination Report

6-2 Formatting Schedules for Inclusion with Reports

6-3 How to Simplify the Complex with Audiovisuals

Chapter 7: Documents

7-1 Case 1: Fraudulent Financial Statements (Larsen Convenience Store)

7-2 Case 2: Check Fraud, Debit Card Fraud, Cash Larceny (Anderson Internal Medicine)

7-3 Case 3: Fraudulent Edits/Adjusted Journal Entries [Anderson Internal Medicine (Edits/AJEs)]

7-4 Case 4: Using Data Analytics: Analyzing and Summarizing Data with Excel Pivot [Anderson Internal Medicine (Excel Pivot)]

7-5 Case 5: Tracing Data Analytics Red Flags Back to Source Documents Using Subpoenas [Anderson Internal Medicine and Larsen Convenience (Husband/Wife Loan Fraud and Conspiracy)]

About the Authors

About the Website

Index

End User License Agreement

Guide

Cover

Table of Contents

Begin Reading

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The Wiley Corporate F&A series provides information, tools, and insights to corporate professionals responsible for issues affecting the profitability of their company, from accounting and finance to internal controls and performance management.

Fraud Examination Casebook with Documents

A Hands-on Approach

WILLIAM H. BEECKEN, CFE, CPACLARK A. BEECKEN, CFE

Copyright © 2017 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 is available:

ISBN 9781119349990 (Hardcover)ISBN 9781119349952 (epdf)ISBN 9781119349877 (epub)

Cover Design: WileyCover Image: © Nomad_Soul/Shutterstock

Foreword

I am pleased to write this foreword to the Fraud Examination Casebook with Documents: A Hands‐on Approach by William H. Beecken and Clark A. Beecken, a redoubtable father‐son team of forensic accountants. Bill has been a seasoned forensic professional employed many years with the Federal Deposit Insurance Corporation (FDIC) Office of Inspector General, as well as the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Clark is currently working as a forensic auditor for the federal government.

Several years ago, as a faculty member in the School of Accountancy at Kennesaw State University (KSU), I came to know Bill as a popular faculty member at Southern Polytechnic State University—now the KSU Marietta campus—who taught forensic accounting in an innovative way. At the end of his course, it was part of the students' end‐of‐term assignment to go through the real‐world experience of being deposed as an “expert witness” by the local district attorney and overseen by a judge in the actual environs of the Marietta, Georgia, courthouse. A couple of times, I was a member of the audience in the courthouse, rather envious of Bill's students who were being exposed to a mock‐trial scenario. Hence, I enthusiastically commend and recommend Bill's idiosyncratic interpretation of a hands‐on approach!

From my very first meeting, Clark appeared to be a chip off the old block, cut of the same cloth, the apple that doesn't fall far from the tree, etc.—sharp, incisive, and blessed with the technological adeptness and adroitness that comes with having grown up digital. So, I am not surprised that he has left his indelible mark on the book by focusing on Microsoft Excel, the industry standard for spreadsheets, featuring calculation, graphing tools, pivot tables, and such.

Among other things, this practical fraud casebook does a wonderful job of showing how Excel PivotTables may be profitably deployed—not only to summarize a huge amount of data but also to help trace Excel Pivot red flags back to source documents to understand the flow of money. After all, much of forensic accounting can be usefully described as the work of understanding and investigating people, money, and associated patterns of behavior with great tenacity—colloquially described as the “follow the money” approach. Such work cannot be carried out without sophisticated data analysis in today's data rich, information poor (DRIP) world.

It is one thing to appreciate the scope and reach of forensic accounting at a conceptual level; quite another to get your hands dirty with data, and recognize the power of data‐driven insights and solutions. This book admirably makes that bridge from theory to practice happen. Rather than “hand waving,” you become hands‐on—you don't just talk, for talk is cheap, but you actually perform analyses and learn to manipulate data statistically to yield relevant and meaningful information. This information helps you gather evidence and arrive at inferences that support or challenge your hypotheses—a most exciting endeavor. After all, it is such information that can greatly help buttress one's arguments, defend one's position, persuade others in courtroom contexts, and thus, help win cases.

Dr. Sridhar Ramamoorti, ACA, CPA/CITP/CFF/CGMA, CIA, CFSA, CGAP, CRMA, CFE, CGFM, CRP, MAFF

Associate Professor of Accounting, School of Business Administration, University of Dayton, Ohio

Managing Principal, The Behavioral Forensics Group, LLC (www.bringingfreudtofraud.com)

MEMBERSHIPS

Standing Advisory Group, Public Company Accounting Oversight Board, 2014–2016

Forensic Accounting Advisory Board, Georgia Southern University, 2015–

Board of Trustees, Financial Executives Research Foundation, 2016–

Litigation Forensics Board, National Association of Certified Valuators & Analysts, 2016–

Lead author, A.B.C.'s of Behavioral Forensics (Hoboken, NJ: John Wiley & Sons, 2013)

Preface

Professors of graduate and undergraduate Fraud Examination courses often instruct students from a survey‐level textbook and, if available, supplement their course with guest lecturers who work in the field. Those new to Fraud Examination often simply read a Fraud Examination textbook, specialized book dealing with some aspect of fraud, or study for the CFE Exam. Students usually complete a typical Fraud Examination course with general knowledge of complex human behaviors like greed and deception, a broad understanding of what fraud is and how fraud is committed, prevented, and resolved. However, they gain little or no hands‐on experience using life‐like accounting documents, databases, or witness interviews. They also do not learn how to apply Fraud Examination techniques like horizontal, vertical, and ratio analysis. Learning Fraud Examination theory is not enough to do the job effectively; “knowing” is different from “applying.”

This casebook was developed with a hands‐on concept similar to that used to train federal special agents. It provides students and those new to Fraud Examination with cases based on real Fraud Examinations. The exercises take them from predication (e.g., receipt of allegations given in a case scenario) through producing a written report, schedules, and court‐room ready audio‐visuals, which are ready for examination and cross‐examination by attorneys in depositions, hearings, or trials. It gives the students and those new to Fraud Examination cradle‐to‐grave experience, painstakingly spreading and analyzing accounting documentation and related data, preparing audio‐visuals to simplify the complex, and preparing a report that adequately discusses the Fraud Examination, schedules, and audio‐visuals to an uninformed reader (e.g., an attorney). Students and those new to Fraud Examination learn such Fraud Examination techniques as horizontal and vertical analysis, examining the front and back of canceled checks, decoding debit card transactions, vouching to supporting documents, examining edits to digital information, using simple data analytics, and preparation of audio‐visuals to simplify the complex. As with real Fraud Examinations, the students and those new to Fraud Examination must think outside of the box and connect the dots, often reading and rereading the scenario and examining and reexamining the accounting documents and witness interviews. Like in real life, they do not receive all of the information they would like to have.

The information they need is present in the case, but they have to dig deeply to find it all. In those courses where the professor uses a mock fraud trial as an additional teaching tool, a prosecutor and defense attorney can use the finished product to painfully examine and cross‐examine students on the results of their completion of these exercises (Fraud Examination reports, schedules, and audiovisuals).

This work is the outgrowth of three earlier versions of the first two fraud cases, which were used to augment Fraud Examination courses at a state university (on‐the‐ground) and private university (online). Starting with the first Fraud Examination course students in the on‐the‐ground course were required to prepare reports, schedules, and audiovisuals and then meet in groups to prepare for the final examination: a mock fraud trial before a real judge, prosecutor, and defense attorney. During the pre‐trial period, teams were selected for the defense and prosecution attorneys, and team reports, schedules, and audiovisuals were exchanged under discovery. Attorneys taught a session in how to testify as an expert witness and films were shown on the tips, tricks, and traps of testifying. During cross‐examination, students quickly found out how inadequate work, misspoken words, and/or fear of the unknown impacted the effectiveness of their testimony on the results of their Fraud Examinations. Those teams that prepared most often did the best.

Based on prior experience, the first two cases are the most that should be used to supplement an undergraduate Fraud Examination course. It takes four to eight hours for each assignment to individually complete with worksheets and another eight to ten hours for teams to prepare reports, schedules, and audiovisuals. Considering the more intense writing requirements for graduate programs, graduate Fraud Examination students can and should work all five cases. Those new to Fraud Examination may take more or less hours depending on their experience level. Expect the first set of reports, schedules, and audiovisuals (fraud case 1) to be substandard. However, those that follow review comments often provide much improved products with the second set of reports, schedules, and audiovisuals (fraud case 2). The forensic data analytics case (case 4) is provided so business schools can introduce students to forensic data analytics. The “how‐to” session provides an overview of Excel Pivot. Finally, the conspiracy/loan fraud case was added to bring the serial cases full circle and emphasize that frauds may not be committed alone.

Writing this book came out of a need to provide students with a working knowledge of simple fraud cases and an avenue to quickly become Fraud Examiners. From past experience, graduates must first work as auditors, claims adjusters, forensic accountants, investigators, and so forth before getting an opportunity to enter the field. To get them entry‐level positions right out of college required a large number of volunteers: guest lecturers, employers with Fraud Examination internships, and attorneys and CFEs willing to spend hours holding a mock fraud trial where students would testify as expert witnesses.

The following spoke about their real‐world experience: Lew Brendle, J.D., Laurie Dyke, CFE CPA, Karen Fortune, CFE CPA, James F. Hart, CPA/ABV, CFE, Scott Hilsen, J.D, CFE, Tim Huhn, CFE, Phil Hurd, CISSP CIA, Deputy Chief Assistant District Attorney (White Collar Crime) John Melvin, J.D., David Sawyer, CFE, CPA, Special Agent Gary Sherrill, CFE, and Thomas Taylor, CFE. The Cobb County District Attorney's Office, Georgia Institute of Technology, and IAG Forensics & Valuation provided Fraud Examination internships. The following CFEs devoted days getting students prepared to testify as expert witnesses: Laurie Dyke, CFE CPA, Karen Fortune, CFE CPA, Luke Thomas, CFE CPA, and many of their junior associates with IAG Forensics & Valuation. The following attorneys and magistrates participated as judges and attorneys at the annual mock fraud trials: John Capo, J.D., Scott Poole, J.D., and Chief Judge Allen Wigington (Pickens County), Victor Hartman, J.D., CFE, CPA (former FBI District Counsel), and District Attorney Victor Reynolds, J.D., Deputy Chief Assistant District Attorney (White Collar Crime) John Melvin, J.D., Deputy Chief Assistant District Attorney (Major Litigation) Michael Carlson, J.D., and Assistant District Attorney Jason Marbutt, J.D. (Cobb County). In addition, thanks to the academic assistance provided by Donald Ariail, Ph.D., CFE, CPA and Sridhar Ramamoorti, Ph.D., CFE, CPA, CIA.

Finally, Clark and I want to thank Jeanne, our mother and wife, respectively. She has had to persevere through countless hours of solitary living while we wrote this casebook. Without her love and understanding, this casebook would not have been written.

Overview of the Serial Fraud Cases(A Family of Fraudsters)