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Principles of Fraud Examination, 4th Edition

Book Description

Principles of Fraud Examination 4th Edition by Joe Wels contains engaging real-life case studies and an analysis of the complexity of frauds and fraudulent behavior incorporated throughout the book. This text provides a broad understanding of fraud—what it is and how it is committed, prevented, and resolved. Principles of Fraud Examination 4th Edition begins by providing an understanding of fraud examination methodology then documents the schemes used by executive, managers, and employees to commit fraud against their organizations. Case studies, complete with statistics and flowcharts, are provided for each chapter. The primary focus of this text is maintained in the updated edition, with coverage of the actual accounting and human behaviors that lead to cases of accounting fraud. The 4th edition includes updates to reflect new and revised accounting standards and laws, updated statistics to include the most recent ACFE findings, and moderate changes to end of chapter material. Also included in the newest edition is updated coverage of recent examples of fraud accounting in the real world.

Table of Contents

  1. Cover Page
  2. Title Page
  3. Copyright
  4. Dedication
  5. Foreword
  6. PREFACE
  7. Brief Contents
  8. Contents
  9. CHAPTER 1: INTRODUCTION
    1. FRAUD EXAMINATION METHODOLOGY
    2. DEFINING OCCUPATIONAL FRAUD AND ABUSE
    3. RESEARCH IN OCCUPATIONAL FRAUD AND ABUSE
    4. SUMMARY
    5. ESSENTIAL TERMS
    6. REVIEW QUESTIONS
    7. DISCUSSION ISSUES
    8. ENDNOTES
  10. CHAPTER 2: SKIMMING
    1. CASE STUDY: SHY DOC GAVE GOOD FACE
    2. OVERVIEW
    3. SKIMMING SCHEMES
    4. CASE STUDY: BEVERAGE MAN TAKES THE PLUNGE
    5. PROACTIVE COMPUTER AUDIT TESTS DETECTING SKIMMING
    6. SUMMARY
    7. ESSENTIAL TERMS
    8. REVIEW QUESTIONS
    9. DISCUSSION ISSUES
    10. ENDNOTES
  11. CHAPTER 3: CASH LARCENY
    1. CASE STUDY: BANK TELLER GETS NABBED FOR THEFT
    2. OVERVIEW
    3. CASH LARCENY SCHEMES
    4. CASE STUDY: THE OL' FAKE SURPRISE AUDIT GETS 'EM EVERY TIME
    5. PROACTIVE COMPUTER AUDIT TESTS FOR DETECTING CASH LARCENY
    6. SUMMARY
    7. ESSENTIAL TERMS
    8. REVIEW QUESTIONS
    9. DISCUSSION ISSUES
    10. ENDNOTES
  12. CHAPTER 4: BILLING SCHEMES
    1. CASE STUDY: MEDICAL SCHOOL TREATS FRAUD AND ABUSE
    2. OVERVIEW
    3. BILLING SCHEMES
    4. BILLING SCHEMES INVOLVING NONACCOMPLICE VENDORS
    5. CASE STUDY: COVER STORY: INTERNAL FRAUD
    6. PERSONAL PURCHASES WITH COMPANY FUNDS
    7. PROACTIVE COMPUTER AUDIT TESTS FOR DETECTING BILLING SCHEMES
    8. SUMMARY
    9. ESSENTIAL TERMS
    10. REVIEW QUESTIONS
    11. DISCUSSION ISSUES
    12. ENDNOTE
  13. CHAPTER 5: CHECK TAMPERING
    1. CASE STUDY: A WOLF IN SHEEP'S CLOTHING
    2. OVERVIEW
    3. CHECK TAMPERING SCHEMES
    4. CONCEALING CHECK TAMPERING
    5. CASE STUDY: WHAT ARE FRIENDS FOR?
    6. ELECTRONIC PAYMENT TAMPERING
    7. PROACTIVE COMPUTER AUDIT TESTS FOR DETECTING CHECK TAMPERING SCHEMES
    8. SUMMARY
    9. ESSENTIAL TERMS
    10. REVIEW QUESTIONS
    11. DISCUSSION ISSUES
    12. ENDNOTES
  14. CHAPTER 6: PAYROLL SCHEMES
    1. CASE STUDY: SAY CHEESE!
    2. OVERVIEW
    3. PAYROLL SCHEMES
    4. CASE STUDY: THE ALL-AMERICAN GIRL
    5. PROACTIVE COMPUTER AUDIT TESTS FOR DETECTING PAYROLL FRAUD
    6. SUMMARY
    7. ESSENTIAL TERMS
    8. REVIEW QUESTIONS
    9. DISCUSSION ISSUES
    10. ENDNOTES
  15. CHAPTER 7: EXPENSE REIMBURSEMENT SCHEMES
    1. CASE STUDY: FREQUENT FLIER'S FRAUD CRASHES
    2. OVERVIEW
    3. EXPENSE REIMBURSEMENT SCHEMES
    4. CASE STUDY: THE EXTRAVAGANT SALESMAN
    5. PROACTIVE COMPUTER AUDIT TESTS FOR DETECTING EXPENSE REIMBURSEMENT SCHEMES
    6. SUMMARY
    7. ESSENTIAL TERMS
    8. REVIEW QUESTIONS
    9. DISCUSSION ISSUES
    10. ENDNOTE
  16. CHAPTER 8: REGISTER DISBURSEMENT SCHEMES
    1. CASE STUDY: DEMOTION SETS FRAUD IN MOTION
    2. OVERVIEW
    3. REGISTER DISBURSEMENT SCHEMES
    4. CASE STUDY: A SILENT CRIME
    5. CONCEALING REGISTER DISBURSEMENTS
    6. PREVENTING AND DETECTING REGISTER DISBURSEMENT SCHEMES
    7. PROACTIVE COMPUTER AUDIT TESTS FOR DETECTING REGISTER DISBURSEMENT SCHEMES
    8. SUMMARY
    9. ESSENTIAL TERMS
    10. REVIEW QUESTIONS
    11. DISCUSSION ISSUES
    12. ENDNOTE
  17. CHAPTER 9: NONCASH ASSETS
    1. CASE STUDY: CHIPPING AWAY AT HIGH-TECH THEFT
    2. OVERVIEW
    3. NONCASH MISAPPROPRIATION SCHEMES
    4. CASE STUDY: HARD DRIVES AND BAD LUCK
    5. CONCEALING INVENTORY SHRINKAGE
    6. PREVENTING AND DETECTING THEFTS OF NONCASH TANGIBLE ASSETS THAT ARE CONCEALED BY FRAUDULENT SUPPORT
    7. MISAPPROPRIATION OF INTANGIBLE ASSETS
    8. PROACTIVE COMPUTER AUDIT TESTS FOR DETECTING NONCASH MISAPPROPRIATIONS
    9. SUMMARY
    10. ESSENTIAL TERMS
    11. REVIEW QUESTIONS
    12. DISCUSSION ISSUES
    13. ENDNOTE
  18. CHAPTER 10: CORRUPTION
    1. CASE STUDY: WHY IS THIS FURNITURE FALLING APART?
    2. OVERVIEW
    3. CORRUPTION SCHEMES
    4. BRIBERY
    5. ILLEGAL GRATUITIES
    6. ECONOMIC EXTORTION
    7. CONFLICTS OF INTEREST
    8. CASE STUDY: WORKING DOUBLE DUTY
    9. ANTI-CORRUPTION LEGISLATION
    10. PROACTIVE COMPUTER AUDIT TESTS FOR DETECTING CORRUPTION
    11. SUMMARY
    12. ESSENTIAL TERMS
    13. REVIEW QUESTIONS
    14. DISCUSSION ISSUES
    15. ENDNOTE
  19. CHAPTER 11: ACCOUNTING PRINCIPLES AND FRAUD
    1. FRAUD IN FINANCIAL STATEMENTS
    2. CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING
    3. RESPONSIBILITY FOR FINANCIAL STATEMENTS
    4. USERS OF FINANCIAL STATEMENTS
    5. TYPES OF FINANCIAL STATEMENTS
    6. THE SARBANES–OXLEY ACT OF 2002
    7. FINANCIAL STATEMENT FRAUD DATA FROM THE ACFE 2011 GLOBAL FRAUD SURVEY
    8. SUMMARY
    9. ESSENTIAL TERMS
    10. REVIEW QUESTIONS
    11. DISCUSSION ISSUES
  20. CHAPTER 12: FINANCIAL STATEMENT FRAUD SCHEMES
    1. CASE STUDY: THAT WAY LIES MADNESS
    2. OVERVIEW
    3. DEFINING FINANCIAL STATEMENT FRAUD
    4. COSTS OF FINANCIAL STATEMENT FRAUD
    5. FICTITIOUS REVENUES
    6. TIMING DIFFERENCES
    7. CASE STUDY: THE IMPORTANCE OF TIMING
    8. CONCEALED LIABILITIES AND EXPENSES
    9. IMPROPER DISCLOSURES
    10. IMPROPER ASSET VALUATION
    11. DETECTION OF FRAUDULENT FINANCIAL STATEMENT SCHEMES
    12. DETERRENCE OF FINANCIAL STATEMENT FRAUD
    13. CASE STUDY: ALL ON THE SURFACE
    14. SUMMARY
    15. ESSENTIAL TERMS
    16. REVIEW QUESTIONS
    17. DISCUSSION ISSUES
  21. CHAPTER 13: EXTERNAL FRAUD SCHEMES
    1. CASE STUDY: A COMPUTER HACKER TURNED INFORMANT . . . TURNED HACKER
    2. OVERVIEW
    3. THREATS FROM CUSTOMERS
    4. THREATS FROM VENDORS
    5. THREATS FROM UNRELATED THIRD PARTIES
    6. CORPORATE ESPIONAGE
    7. SUMMARY
    8. ESSENTIAL TERMS
    9. REVIEW QUESTIONS
    10. DISCUSSION ISSUES
    11. ENDNOTES
  22. CHAPTER 14: FRAUD RISK ASSESSMENT
    1. OVERVIEW
    2. WHAT IS A FRAUD RISK ASSESSMENT?
    3. WHY SHOULD ORGANIZATIONS CONDUCT FRAUD RISK ASSESSMENTS?
    4. WHAT MAKES A GOOD FRAUD RISK ASSESSMENT?
    5. CONSIDERATIONS FOR DEVELOPING AN EFFECTIVE FRAUD RISK ASSESSMENT
    6. PREPARING THE COMPANY FOR THE FRAUD RISK ASSESSMENT
    7. EXECUTING THE FRAUD RISK ASSESSMENT
    8. ADDRESSING THE IDENTIFIED FRAUD RISKS
    9. REPORTING THE RESULTS OF THE FRAUD RISK ASSESSMENT
    10. MAKING AN IMPACT WITH THE FRAUD RISK ASSESSMENT
    11. THE FRAUD RISK ASSESSMENT AND THE AUDIT PROCESS
    12. SUMMARY
    13. ESSENTIAL TERMS
    14. REVIEW QUESTIONS
    15. DISCUSSION ISSUES
    16. ENDNOTES
  23. CHAPTER 15: CONDUCTING INVESTIGATIONS AND WRITING REPORTS
    1. WHEN IS AN INVESTIGATION NECESSARY?
    2. PLANNING THE INVESTIGATION
    3. DEVELOPING EVIDENCE
    4. PRESERVING DOCUMENTARY EVIDENCE
    5. ORGANIZING DOCUMENTARY EVIDENCE
    6. SOURCES OF INFORMATION
    7. REPORT WRITING
    8. SUMMARY
    9. ESSENTIAL TERMS
    10. REVIEW QUESTIONS
    11. DISCUSSION ISSUES
  24. CHAPTER 16: INTERVIEWING WITNESSES
    1. OVERVIEW
    2. SUMMARY
    3. ESSENTIAL TERMS
    4. REVIEW QUESTIONS
    5. DISCUSSION ISSUES
  25. CHAPTER 17: OCCUPATIONAL FRAUD AND ABUSE: THE BIG PICTURE
    1. DEFINING ABUSIVE CONDUCT
    2. MEASURING THE LEVEL OF OCCUPATIONAL FRAUD AND ABUSE
    3. UNDERSTANDING FRAUD DETERRENCE
    4. THE CORPORATE SENTENCING GUIDELINES
    5. THE ETHICAL CONNECTION
    6. CONCLUDING THOUGHTS
    7. SUMMARY
    8. ESSENTIAL TERMS
    9. REVIEW QUESTIONS
    10. DISCUSSION ISSUES
    11. ENDNOTES
  26. APPENDIX A: ONLINE SOURCES OF INFORMATION
    1. COMMERCIAL ONLINE SERVICES
    2. SEARCH ENGINES
    3. SOCIAL-NETWORKING SITES
    4. PUBLIC RECORDS
    5. NEWS SEARCHES
    6. OTHER SOURCES OF INFORMATION
  27. APPENDIX B: SAMPLE CODE OF BUSINESS ETHICS AND CONDUCT
    1. INTRODUCTION
    2. CONFLICTS OF INTEREST
    3. COMPANY ASSETS
    4. POLITICAL CONTRIBUTIONS
    5. EMPLOYEE CONDUCT
    6. COMPLIANCE LETTER AND CONFLICT OF INTEREST QUESTIONNAIRE
  28. APPENDIX C: RISK ASSESSMENT TOOL
    1. INTRODUCTION
    2. MODULE # 1 – EMPLOYEE ASSESSMENT
    3. MODULE # 2 – MANAGEMENT/KEY EMPLOYEE ASSESSMENT
    4. MODULE # 3 – PHYSICAL CONTROLS TO DETER EMPLOYEE THEFT AND FRAUD
    5. MODULE # 4 – SKIMMING SCHEMES
    6. MODULE # 5 – CASH LARCENY SCHEMES
    7. MODULE # 6 – CHECK TAMPERING SCHEMES
    8. MODULE # 7 – CASH REGISTER SCHEMES
    9. MODULE # 8 – PURCHASING AND BILLING SCHEMES
    10. MODULE # 9 – PAYROLL SCHEMES
    11. MODULE # 10 – EXPENSE REIMBURSEMENT SCHEMES
    12. MODULE # 11 – THEFT OF INVENTORY AND EQUIPMENT
    13. MODULE # 12 – THEFT OF PROPRIETARY INFORMATION
    14. MODULE # 13 – CORRUPTION
    15. MODULE # 14 – CONFLICTS OF INTEREST
    16. MODULE # 15 – FINANCIAL STATEMENT FRAUD
  29. BIBLIOGRAPHY
  30. INDEX