Fraud Auditing and Forensic Accounting (eBook)

TOMMIE W. SINGLETON, CPA, CMA, CISA, CITP, is Marshall IS Scholar and coordinator of the Forensic Accounting Program at the University of Alabama at Birmingham. He is a member of the American Institute of Certified Public Accountants, the Association of Certified Fraud Examiners, the Institute of Internal Auditors, the Information Systems Audit and Control Association, and the Institute of Management Accountants, among other organizations. He has published numerous articles and is coauthor of Managing the Audit Function: A Corporate Audit Department Procedures Guide, Third Edition (Wiley). AARON J. SINGLETON acquired his master's of accountancy at Bowling Green State University. He is an IT auditor with PricewaterhouseCoopers (PWC). His articles have been published in the Journal of Corporate Accounting and Finance and Bank Accounting and Finance. G. JACK BOLOGNA, BBA, JD, CFE, is former president of Computer Protection Systems, Inc., and Associate Professor of Management at Siena Heights University, Michigan. Among his numerous publications are The Accountant's Handbook of Fraud and Commercial Crime (Wiley), Forensic Accounting Handbook, and Handbook on Corporate Fraud. ROBERT J. LINDQUIST, BComm, CA, CFE, is CEO of Lindquist, Avey, Macdonald, Baskerville, Inc., a leading North American forensic and investigative accounting firm. Previously, he was partner and national director of the forensic accounting services division of a "Big Six" accounting firm.

Preface.

Acknowledgments.

Chapter 1: Fraud Definitions, Models, and Taxonomies.

Introduction.

Classic Fraud Research.

Fraud Triangle.

Scope of Fraud.

Profile of Fraudsters.

Who Is Victimized by Fraud Most Often?

Fraud Taxonomies.

Evolution of a Typical Fraud.

Chapter 2: Fundamentals of Fraud Auditing and ForensicAccounting.

Introduction.

Brief History of Fraud and the Antifraud Profession.

Review of Technical Literature.

Auditor's Mind-Set.

What Is Forensic Accounting?

Steps in Fraud Investigation.

What Is Fraud Auditing?

Antifraud Professional Organizations and Certifications.

Summary.

Chapter 3: Auditor Liability for Detecting Fraud.

Introduction.

Recent Developments in Auditor Liability.

Summary.

Chapter 4: Fraud Schemes.

Introduction.

ACFE Fraud Tree.

Financial Statement Schemes.

Corruption Schemes.

Asset Misappropriation Schemes.

Summary.

Chapter 5: Red Flags and Fraud Detection.

Introduction.

Professional Standards.

Common Red Flags.

Common Detection Methods.

Specific Red Flags and Detection Methods.

Corruption Schemes.

Asset Misappropriation Schemes.

Fraud Detection Model.

Summary.

Chapter 6: Fraud and CAATs.

Introduction.

Benefits of CAATs.

Fraud and CAAT Issues.

Need for Computer Tools.

Sample Tools/CAATs.

CAAT Methodology.

Summary.

Chapter 7: Fraud Prevention and Control.

Introduction.

Perception of Detection.

Classic Approaches.

Prevention Environment.

Prevention Measures.

Accounting Cycles.

Summary.

Chapter 8: Fraud Risk Assessment.

Introduction.

Risk Assessment Process and Documentation.

Risk Management Checklists and Documentation.

Special Cases.

Summary.

Chapter 9: Fraud and the Accounting InformationSystem.

Introduction.

Accounting Concepts.

Expenditures Cycle (Purchases and Disbursements).

Bank Reconciliation.

General Ledger.

Cash Path.

Segregation of Duties.

Computerized Accounting Systems.

Key Personnel.

Computer Hardware.

Computer Software.

Media Storage.

New Forms of Media.

Paper and Microfilm.

Audit Trail Concept.

Chapter 10: Computer-Related Fraud.

Introduction.

History and Evolution of Computer-Related Crimes.

Computer-Related Fraud Theories and Principles.

Characteristics of the Computer Environment.

Information Security (InfoSec).

Profiling Internet Fraudsters.

Summary.

Chapter 11: Forensic Accountant as an Expert Witness.

Introduction.

Role of a Forensic Accountant as a Witness in Court.

Forensic Accountant as an Expert Witness.

Qualification and Admissibility of Accounting Evidence.

Expert's Role in the Litigation Team.

Pretestimony Activities.

Trial and Testimony.

Summary.

Appendix 11A.

Chapter 12: General Criteria and Standards for Evaluating anExpert's Qualifications.

Introduction.

Credentials.

Personal Qualities of the Expert.

Sources for Locating Expert Witnesses.

Distinguishing the Actual Area of Competence.

Summary.

Chapter 13: Gathering Evidence.

Introduction.

Rules of Evidence.

Hearsay Exceptions.

Other Rules of Evidence.

Index.

"...look at the expanded scope that fraud and other white collar crimes have taken on in the business landscape, attributed in part to the pervasiveness of computerized accounting systems, the World Wide Web, the occurrence of large-scale frauds such as Enron and WorldCom, which requires financial accountants to provide a new level of assertion as to the veracity of a company's financial records." (Strategic Finance, April 2009)