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More About This Title Detecting Fraud in Organizations: Techniques, Tools, and Resources
English
An essential reference for all business professionals, Detecting Fraud in Organizations: Techniques, Tools, and Resources explains the process of how people commit fraud, as well as how to prevent and stop fraud from occurring in your organization. Organized by business processes which succinctly describe how fraud manifests itself on a daily basis, the authors explain ways in which everyone can help guard against fraud by familiarizing themselves with its building blocks and methods used to perpetrate and conceal it. Filled with situational examples the book is accompanied by a website featuring fraud simulations, business process maps, and other useful tools for combating fraud.
- Focuses on the people who perpetrate fraud and those who are tasked with preventing and detecting it
- Uniquely organized by business processes for more relevance and easier understanding by those people working within organizations
- Shows how subtle factors play a large role in identifying and ferreting out fraud in addition to the traditional knowledge of fraud schemes giving people and organizations the edge they need to be successful in prevention and deterrence
- Companion website includes additional fraud simulations, business process maps, and useful tools
The price of fraud can be devastating to your business. Detecting Fraud in Organizations: Techniques, Tools, and Resources equips you and others in your organization with essential information and tools necessary to proactively catch fraud, reduce losses, improve efficiencies and develop actionable controls.
English
JOSEPH R. PETRUCELLI, CPA/CFF, FCPA, CVA, CFFA, PSA, CFE, is a founding partner of PP&D Accounting Services, Inc., and Fraud Forces, Inc., where he provides forensic accounting, tax, and consulting services, including testifying and preparing for trial as a qualified expert. He is also an adjunct professor teaching accounting and taxation-related courses, including advanced forensic accounting. He was part of the development team on the fraud risk management and detection certification curriculum of Consultants' Training Institute (CTI), a division of the National Association of Certified Valuators and Analysts (NACVA).
English
Preface ix
Acknowledgments xi
Introduction 1
The 800-Pound Friendly Gorilla 1
Numbers Don’t Lie, People Do 3
An Overview of Fraud 4
The One-Minute Fraud Mysteries 8
A Few Tips for Detecting Fraud As You Begin 13
Setup 16
Chapter 1: Understanding Fraud: What Is Fraud, and Why Does It Continue to Happen? 19
People Are Greedy—How Greedy Are You? 20
One-Minute Fraud Mystery: Trust Us Inc. 21
Distinguishing among Deterrence, Prevention, and Detection 22
The Increased Risk of Fraud Loss 35
Divergent and Convergent Thinking 36
Critical Thinking Requires Critical Questions 40
The Personality Traits of a Fraudster 45
The Moral Compass 48
The Elements of Fraud: MIRD 48
Education about Fraud 52
Confusion about Responsibility 55
Complexity 56
Summary 60
One-Minute Fraud Mystery Analysis 62
Chapter 2: Fraud Detection Approaches 69
Why Doesn’t Enhanced Legislative, Regulatory, and Professional Oversight Help to Prevent Fraud? 70
One-Minute Fraud Mystery: Big Fish Investment Inc. 72
Principles and Rules Alone Cannot Eliminate All Fraud 74
A Real-World Perspective 76
Getting a Handle on Transactions 79
The 10 Forensically Accepted Generally
Accepted Accounting Principle Assumptions 81
Summary 107
One-Minute Fraud Mystery Analysis 109
Chapter 3: Deciding to Commit Fraud: What Is the “Something” That Coerces People to Cross the Line? 119
One-Minute Fraud Mystery: The House of Worship 122
Do You Really Know What the People in Your Organization Are Thinking? 122
The Four Generations and Motivation 128
Pinpointing the Fraudster 133
The Three Most Prevalent Types of Fraud 133
An Accounting Creed 135
The Consequences of Fraud 137
Summary 149
One-Minute Fraud Mystery Analysis 150
Chapter 4: How to Act Like a Fraudster: To Catch a Fraudster, You Need to Think Like One 155
One-Minute Fraud Mystery: Catch Me If You Can Inc. 157
The Six Ps of Successful Fraudsters 158
The Characteristics of a Fraudster 161
Fraudsters and Their Organizations 170
Summary 177
One-Minute Fraud Mystery Analysis 178
Chapter 5: The Dynamics of Business: Everything Is Related—from People to Processes to
Outside Influences 185
One-Minute Fraud Mystery: Accrual Inc. 189
Control-Point Links and Accountability 190
The Layers of Trust 191
Responsibility Chains 193
A Failure in Management 194
More Than the Bottom Line 196
Outside Influences 199
Organizational Failures 203
Understanding Cash Flow 206
Summary 211
One-Minute Fraud Mystery Analysis 212
Chapter 6: Understanding the Accounting Process 219
One-Minute Fraud Mystery: Sneakers Are Us Inc. 223
Understanding the Sale of Goods 224
Deceptive Data 235
Computerized Fraud Techniques 237
Operating Expenses 240
Balanced Principles 246
Balance-Sheet Components 252
Statement of Cash Flow 252
Ratio Analysis 257
Building a Case: Document Organization, Data Analysis, and Lifestyle Analysis 261
Summary 264
One-Minute Fraud Mystery Analysis 265
Chapter 7: It All Comes Down to Cash 271
One-Minute Fraud Mystery: Yankee Property Management 275
Handling Cash 276
Cash Disbursement Controls 279
Cash and Fraud 282
Classifications of Cash and Cash-Equivalent Fraud Schemes and Scenarios 285
Fraud Control Points in the Organizational Process 302
Summary 303
One-Minute Fraud Mystery Analysis 304
Chapter 8: Final Thoughts: Handy Tips and Quick Checklists for Reference 309
POP: Finding the Next Potential-Fraud Kernel in Your Organization 310
Quick References on the Fundamentals of Fraud 311
GAAP versus FAGAAPA: A Summary 315
Five Categories of Fraud 319
Why Auditors and Accountants Fail to Detect Fraud 326
Red Flags for Potential Fraud 327
Using the Accruals-to-Assets Ratio 327
A Simple Fraud Risk Plan 330
Conclusion 333
Afterword 337
Bibliography 339
About the Author 343
About the Website 345
Index 347
