Expert Fraud Investigation A Step-by-Step Guide

by Coenen, Tracy L.

• ISBN13: 9780470387962
• ISBN10: 0470387963
• Edition: 1st
• Format: Hardcover
• Copyright: 2009-02-09
• Publisher: Wiley

Summary

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.

Author Biography

Tracy L. Coenen, CPA, MBA, CFE, is a fraud expert and President of Sequence Inc., a forensic accounting firm with offices in Milwaukee and Chicago. She conducts financial investigations for private and public companies, reports her findings to executives and boards of directors, and testifies in court as an expert witness. Her commentary has been featured on NBC news and on CNBC's personal finance show, On the Money, and her comments have been printed in the Wall Street Journal, USA Today, BusinessWeek.com, CBSNews.com, and Entrepreneur.com, among others. Tracy writes articles on fraud for national business publications including Fraud Magazine.

Table of Contents

Preface	p. xv
Acknowledgments	p. xvii
Finding Fraud	p. 1
Signs of Fraud	p. 1
Looking for Suspects	p. 9
Evaluating Fraud Tips	p. 11
Should you Investigate?	p. 12
Confronting Suspects	p. 13
Skills of a Fraud Investigator	p. 14
Differences between Audits and Investigations	p. 16
Conducting a Fraud Investigation	p. 19
Notes	p. 19
Beginning the Investigation	p. 21
Assessing the Engagement	p. 22
Making Recommendations	p. 26
Budgeting and Cost Control	p. 28
Fees	p. 30
Billing Practices	p. 35
Engagement Letters	p. 36
Managing the Case	p. 39
Assembling the Team: Where to Start	p. 40
Assembling the Team: Company Insiders	p. 41
Assembling the Team: Key Participants	p. 43
Assembling the Team: Outside Consultants	p. 44
Importance of Credentials	p. 45
Management and Supervision of Staff	p. 46
Work programs and Checklists	p. 47
Document Management	p. 48
Preserving Evidence	p. 50
File Maintenance	p. 52
Investigative Software	p. 54
Professional Standards	p. 54
When to Stop Investigating	p. 57
Searching for Fraud	p. 59
Analytical Review	p. 60
Key Financial Ratios	p. 61
Write-offs, Adjustments, and Miscellaneous	p. 65
Manual Disbursements	p. 67
What about Financial Statement Audits?	p. 68
Looking for Fraud in Little Things	p. 70
Sources of Information	p. 73
Who Acquires Information	p. 73
Internal Records	p. 75
Private Records	p. 77
Public Records	p. 82
The Internet and Search Engines	p. 91
Investigative Techniques	p. 93
Corporate Background Checks	p. 94
Individual Background Checks	p. 94
Searching for Friends, Family, and Associates	p. 95
Surveillance	p. 96
Digital Data Analysis	p. 97
Computer Forensics	p. 99
Interviewing Witnesses and Suspects	p. 99
Confirmation with Customers and Vendors	p. 104
Creativity and the Fraud Investigator	p. 106
Investigation of Asset Misappropriation Schemes	p. 107
Cash Receipts Schemes	p. 108
Disbursement Schemes	p. 113
Noncash Schemes	p. 129
Investigation of Financial Statement Fraud	p. 133
Revenue Overstatement	p. 134
Channel Stuffing	p. 137
Round Tripping	p. 138
Asset Overstatement	p. 139
Liability and Expense Understatement	p. 143
Reserve Manipulation	p. 147
Misrepresentation or Omission of Information	p. 148
Improper Recording of Mergers and Acquisitions	p. 149
Off-Balance Sheet Items	p. 150
Accounting Involves Judgment and Estimates	p. 151
Earnings Management	p. 152
Note	p. 152
Investigation of Corruption Schemes	p. 153
Bribes	p. 154
Kickbacks	p. 155
Extortion and Conflict of Interest	p. 156
Related Party Transactions	p. 156
Money Laundering	p. 158
Foreign Corrupt Practices Act (FCPA)	p. 160
Prevention and Detection	p. 161
Note	p. 162
Investigation of External Fraud Schemes	p. 163
Corporate Espionage	p. 163
Investment Schemes	p. 165
Pyramid or Ponzi Schemes	p. 167
Securities Fraud	p. 169
Hidden Income or Assets	p. 170
Insurance Fraud	p. 173
Bankruptcy Fraud	p. 174
Note	p. 175
Reporting and Litigation	p. 177
Stick to the Facts	p. 178
Keep It Simple	p. 178
Background Information	p. 179
Investigation Procedures	p. 181
Opinions	p. 182
Attachments	p. 183
Draft Reports	p. 184
Unfavorable Opinions	p. 185
Follow-up to the Fraud Investigator's Work	p. 186
Being an Expert Witness	p. 189
Preparing for Testimony	p. 189
Deposition Testimony	p. 191
Trial Testimony	p. 194
Note	p. 195
Other Issues	p. 197
Moving Forward as a Company	p. 197
Preventing Future Frauds	p. 199
Marketing a Fraud Investigation Practice	p. 201
Competing with Other Firms	p. 202
Conducting a Global Investigation	p. 203
Professional Liability Issues	p. 204
Reducing Fraud with Investigations	p. 206
Note	p. 207
Appendix	p. 209
Index	p. 215
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