Forensic Accounting and Fraud Examination, 3rd Edition

by Kranacher, Mary-Jo; Riley, Richard

• ISBN13: 9781394200924
• ISBN10: 1394200927
• eBook ISBN(s): 9781394200900
• Additional ISBN(s): 9781119494331
• Edition: 3rd
• Format: Paperback
• Copyright: 2023-11-20
• Publisher: Wiley
• More Book Details

Table of Contents

Preface                xii

About the Authors                  xiv

Section i    Introduction to Forensic Accounting and Fraud Examination      1

1    Core Foundation Related to Forensic Accounting and Fraud Examination                                                3

Module 1: What Is Fraud?,           4

Legal Elements of Fraud,      4

Major Categories of Fraud,   6

Common Fraud Schemes,     7

What Is the Difference Between Fraud and Abuse?,       8

Module 2: What Is Forensic Accounting?,          10

Nonfraud Forensic Accounting and Litigation

Advisory Engagements,        10

Module 3: The Professional’s Skill Set,   10

Module 4: The Role of Auditing, Fraud Examination, and Forensic Accounting,            11

Module 5: The Basics of Fraud,   11

The Cost of Fraud and Other Litigation,      13

ACFE 2016 Report to the Nations on Occupational Fraud and Abuse,       13

Module 6: The Investigation,       22

The Mindset: Critical Thinking and Professional

Skepticism,   22

Fraud Risk Factors and “Red Flags”,           22

Evidence-Based Decision Making,   23

Scope of the Engagement,    23

The Problem of Intent: Investigations Centered on the Elements of Fraud, 24

The Analysis of Competing Hypotheses (The Hypothesis-Evidence Matrix),            24

Methodologies Used in Fraud Examinations and Forensic Accounting Engagements,            26

The Importance of Nonfinancial Data,         28

Graphical Tools,       28

Big Data and Data Analytics,           29

The Importance of the Story Line: Who, What, Where, When, How, and Why,            29

Teamwork and Leadership,  29

Module 7: Fraud Examination Methodology,      30

Predication,   30

Fraud Prevention and Deterrence,    30

Fraud Detection and Investigation,  30

Remediation: Criminal and Civil Litigation and Internal Controls, 30

Critical Thinking,      31

Review Questions,    31

Multiple Choice Questions,  31

Fraud Casebook,       32

Short Answer Questions, 32

Discussion Questions,     32

Brief Cases,   32

Major Case Investigation (MCI)—Johnsons Real Estate,    32

Chapter 1 MCI Introduction—Johnsons Real Estate,    33

IDEA Exercises,       33

IDEA—Assignment Chapter 1,        34

Tableau Exercises,    34

Tableau—Assignment Chapter 1,     35

Endnotes,      35

Appendix I: Careers in Fraud Examination and Financial Forensics,          36

2    Who Commits Fraud and Why: The Profile and Psychology of the Fraudster          48

Module 1: Criminology, Fraud and Forensic Accounting,          48

Criminology, 49

Occupational Fraud and Abuse,        49

White-Collar Crime, 49

Organizational Crime,          49

Organized Crime,      50

Torts, Breach of Duty, and Civil Litigation, 50

Module 2: Who Commits Fraud and Why: The Fraud Triangle, 51

Edwin H. Sutherland,           51

Donald R. Cressey and the Fraud Triangle, 52

Module 3: The Role of Personal Integrity, Capability, Gender, and the Influence of the Organization,  59

The Fraud Scale,         59

Capability and Arrogance,      61

The Role of the Organization, 62

Module 4: The Psychology of the Fraudster, a Deeper Look: M.I.C.E., Predators, and Collusion, 64

M.I.C.E,         65

Predatory versus Situational Fraudsters,      65

Collusion and Collusive Groups,      67

Module 5: The Fraud Triangle in Court and the Meta-Model,    68

The Meta-Model,      69

Critical Thinking, 70

Review Questions,            70

Multiple Choice Questions,          70

Fraud Casebook,   71

Short Answer Questions,      71

Discussion Questions,           71

Brief Cases,          72

Major Case Investigation, 72

IDEA Exercises: Assignment       2, 72

Tableau Exercises: Assignment   2, 72

Endnotes,  72

3    Legal, Regulatory, and Professional Environment    74

Module 1: Introduction,   75

Module 2: The Rights of Individuals,      75

Interviews,    76

Searches,       77

Surveillance, 77

Discharging a Suspected Wrongdoer from Employment,    78

Privileges,     78

Module 3: Probable Cause,          80

Module 4: Rules of Evidence,      81

Module 5: Criminal Justice System,        83

Module 6: Civil Justice System,   84

Complaints and Pretrial Activity,     84

Negotiated Settlements,        85

Pretrial Motions and the Civil Trial, 85

Basic Accounting Principles,       86

Basic Accounting Principles—A Survivor’s Guide to Accounting,         86

Performance Assessment and Decision Making,  91

Regulatory System,          92

The AICPA and Statement on Auditing Standards

No. 99,         92

The Sarbanes–Oxley Act of 2002,  94

Enhanced Financial Disclosure Requirements,       100

Protections for Corporate Whistleblowers under

Sarbanes–Oxley,      100

Enhanced Penalties for White-Collar Crime,          101

The Public Company Accounting Oversight Board (PCAOB),      102

Dodd-Frank, 103

Committee of Sponsoring Organizations’ (COSO) Enterprise Risk Management Framework (ERM), 103

IIA Practice Advisories 1210.A1 and 1210.A2,      104

The Role of Corporate Governance,        105

Critical Thinking, 105

Review Questions,            106

Multiple Choice Questions,          106

Fraud Casebook,   107

Short Answer Questions,      107

Discussion Questions,           107

Brief Cases,          107

Major Case Investigation, 107

IDEA Exercises: Assignment 3,   108

Tableau Exercises: Assignment 3,           108

Endnotes,  108

Section ii      Fraud Schemes       109

4    Cash Receipt Schemes and Other Asset Misappropriations   111

Module 1: Skimming Schemes—Cash,   112

Sales Skimming,       112

Module 2: Skimming Schemes—Receivables,    117

Lapping,        118

Force Balancing,       119

Stolen Statements,    119

Fraudulent Write-Offs or Discounts, 119

Debiting the Wrong Account,           119

Destroying or Altering Records of the Transaction, 119

Preventing and Detecting Receivables Skimming,  120

Big Data and Data Analytic Techniques for Detecting Skimming, 121

Module 3: Cash Larceny Schemes,          123

Larceny at the Point of Sale, 123

Larceny of Receivables,       125

Cash Larceny from the Deposit,       126

Big Data and Data Analytic Techniques for Detecting Cash Larceny,        128

Module 4: Noncash Misappropriation Schemes, 129

Misuse of Noncash Assets,   129

Unconcealed Larceny Schemes,       130

Asset Requisitions and Transfers,    132

Purchasing and Receiving Schemes, 132

False Shipments of Inventory and Other Assets,      133

Other Schemes,         134

Module 5: Concealing Inventory Shrinkage,      134

Altered Inventory Records,   135

Fictitious Sales and Accounts Receivable,   135

Write-Off Inventory and Other Assets,        135

Physical Padding,      135

Module 6: Preventing and Detecting

Noncash Thefts That Are Concealed by Fraudulent Support,    136

Big Data and Data Analytic Techniques for Detecting Noncash Misappropriations,  137

Critical Thinking,            138

Review Questions,          138

Multiple Choice Questions,        139

Fraud Casebook, 139

Short Answer Questions,        139

Discussion Questions, 140

Brief Cases,         140

Major Case Investigation,           140

Tableau Exercises: Assignment 4,          141

Endnotes, 141

5    Cash Disbursement Schemes 142

Module 1: Billing Schemes,         142

Shell Company Schemes,     142

Billing Schemes Involving Nonaccomplice Vendors,          147

Personal Purchases with Company Funds,   148

Module 2: Check Tampering Schemes,   154

Forged Maker Schemes,       154

Forged Endorsement Schemes,         157

Altered Payee Schemes,       160

Concealed Check Schemes,  162

Authorized Maker Schemes, 163

Concealing Check Tampering,         164

Module 3: Payroll Schemes,        169

Ghost Employees,     169

Falsified Hours and Salary,  172

Commission Schemes,          175

Module 4: Expense Reimbursement Schemes,    179

Mischaracterized Expense Reimbursements,           180

Overstated Expense Reimbursements,         182

Fictitious Expense Reimbursement Schemes,          183

Multiple Reimbursement Schemes,  185

Module 5: Register Disbursement Schemes,       186

False/Fictitious Refunds,      186

False Voids,  187

Concealing Register Disbursements, 188

Preventing and Detecting Register Disbursement Schemes,            188

Critical Thinking, 190

Review Questions,            190

Multiple Choice Questions,          190

Fraud Casebook,   191

Short Answer Questions,        191

Discussion Questions, 191

Brief Cases,          191

Major Case Investigation, 192

IDEA Exercises: Assignment 5,   192

Tableau Exercises: Assignment 5,           192

Endnotes,  192

6    Corruption and the Human Factor           193

Module 1: Corruption Schemes,  194

Module 2: Bribery,           195

Kickback Schemes,   195

Diverting Business to Vendors,        196

Overbilling Schemes,            197

Other Kickback Schemes,     197

Slush Funds,  198

Preventing and Detecting Kickback Schemes,         198

Bid-Rigging Schemes,          199

Module 3: Foreign Corrupt Practices Act (FCPA),          203

Module 4: Illegal Gratuities, Economic Extortion, and Conflicts of Interest,     205

Illegal Gratuities,      205

Economic Extortion, 205

Conflicts of Interest, 205

Big Data and Data Analytic Techniques for Detecting Corruption, 208

Module 5: The Human Factor,     210

Greed,            211

Wages in Kind,         211

Unreasonable Expectations, 211

Understanding Fraud Deterrence,     211

Critical Thinking, 213

Review Questions,            213

Multiple Choice Questions,          214

Fraud Casebook,   214

Short Answer Questions,      214

Discussion Questions,           215

Brief Cases,          215

Major Case Investigation, 215

IDEA Exercises: Assignment 6,   216

Tableau Exercises: Assignment 6,           216

Endnotes,  216

7    Financial Statement Fraud 217

Module 1: Financial Reporting Fraud: Who, Why, and How,     218

Financial Statement Fraud,   218

Module 2: Accounting Principles and Fraud,       220

Conceptual Framework for Financial Reporting,     220

Responsibility for Financial Statements,      223

Users of Financial Statements,         223

Types of Financial Statements,        224

Module 3: Fraudulent Financial Statement Schemes,      228

Defining Financial Statement Fraud,                        229

Costs of Financial Statement Fraud, 229

Fictitious Revenues,  230

Timing Differences,  232

The Capital Forum,          234

A Closer Look at Subscription Pricing and Revenue Recognition, 235

Concealed Liabilities and Expenses, 236

Improper Disclosures,          237

Improper Asset Valuation,    239

Module 4: Detection of fraudulent financial statement schemes, 242

Financial Statement Analysis,          242

Ratio Analysis,          244

Module 5: Deterrence of Financial Statement Fraud,      249

Reduce Pressures to Commit Financial Statement Fraud,     249

Reduce the Opportunity to Commit Financial Statement Fraud,       249

Reduce Grounds for Rationalizing Financial Statement Fraud,         250

Critical Thinking, 252

Review Questions,            252

Multiple Choice Questions,          252

Fraud Casebook,   253

Short Answer Questions,        253

Discussion Questions, 253

Brief Cases,          253

Major Case Investigation, 255

IDEA Exercises: Assignment 7,   255

Tableau Exercises: Assignment 7,           255

Endnotes,  255

Section iii     Detection and Investigative Tools and Techniques           257

8    Fraud Detection: Red Flags and Targeted Risk Assessment 259

The Fraud Prompt—Simple and Effective,         259

Module 1: Corporate Governance and Fraud,      259

Satyam Fraud: A Failure in Corporate

Governance,  259

The Fraud Risk Universe,     260

Management’s Responsibility,         260

The Role of the External Auditor,    262

Boards of Directors and Audit Committees, 265

Internal Auditors,      266

Module 2: Fraud Detection,         266

Social Media as a Tool for Fraud Detection, 266

Understanding the Business, 267

The Internal Control Environment,  268

The Use of Red Flags to Detect Fraud,         269

Tips and Complaints, 269

Behavioral Red Flags,           269

Analytical Anomalies,          270

Accounting Anomalies,        271

Internal Control Irregularities and Weaknesses,       273

The Power of Nonfinancial Numbers,          274

Using Red Flags as a Basis for Further Investigation,         274

Module 3: Targeted Fraud Risk Assessment,      275

Module 4: Targeted Fraud Risk Assessment in a Digital Environment, 281

Prevention and Deterrence in a Digital Environment,         281

Digital Evidence,      282

Detection and Investigation in a Digital Environment,        282

Critical Thinking, 282

Review Questions,            282

Multiple Choice Questions,          282

Fraud Casebook,   283

Short Answer Questions,      283

Discussion Questions,           284

Brief Cases,          284

Major Case Investigation, 285

IDEA Exercises: Assignment 8,   285

Tableau Exercises: Assignment 8,           286

Endnotes,  286

9    Evidence-Based Fraud Examinations        287

The Fraud Triangle and the Courts,         287

Module 1—Fraud Examinations: Who, What, Where, When, How, and Why,  288

Evidence-Based Examinations,        288

The Hypothesis-Evidence Matrix,    288

Predication,   289

The Fraud Triangle: Opportunity, Perceived Pressure, and Rationalization,            290

M.I.C.E,         291

The Problem of Intent: Examinations Centered on the Elements of Fraud, 291

The Complete Story, 292

Module 2—Evidence,       292

Evaluating the Quality of Evidence: Relevance, Reliability, and Validity, 293

Organizing the Evidence and Documenting Work Product,        294

Module 3—Evidence Sources of the Act, Concealment, and Conversion,         295

Documents,   296

Bank, Credit Card, and Investment Statements,       296

Invigilation,   297

Interviewing and Interrogation,        298

Surveillance and Covert Operations, 298

Confidential Sources and Informants,          299

CTRs, SARs, and FinCen 8300,       299

Email, Text Messages, Social Media,           299

Big Data, Data Analytics, Textual Analysis, Pattern Recognition, and Other Digital Tools, 299

Other Physical Evidence,      300

Module 4—Evidence Sources Specific to Concealment, 300

Altered Documents,  301

General Ledger, Journal Entries, and Reconciling Items,    302

Tax Returns,  302

Module 5—Evidence Sources Specific to Conversion,   303

Error or Fraud?,         303

Locating Hidden Assets and Unknown Sources of Income, 303

Concealed Offshore Financial Accounts, Transactions, and Loans, 303

Indirect Methods of Income Reconstruction,           304

Databases, Sources of Information, and Extra-organization Intelligence,   312

Internet Searching,    316

Critical Thinking, 317

Review Questions,            317

Multiple Choice Questions,          317

Fraud Casebook,   318

Short Answer Questions,      318

Discussion Questions,           318

Brief Cases,          319

Major Case Investigation, 320

IDEA Exercises: Assignment 9,   320

Tableau Exercises: Assignment 9,           321

Endnotes,  321

Appendix A: Data Collection Checklist,  322

10  Effective Interviewing and Interrogation        323

Module 1: Introduction to Interviews and Interrogations,           324

Interviews in Cases of Suspected Fraud or Corruption,       325

Interviews in Fraudulent Financial Statement and Tax Return Examinations,            325

Module 2: Details of the Interview and Interrogation Process,   326

Preparation and Planning,     326

General Approach to Conducting Interviews,          326

Interviews of Witnesses,       327

Three Stages of Interviewing: Introduction, Body, and Close,        327

Two Stages of Interrogations: Introduction and Admission-Seeking,         328

Module 3: Five Types of Interview and Interrogation Questions,           328

Introductory Questions,        328

Informational Questions,      330

Closing Questions,    332

Assessment Questions,         333

Admission-Seeking Questions,         336

Joe Wells’ Ten Commandments for Effective Interviews,          337

Module 4: Steps in the Admission-Seeking Interview (Interrogation),   338

Accuse the Subject of Committing the Offense,      338

Observe Reaction,     338

Repeat Accusation,   338

Interrupt Denials,      338

Establish Rationalization,     339

Defuse Alibis,           340

Obtain the Benchmark Admission,   341

Transition to the Verbal Confession, 341

Obtain a Signed Statement,  343

Module 5: Judging Deception,     344

Physiology of Deception,     344

Verbal Cues to Deception,    345

Nonverbal Cues to Deception,          346

Ability to Judge Deception,  347

Critical Thinking, 348

Review Questions,            348

Multiple Choice Questions,          348

Fraud Casebook,   349

Short Answer Questions,      349

Discussion Questions,           349

Brief Cases,          350

Major Case Investigation, 351

IDEA Exercises: Assignment 10, 351

Tableau Exercises: Assignment 10,         351

Endnotes,  351

Appendix : Comprehensive Guidelines: Information Collected in Interviews,   352

11  Using Information Technology for Fraud Examination and Financial Forensics           354

Module 1: The Digital Environment,       354

Overview of Information Technology Controls,      355

IT Audits and Assurance Activities, 356

Module 2: Digital Evidence,        356

Tools Used to Gather Digital Evidence,       357

Recovering Deleted Files,    358

Recovering Deleted Emails, 358

Restoring Data,         358

Module 3: Detection and Examination in a Digital Environment,          359

Framework for Data Extraction and Analysis Tools and Techniques,         360

Data Extraction and Analysis Software Functions,  361

Data Extraction and Analysis Software,       364

Module 4: Graphics and Graphics Software,       367

The Association Matrix,       367

Link Charts,  368

Flow Diagrams,        369

Timelines,     370

Other Graphical Formats,     371

Graphical Software,  372

Module 5: Case Management Software,  372

Critical Thinking,      373

Review Questions,    373

Multiple Choice Questions,  374

Fraud Casebook,       374

Short Answer Questions,           374

Discussion Questions,   375

Brief Cases,          375

Major Case Investigation, 376

IDEA Exercises: Assignment 11, 376

Tableau Exercises: Assignment 11,         376

Endnotes,  376

Section iv     Advanced Topics in Forensic Accounting and Fraud Examination           377

12  Complex Frauds and Financial Crimes     379

Former Congressman Pleads Guilty to Helping Charitable Entity with Ties to Terrorist Organization,     379

Module 1: The Predator versus the Situational Fraudster,           379

Module 2: Collusion among Multiple Individuals, Organizations, or Jurisdictions,       380

Mixing Legitimate and Illegal Activities,    381

The Need to Isolate Illegal Activities,          381

Module 3: Dismantling Organizations using Asset Forfeiture and Seizure,        381

Module 4: Schemes and Illegal

Acts Associated with Complex Frauds and Financial Crimes,    382

Organized Crime,      382

Drug Trafficking,      383

Terrorist Financing,  384

Money Laundering,  385

Racketeering Influence and Corrupt Organizations Act (RICO),     387

Conspiracy,   388

USA Patriot Act,       388

The Bank Secrecy Act,         389

Mail Fraud,   389

Wire Fraud,   389

The Foreign Corrupt Practices Act (FCPA), 390

The (UK) Bribery Act,          390

Module 5: The U.S. Banking System,      391

Module 6: Tools and Techniques for Moving Money,    392

Hawala Dealer in Washington Imprisoned for Over Nine Years,    392

Money Laundering Strategies and Techniques,       393

Module 7: Other Complex Frauds and Financial Crimes,           399

Tax Evasion and Fraud,        399

Bankruptcy Fraud,    401

Securities Fraud,       403

Critical Thinking, 405

Review Questions,            405

Multiple Choice Questions,          405

Fraud Casebook,   406

Short Answer Questions,      406

Discussion Questions,           406

Brief Cases,          406

Major Case Investigation, 408

IDEA Exercises: Assignment 12, 408

Tableau Exercises: Assignment 12,         408

Endnotes,  409

13  Cybercrime: Fraud in a Digital World    410

Module 1: The Digital Environment,       410

The Role of Digital Devices in Cybercrime, 412

Computer Fraud versus Computer Crime,    412

Losses or Other Damages Related to Computer Crimes,     413

International Aspects of Computer Crime,   414

Module 2: Frauds and Other Threats in the Digital World,         416

Insider Threats,         417

Digital Device Hacking,       417

Viruses,         419

Hardware, Software, and Data Security,      421

Module 3: Cyber Fraud,   423

Electronic Commerce (E-Commerce),         424

Typical Internet Schemes,    424

Combating Internet Fraud,    426

Module 4: Complex Frauds and Financial Crimes in Cyberspace,          426

Artificial Intelligence (AI)—Possible Contributions to Forensic Accounting, Antifraud, and Compliance Efforts, 426

Money Laundering in Cyberspace,   427

Module 5: Reporting Cybercrime,           429

Critical Thinking, 429

Review Questions,            429

Multiple Choice Questions,          429

Fraud Casebook,   430

Short Answer Questions,      430

Discussion Questions,           431

Brief Cases,          431

Major Case Investigation, 431

IDEA Exercises: Assignment 13, 432

Tableau Exercises: Assignment 13,         432

Endnotes,  432

14  Antifraud and Compliance Efforts: Ethics, Prevention, and Deterrence       433

Module 1: Ethics, 433

Approaches to Ethical Problem Solving,      434

Ethical Principles,     435

Ethics, Trust, and Responsibility,     435

Ethics and Values as Drivers of Personal Behavior, 436

Professional Conduct,           436

Ethics at Client Entities: The Foundation for Fraud Prevention and Deterrence,             436

Five-Step Approach to Compliance, Fraud Prevention, Deterrence, and Detection,       438

Module 2: Compliance,    439

Module 3: Fraud Deterrence,       440

The Perception of Detection, 441

Board of Directors,   442

Audit Committee,     443

Organizational Leadership,   443

Internal Auditors,      443

Accounting Personnel,          444

Human Resources,    444

Anonymous Communications,         444

Line Employees and Staff,   445

Legal and Compliance,         445

Fraud Risk Management and Compliance Program,            445

Fraud Action/Reaction AFTER Discovery, 446

React to Early Warning Signs,         447

Module 4: Fraud Prevention,       450

Critical Thinking, 453

Review Questions,            453

Multiple Choice Questions,          454

Fraud Casebook,   454

Short Answer Questions,      454

Discussion Questions,           455

Brief Cases,          455

Major Case Investigation, 455

IDEA Exercises: Assignment 14, 455

Tableau Exercises: Assignment 14,         456

Endnotes,  456

Section v   Litigation Advisory Services and Remediation          457

15  Consulting, Litigation Support, and Expert Witnessing: Damages, Valuations, and Other Engagements       459

Module 1: Consulting, Litigation Support, and Expert Witnessing,       459

Professional Standards and Guidance,          459

Engagement Issues and Professional Responsibility,          460

Types of Consulting and Litigation Support Activities,      461

Tools and Techniques: General Discussion, 461

Module 2: Commercial Damages,            465

Legal Framework for Damages,       466

Types of Commercial Damages,      466

The Loss Period,       467

Economic Framework for Damages, 467

Quantifying Lost Revenues and Increased Expenses,          469

Determining Lost Profits,     470

Determining Incremental Costs,       471

Variable Cost Application,   472

The Time Value of Money,  476

Communicating and Defending the Results of Commercial Damage Estimates,             477

Commercial Damages Application, 477

Module 3: Valuations,      482

Overall Engagement Considerations,           482

The Types of Valuation Engagements,        483

Measures of Value,   483

Determining Market, Fair Market, and Fair Value,  484

Discounted Earnings and Cash Flows,         484

Capitalized Earnings,            485

Estimating the Risk-Adjusted Discount/Capitalization Rate,          485

Forecasting Income and Cash Flows,           486

Asset Valuation Models,       487

Market and Accounting-Based Comparables Models,         488

Valuation Discounts and Premiums, 488

Other Ownership Interests Subject to Valuation,     488

Conclusion of Value, 488

Valuation Application,         488

Balance Sheet Adjustments, 492

Income Statement Adjustments,       493

Valuation Calculations,        494

Module 4: Personal Injury, Wrongful Death, and Survival Actions,       498

Losses: Personal Injury,        498

Losses: Wrongful Death and Survival Cases,          499

Analysis of Earnings Losses, 499

Analysis of Lost Employment Benefits Associated with Lost Earnings,     503

Analysis of Lost Nonmarket Services,         504

Analysis of Medical and Life-Care Costs,    505

Injured Children, Homemakers, and Retired Persons,         505

Personal Injury and Lost Compensation Application,          505

Critical Thinking, 513

Review Questions,            513

Multiple Choice Questions,          513

Fraud Casebook,   514

Short Answer Questions,      514

Discussion Questions,           514

Brief Cases,          514

Major Case Investigation, 516

IDEA Exercises: Assignment 15, 517

Tableau Exercises: Assignment 15,         517

Endnotes,  517

16  Remediation and Litigation Advisory Services 518

Module 1: Introduction to Remediation,  519

Module 2: Recovery of Money and Other Assets,           520

Identification of Money and Assets for Recovery,   520

“Following” versus “Tracing” the Money,   521

Legal Methods for Recovery of Assets,       521

Module 3: Support for Criminal and Civil Court Actions,          522

The Character and Flavor of Being an Expert Witness,       523

Fact Witnesses versus Expert Witnesses,     524

Supporting the Investigation,           525

View from the Trenches: Obtaining the Necessary Evidence,         526

Evaluation of the Evidence,  526

Report Writing,         527

Credibility,    529

Deposition Testimony,         530

Direct Examination,  530

Cross-Examination,  531

Testifying Can Turn Nasty,  532

Module 4: Restructure the Internal Control Environment,          533

Root Cause and Critical Thinking,   533

Overview of an Antifraud Environment,      535

Internal Control Policies and Procedures,    535

Risk Assessment and Internal Control,         536

The Importance of Corporate Governance,  536

The Risk of Management Override, 537

Early Reaction to Symptoms,           537

AICPA Statement on Auditing Standard (SAS)

No. 99, “Risk Factors Relating to Misstatements

Arising from Fraudulent Financial Reporting”,       538

AICPA Statement on Auditing Standard (SAS) No. 99

(AU 316), “Consideration of Fraud in a Financial

Statement Audit” (Supersedes SAS No. 82, “Risk

Factors Relating to Misstatements Arising from

Misappropriation of Assets”) and SAS 109 (AU 314),

“Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement”,       539

Lessons Learned,      541

Critical Thinking,            541

Review Questions,          541

Multiple Choice Questions,        542

Fraud Casebook, 542

Short Answer Questions,      543

Discussion Questions,           543

Major Case Investigation,           543

IDEA Exercises: Assignment 16,           543

Tableau Exercises: Assignment 16,        543

Endnotes, 543

Appendix A: Fraud/Financial Crimes Report,    544

Appendix B: Commercial Damages/Lost Profits Report,          550

Appendix C: Valuation Report,  556

Appendix D: Forensic Economics (Personal Injury)

Report, 585

Glossary     595

Index 599