The Fraud Audit Responding to the Risk of Fraud in Core Business Systems

by Vona, Leonard W.

• ISBN13: 9780470647264
• ISBN10: 0470647264
• Edition: 1st
• Format: Hardcover
• Copyright: 2011-08-09
• Publisher: Wiley

Summary

Essential guidance for creation of an effective fraud audit program in core business systems The Association of Certified Fraud Examiners has reported that U.S. businesses lose up to $4 billion annually due to fraud and abuse. Discover fraud within your business before yours becomes another business fraud statistic. Fraud in the Core Business Systems provides a proven fraud methodology that allows auditors to discover fraud versus investigating it. Explains how to create a fraud audit program Shows auditors how to locate fraud through the use of data mining Focuses on a proven methodology that has actually detected fraudulent transactions Take a look inside for essential guidance for fraud discovery within specific corporate F&A functions, such as disbursement, procurement, payroll, revenue misstatement, inventory, journal entries, and management override.

Author Biography

LEONARD W. VONA, CPA, CFE, is CEO of Fraud Auditing, Inc., and a world-renowned authority in fraud investigation. He has provided expert witness testimony in federal and state courts; consulted with corporations around the world; and is the author of Fraud Risk Assessment: Building a Fraud Audit Program, published by Wiley. A financial investigator with more than thirty years of diversified auditing and forensic accounting experience, including a distinguished eighteen-year private industry career, he regularly speaks at audit conferences and developed the Fraud Training Curriculum for the MIS Training Institute, an internationally recognized audit training organization.

Table of Contents

Preface	p. xi
What Is a Fraud Audit?	p. 1
Why Respond to Fraud Risk?	p. 3
The Fraud Paradigm	p. 4
Fraud Auditing	p. 5
Fraud Defined	p. 8
The Fraud Triangle	p. 8
Responses to the Risk of Fraud	p. 12
Summary	p. 13
Professional Standards	p. 15
Overview	p. 16
Fraud Audit Standards	p. 18
Summary	p. 25
Fraud Scenarios	p. 27
Key Definitions and Terms	p. 28
Fraud Risk Structure	p. 30
Classifying Fraud	p. 32
Identifying Fraud Scenarios	p. 41
Fraud Audit Considerations	p. 46
Summary	p. 51
Brainstorming: The Implementation of Professional Standards	p. 53
What is Brainstorming?	p. 54
When to Brainstorm	p. 56
Summary	p. 66
Assessment of Fraud Likelihood	p. 69
Preparing a Fraud Risk Assessment	p. 69
Summary	p. 81
Building the Fraud Audit Program	p. 83
Traditional Audit versus the Fraud Audit	p. 84
Responding to the Risk of Fraud	p. 84
A Fraud Audit Program	p. 85
Testing Procedures	p. 89
Fraud Concealment Effect on the Audit Response	p. 97
Audit Evidence Issues	p. 103
Fraud Scenario Examples	p. 105
Summary	p. 110
Data Mining for Fraud	p. 111
The Art and Science of Data Mining	p. 112
Strategies for Data Mining	p. 129
Limitations of Data Mining	p. 131
Summary	p. 132
Fraud Audit Procedures	p. 133
Basis of Fraud Audit Procedures	p. 133
Levels of Fraud Audit Procedures	p. 135
Design of Fraud Audit Procedures	p. 138
Summary	p. 145
Document Analysis	p. 147
Document Analysis and the Fraud Audit	p. 148
Levels of Document Examination	p. 148
Document Red Flags	p. 150
Brainstorming Sessions and Document Red Flags	p. 155
The Fraud Audit Program and Document Red Flags	p. 156
Summary	p. 156
Disbursement Fraud	p. 159
Fraud Risk Structure	p. 159
Audit Approaches	p. 166
Summary	p. 178
Procurement Fraud	p. 179
Fraud Risk Structure	p. 181
Audit Procedures	p. 195
Summary	p. 202
Payroll Fraud	p. 205
Fraud Risk Structure	p. 206
Audit Procedures	p. 212
Summary	p. 222
Revenue Misstatement	p. 223
Fraud Risk Structure	p. 224
Audit Approach	p. 231
Summary	p. 236
Inventory Fraud	p. 237
Fraud Risk Structure	p. 238
Audit Procedures	p. 243
Summary	p. 249
Journal Entry Fraud	p. 251
Fraud Risk Structure	p. 252
Audit Procedures	p. 261
Summary	p. 266
Program Management Fraud	p. 269
Fraud Risk Structure	p. 270
Audit Approach	p. 277
Summary	p. 282
Quantifying Fraud	p. 283
Conveying the Impact to Management	p. 284
Role of Evidence in Calculating a Fraud Loss	p. 287
Impact on the Fraud Audit	p. 289
Options for Management	p. 292
Case Studies	p. 293
Summary	p. 296
Appendixes	p. 297
	p. 298
	p. 311
	p. 325
	p. 339
	p. 347
	p. 360
	p. 363
About the Author	p. 365
Index	p. 367
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