Fraud Auditing and Forensic Accounting, 3rd Edition

by Tommie W. Singleton (University of Alabama ); Aaron J. Singleton; G. Jack Bologna (Siena Heights College); Robert J. Lindquist (Peat Marwick Lindquist Holmes, Toronto, Ontario)

• ISBN13: 9780471785910
• ISBN10: 0471785911
• Edition: 3rd
• Format: Hardcover
• Copyright: 2006-09-01
• Publisher: Wiley

Summary

With the responsibility of detecting and preventing fraud placed directly on the accounting profession, you are responsible for recognizing fraud and learning the tools and strategies necessary to stop it. Fraud Auditing and Forensic Accounting, Third Edition shows you how to develop an investigative eye toward both internal and external fraud and provides crucial information on how to deal with it when discovered.

Author Biography

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.

Table of Contents

PREFACE	vii
ACKNOWLEDGMENTS	ix
CHAPTER 1 Fraud Definitions, Models, and Taxonomies	1	(32)
Introduction	1	(5)
Classic Fraud Research	6	(2)
Fraud Triangle	8	(4)
Scope of Fraud	12	(2)
Profile of Fraudsters	14	(4)
Who Is Victimized by Fraud Most Often?	18	(1)
Fraud Taxonomies	19	(9)
Evolution of a Typical Fraud	28	(5)
Chapter 2 Fundamentals of Fraud Auditing and Forensic Accounting	33	(42)
Introduction	33	(2)
Brief History of Fraud and the Antifraud Profession	35	(5)
Review of Technical Literature	40	(2)
Auditor's Mind-Set	42	(1)
What Is Forensic Accounting?	43	(9)
Steps in Fraud Investigation	52	(3)
What Is Fraud Auditing?	55	(16)
Antifraud Professional Organizations and Certifications	71	(1)
Summary	72	(3)
CHAPTER 3 Auditor Liability for Detecting Fraud	75	(24)
Introduction	75	(16)
Recent Developments in Auditor Liability	91	(5)
Summary	96	(3)
CHAPTER 4 Fraud Schemes	99	(26)
Introduction	99	(2)
ACFE Fraud Tree	101	(7)
Financial Statement Schemes	108	(3)
Corruption Schemes	111	(2)
Asset Misappropriation Schemes	113	(9)
Summary	122	(3)
CHAPTER 5 Red Flags and Fraud Detection	125	(30)
Introduction	125	(1)
Professional Standards	126	(1)
Common Red Flags	127	(2)
Common Detection Methods	129	(2)
Specific Red Flags and Detection Methods	131	(3)
Corruption Schemes	134	(1)
Asset Misappropriation Schemes	135	(12)
Fraud Detection Model	147	(6)
Summary	153	(2)
CHAPTER 6 Fraud and CAATs	155	(20)
Introduction	155	(1)
Benefits of CAATs	156	(2)
Fraud and CART Issues	158	(1)
Need for Computer Tools	159	(2)
Sample Tools/CAATs	161	(3)
CAAT Methodology	164	(9)
Summary	173	(2)
CHAPTER 7 Fraud Prevention and Control	175	(16)
Introduction	175	(1)
Perception of Detection	175	(3)
Classic Approaches	178	(2)
Prevention Environment	180	(3)
Prevention Measures	183	(4)
Accounting Cycles	187	(3)
Summary	190	(1)
CHAPTER 8 Fraud Risk Assessment	191	(20)
Introduction	191	(5)
Risk Assessment Process and Documentation	196	(2)
Risk Management Checklists and Documentation	198	(9)
Special Cases	207	(2)
Summary	209	(2)
CHAPTER 9 Fraud and the Accounting Information System	211	(20)
Introduction	211	(1)
Accounting Concepts	212	(1)
Expenditures Cycle (Purchases and Disbursements)	213	(1)
Bank Reconciliation	214	(1)
General Ledger	215	(3)
Cash Path	218	(1)
Segregation of Duties	218	(1)
Computerized Accounting Systems	218	(1)
Key Personnel	219	(5)
Computer Hardware	224	(2)
Computer Software	226	(1)
Media Storage	227	(1)
New Forms of Media	228	(1)
Paper and Microfilm	229	(1)
Audit Trail Concept	229	(2)
CHAPTER 10 Computer-Related Fraud	231	(24)
Introduction	231	(2)
History and Evolution of Computer-Related Crimes	233	(3)
Computer-Related Fraud Theories and Principles	236	(4)
Characteristics of the Computer Environment	240	(2)
Information Security (InfoSec)	242	(3)
Profiling Internet Fraudsters	245	(7)
Summary	252	(3)
CHAPTER 11 Forensic Accountant as an Expert Witness	255	(28)
Introduction	255	(1)
Role of a Forensic Accountant as a Witness in Court	255	(7)
Forensic Accountant as an Expert Witness	262	(3)
Qualification and Admissibility of Accounting Evidence	265	(2)
Expert's Role in the Litigation Team	267	(1)
Pretestimony Activities	267	(2)
Trial and Testimony	269	(10)
Summary	279	(1)
Appendix 11A	279	(4)
CHAPTER 12 General Criteria and Standards for Evaluating an Experts Qualifications	283	(16)
Introduction	283	(1)
Credentials	283	(7)
Personal Qualities of the Expert	290	(4)
Sources for Locating Expert Witnesses	294	(2)
Distinguishing the Actual Area of Competence	296	(1)
Summary	297	(2)
CHAPTER 13 Gathering Evidence	299	(16)
Introduction	299	(1)
Rules of Evidence	299	(4)
Hearsay Exceptions	303	(1)
Other Rules of Evidence	304	(11)
Index	315