Fraud Auditing and Forensic Accounting, Fourth Edition

334 Pages·2010·2.6 MB·English

by  Tommie W. Singleton

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Fraud Auditing and
Forensic Accounting
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Fraud Auditing and
Forensic Accounting
Fourth Edition
TOMMIE W. SINGLETON
AARON J. SINGLETON
JohnWiley&Sons,Inc.
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Copyright#2010byJohnWiley&Sons,Inc.Allrightsreserved.
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LibraryofCongressCataloging-in-PublicationData:
Singleton,Tommie.
Fraudauditingandforensicaccounting/TommieW.Singleton,AaronJ.Singleton.–
4thed.
p.cm.
Rev.ed.of:Fraudauditingandforensicaccounting.3rded.2006.
Includesindex.
ISBN978-0-470-56413-4;ISBN978-0-470-87748-7(ebk);
ISBN978-0-470-87790-6(ebk);ISBN978-0-470-87791-3(ebk)
1. Whitecollarcrimeinvestigation–UnitedStates. 2. Forensicaccounting–United
States. 3. Fraudinvestigation–UnitedStates. I. Singleton,AaronJ.,1980-
II. Fraudauditingandforensicaccounting. III. Title.
HV8079.W47B652010
0
364.163—dc22
2010013504
PrintedintheUnitedStatesofAmerica
10 9 8 7 6 5 4 3 2 1
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Contents
Preface xi
Acknowledgments xiii
Chapter1:BackgroundofFraudAuditingand
ForensicAccounting 1
Introduction 1
BriefHistoryofFraudandtheAntifraudProfession 3
TheFraudCycle 7
ReviewofTechnicalLiterature 9
ForensicAccountantandAudits 11
ForensicAccountants 20
FraudAuditors 25
KeystoEffectiveFraudInvestigation 31
TheAntifraudProfessional’sCareer 33
Summary 36
Notes 37
Chapter2:FraudPrinciples 39
Introduction 39
Definition:WhatIsFraud? 40
Synonyms:Fraud,Theft,andEmbezzlement 42
ClassicFraudResearch 42
FraudTriangle 44
ScopeofFraud 47
ProfileofFraudsters 49
WhoIsVictimizedbyFraudMostOften? 53
FraudTaxonomies 54
FraudTree 62
EvolutionofaTypicalFraud 65
Summary 68
Notes 69
v
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vi n Contents
Chapter3:FraudSchemes 71
Introduction 71
ACFEFraudTree 73
FinancialStatementSchemes 80
CorruptionSchemes 83
AssetMisappropriationSchemes 84
Summary 94
Notes 94
Chapter4:RedFlags 95
Introduction 95
ProfessionalStandards 97
CommonRedFlags 99
SpecificRedFlags 101
FraudDetectionModel 110
Summary 111
Notes 112
Chapter5:FraudRiskAssessment 113
Introduction 113
TechnicalLiteratureandRiskAssessment 114
RiskAssessmentFactors 115
RiskAssessmentBestPractices 119
RiskManagementChecklistsandDocumentation 125
Summary 129
Notes 129
Chapter6:FraudPrevention 131
Introduction 131
PreventionEnvironment 132
PerceptionofDetection 135
ClassicApproaches 137
OtherPreventionMeasures 139
AccountingCycles 141
Summary 143
Notes 143
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Contents n vii
Chapter7:FraudDetection 145
Introduction 145
FraudDetectionAxioms 146
CommonDetectionMethods 146
SpecificDetectionMethods 149
Summary 155
Appendix7A:Beneish’sRatios 156
Chapter8:FraudResponse 157
Introduction 157
FraudPolicy 157
FraudResponseTeam 160
Recovery 164
Summary 165
Notes 166
Appendix8A:ACFESampleFraudPolicy 167
Appendix8B:SampleFraudPolicyDecisionMatrix 172
Chapter9:ComputerCrime 175
Introduction 175
HistoryandEvolutionofComputerCrimes 176
ComputerCrimeTheoriesandCategorizations 179
CharacteristicsoftheComputerEnvironment 182
InformationSecurity(INFOSEC) 185
ProfilingInternetFraudsters 186
Summary 192
Notes 193
Chapter10:FraudandtheAccountingInformationSystem 195
Introduction 195
AccountingConcepts 196
SegregationofDuties 202
AccountingInformationSystems 203
KeyPersonnel 204
ComputerHardware 208
ComputerSoftware 210
NewFormsofMedia 211
AuditTrailConcept 211
Summary 212