Creating fraud awareness.

Enron, WorldCom, Adelphia, Tyco ... these names bring to mind images of executives in handcuffs. They represent bankruptcies and billions of dollars lost by investors, retirees, and lenders. Speaking at the 13th Annual Fraud Conference and Trade Show of the Association of Certified Fraud Examiners, Sherron Watkins, stated that, "In less than two years, investors lost more than $60 billion in the value of their shares in Enron, and the company filed bankruptcy without ever disclosing a poor quarter relative to recurring earnings." (1) At WorldCom, financial officers and their subordinates reclassified more than $3.8 billion of lease expense for communications lines owned by third parties from the income statement to the fixed assets section of the balance sheet in order to maintain a higher stock price. (2) Adelphia founder John J. Rigas and his two sons have been accused of treating the company's funds as their personal piggy bank, using more than $250 million in Adelphia funds to pay personal margin calls, diverting additional funds to build a golf course on their private property, and using corporate apartments and jets for personal use without reimbursing the company--all while Adelphia carried more than $2.3 billion in "off balance sheet debt." (3) Tyco's CEO, CFO, and general counsel have been charged with fraud for receiving millions of dollars in low- or no-interest loans for personal purposes without disclosure to investors; further, they have failed to disclose related-party transactions and executive compensation arising from the forgiveness of loans in their financial statements. (4)

These cases have drawn widespread attention because of the billions of dollars involved, but they are not isolated incidents. In March 2002, a shareholder suit was revived against A.T. Cross, makers of Cross pens, for fraudulently overstating revenues. (5) Also, the former CFO of Media Vision Technology was found guilty in August 2002 of five counts of fraud for lying to investors and financial analysts about numerous schemes employed to overstate the company's financial position, including falsifying inventories, misdating transactions, and recording nonexistent products. A trial for the same charges against the CFO had resulted in a hung jury a year earlier. (6)

The nation's largest accounting firms have come under investigation by the Securities and Exchange Commission for their roles in these and other accounting scandals. Additionally, federal prosecutors brought charges against Arthur Andersen LLP and are investigating PricewaterhouseCoopers for conspiring with managements of public companies to defraud investors. (7) The conviction of Arthur Andersen LLP for obstruction of justice for shredding documents and doctoring Enron-related statements is unprecedented.

Impact on the U.S. Economy

The recent spate of billion dollar bankruptcies and accounting scandals is affecting the nation's economy. The July 18, 2002, press release of The Conference Board stated, in part, that:

   Stock prices and consumer expectations are
   the primary components that are preventing
   the leading index from continuing its positive
   trend in June. The recent wave of questionable
   corporate practices and the lack of
   measures aimed at addressing them have
   contributed to the weakness in these two
   components.

Additionally, The National Economic Review for the second quarter 2002 reported that "concerns regarding financial reporting, a weak labor market, and waning business conditions have eroded consumer confidence ... While [June] confidence is still higher than it was at the start of the year, consumers' assessment of current conditions and their expectations for the next six months declined."

Changes in the Regulatory Environment

In response to huge investor losses, the Sarbanes-Oxley Act of 2002 was signed into law on July 30, 2002, by President Bush. This law requires that a public company's CEO and CFO prepare a statement to accompany the audit report that certifies the "appropriateness of the financial statements and disclosures contained in the periodic report, and that those financial statements and disclosures fairly present, in all material respects, the operations and financial condition of the issuer." Further, each annual report is now to contain an "internal control report" which shall 1) state management's responsibility for establishing and maintaining adequate internal control structure and procedures to ensure that the financial statements are materially correct; and 2) contain an assessment of the effectiveness of the internal control structure and procedures. Certifying officers are now subject to the risk of fines, prison, or both. (8)

The law also established the public watchdog Public Company Accounting Oversight Board, which is to include two CPAs and three "financially literate" individuals who are not and have never been accountants. The Securities and Exchange Commission, the chairman of the Federal Reserve Board, and the Secretary of the Treasury are jointly responsible for appointment of the Oversight Board's members. (9) Further, the law increased the number of offenses that qualify as corporate crime and stiffened the penalties for the same. It is likely that there will be increasing prosecution of white-collar criminals. (10)

Private and Small Businesses Not Exempt

Privately-owned companies are no less susceptible than public ones to fraudulent activities of managers and employees. A study conducted in June 2002 by Ernst & Young, LLP, measured the attitudes of American workers about workplace fraud. Survey results suggest that one-in-five workers is personally aware of fraud in their workplace, and 80% would be willing to turn in a co-worker they believed to be committing fraud, but only 43% actually have. The surveyed workers estimated that employers lose as much as 20% of gross revenues to fraud, such as theft of office items, claiming extra hours worked, inflating expense accounts, and taking kickbacks from suppliers. One-in-ten believed that fraud was increasing in their workplace. (11)

The Association of Certified Fraud Examiners (ACFE) reports that small businesses are especially prone to misappropriation of assets, which accounts for 80% of all fraud cases, and experience fraud losses at a frequency of nearly 100 times that of larger businesses. (12) Factors cited by Camico Insurance that support this claim include the following: 1) fraud is relatively easy to perpetrate and conceal, and the widespread use of computers has made it easier in many ways; 2) only about 20% of known fraud cases are discovered by methods such as audits and management oversight; and 3) small businesses frequently do not have enough employees for segregation of duties, which means there are fewer checks and balances to detect a fraud perpetrator's activities. (13)

Schemes

Based on a study of 971 fraud cases in 2002, the ACFE found that the most common types of workplace fraud, their relative frequency, and median costs to the companies are as follows: (14)

A Fraud Primer

According to Merriam-Webster's Dictionary of Law[C]1996, the definition of fraud is:

   Any act, expression, omission, or concealment
   calculated to deceive another to his or
   her disadvantage, specifically, a misrepresentation
   or concealment with reference to some
   fact material to a transaction that is made with
   knowledge of its falsity or in reckless disregard
   of its truth or falsity and with the intent
   to deceive another and that is reasonably relied
   on by the other who is injured thereby.

Thus, incompetence and poor management do not constitute fraud. The intent to deceive for one's personal gain coupled with injury to the party who reasonably relied on the truthfulness of the facts material to the transaction are paramount elements of fraud.

There are three types of workplace fraud, 1) management fraud, 2) occupational or transactional fraud, and 3) corruption.

* Management Fraud

Management fraud, perpetrated at the top level of companies, is the most costly fraudulent act, as shown in the preceding table. It involves the deliberate misstatement of financial statements to reflect financial performance that is better than economic reality. In an article entitled "The three Cs of fraudulent financial reporting," Zabihollah Rezaee states:

   Assessing an organization's conditions, corporate
   structure, and the choices it makes can
   help reveal the motivations, opportunities,
   and rationalizations behind the commission
   of financial statement fraud.

The definitions provided for the three Cs follow:

   The motivations and pressure to engage in
   financial statement fraud are the conditions.
   Pressures on corporations to meet analysts'
   earnings forecasts play an important role in
   the commission of this type of fraud. In recent
   corporate cases, executives deliberately
   committed illegal actions to mislead users of
   financial statements--investors and creditors--about
   their poor or less-than-favorable
   financial performance.

Note: Although the author is addressing management in publicly-traded companies, the same motivations and pressures have been found in closely-held businesses, where the motivation and pressure are derived from the financial expectations of business owners and lenders.

   An organization's corporate structure can
   create an environment that increases the likelihood
   that fraudulent financial reporting will
   occur. Given that management usually is the
   perpetrator of this type of fraud, it is not surprising
   that most incidences occur in an environment
   characterized by irresponsible and
   ineffective corporate governance.

   Management must make choices between
   using ethical business strategies to achieve
   continuous improvements in both quality and
   quantity of earnings and engaging in illegitimate
   earnings management schemes to show
   earnings stability or growth. Members of
   management may choose to engage in financial
   statement fraud when: 1) their personal
   wealth is closely associated with the
   company's performance; 2) they are willing
   to take personal risk for corporate benefit;
   3) opportunities for the commission of financial
   statement fraud are present; 4) there is a
   substantial internal and external pressure either
   to create or maximize shareholder value;
   and 5) the probability of the fraud being detected
   is perceived to be very low.

The author states further that "the presence of any one of the 3 Cs can signal the possibility of fraud, whereas the combination of two or more factors at any one time increases the likelihood that fraud has occurred." (5)

Erroneous statements may occur in the balance sheet, the income statement, or both. The following areas are subject to the most frequent abuses: revenue measurement and recognition, provisions for uncertain future costs, asset valuation, and related-party transactions. (16)

Revenue measurement and recognition: For most businesses, sales are recorded at the time of delivery of a product or completion of a service (recognition), and the amount recorded is the agreed-upon price of the item or service (measurement). Sometimes judgment is required to determine whether a sales transaction actually existed. For instance, the SEC filed charges against three former executives of Homestore, Inc., for arranging fraudulent "round-trip" barter transactions involving on-line advertising. The scheme was to pay inflated amounts to vendors, who used the proceeds to buy advertising from two media companies, who then bought on-line advertising from Homestore. The effect was that Homestore recognized its own cash as revenue. (17) More often, however, judgment regarding recognition is necessary when performance required to earn the revenue extends across multiple accounting periods, i.e., contracts, warranties, preseason ticket sales, and subscriptions.

Judgment regarding measurement is necessary when the probability of collecting all of the payments is in doubt at the time of completion of the transaction or when one company acts as an intermediary between the buyer and seller. As an example of the latter, many of the dot.com companies reported billions of dollars of sales revenues during the 1990s, when, in fact, they were intermediaries between buyers and sellers and their true revenues were commissions amounting to only 3-5% of the total revenues reported.

Provisions for uncertain future costs: Companies are required to make provisions for expenses such as bad debts, inventory obsolescence, depreciation and amortization of assets, product returns, discounts, and contingent liabilities whether or not the amounts are measurable with certainty. These provisions are intended to present to the readers of the financial information the true economic position of a company. These allowances, however, can be seriously over- or understated when "earnings management" is occurring. Managing earnings is done with the intention of "smoothing" the earnings stream. Provisions are overstated to hide excess income in boom times and understated to hide losses in economic downturns. According to Makar, Alam, and Pearson, earnings management exists when the question is "How can we best report desired results?" rather than "How can we best report economic reality?" (18)

Asset valuation: "On the most basic level, an asset is something that has current or intrinsic value, like cash, or that can be used to generate future revenues." (19) Fixed and intangible assets are balance sheet items susceptible to being over- or understated for fraudulent purposes with the goal of either inflating asset values or managing earnings by increasing or reducing expenses recorded for depreciation and amortization. Assets of concern are fixed assets, including buildings, machinery and equipment, furniture, and vehicles, and intangible assets, including goodwill, patents, trademarks, copyrights, and capitalized research and development costs. Accounting rules require that companies record fixed and intangible assets at historical cost and reduce that value by way of depreciation or amortization over their expected useful lives. There are numerous accounting alternatives for recording depreciation and amortization, however, and those alternatives leave room for interpretation about "useful life"--is the period of time before the asset is no longer useful in generating future revenues. The election of one method over another is not fraud unless there is intent on the part of management to overstate the value of the company's assets or to over- or understate earnings.

Related party transactions: Disclosure of related-party transactions varies with the regulatory environment and company policies. Related parties may include parent or subsidiary companies, company management, shareholders, directors, lenders, vendors, and customers. Such transactions maybe used to hide unreported or diverted profits, hide evidence of earnings management, and to avoid disclosure of the enrichment of a subgroup of managers or shareholders. As cited, it is alleged that Tyco's CEO, CFO, and general counsel received millions of dollars in low- or no-interest loans for personal purposes without disclosure to investors and failed to disclose related-party transactions and executive compensation arising from the forgiveness of loans in their financial statements. To improve the company's balance sheet, Enron shifted significant amounts of debt to related companies whose financial results did not have to be included in the consolidated financial statements.

   According to Sherron Watkins of Enron, (20)

   The recent, numerous accounting scandals
   suggest that companies believe that, similar
   to interpreting the tax code as liberally as
   possible to minimize the company's tax liabilities,
   accounting rules should be applied
   that present the company's financial results
   in the most favorable light possible, whether
   or not those financial statements materially
   represent the financial condition of the company
   or its operations.

In determining whether the presentation of a suspect company's financial statements is a liberal interpretation of accounting principles or fraud, it is necessary to revisit the definition of fraud. If management's intent is to mislead creditors, investors, and shareholders, whether for personal benefit or to avoid loss of market share, and if the readers of the financial statements rely on the material correctness of those statements to their detriment, then management fraud has occurred.

* Occupational Fraud

Returning to the table showing the results of the ACFE's study of 971 fraud cases in 2002, the following acts are commonly referred to as "occupational" or "transactional" fraud and involve asset misappropriation:

While these acts may be committed by management, they are more often committed by employees. It is, therefore, helpful to gain insight into the reasons employees commit fraud. Two separate but related theories have been developed. (21) The first is based on a 20-year-old study of 12,000 employees which found that nearly 90% of those employees engaged in "workplace deviance." This deviance included acts such as failing to perform delegated tasks, workplace slowdowns, sick time abuses, and pilferage. Further, one-third of the employees had stolen money or merchandise from the job. Researchers Hollinger and Clark linked the tendency to engage in fraudulent acts with job dissatisfaction. It has been theorized that dissatisfied employees (particularly those who believe that they are not being paid what they perceive they are worth) seek "wages in kind" and will steal to "balance the scales."

The second theory is related to financial pressures. Donald R. Cressey, a criminologist, interviewed 200 incarcerated embezzlers in the late 1940s. He found that the majority had committed fraud to meet their financial obligations. However, Cressey also identified two other factors that had to exist for the fraudulent acts to occur: each perpetrator had perceived an opportunity to commit and conceal their crimes, and each was able to rationalize their offense as something other than criminal activity. Cressey's findings are represented graphically in what has become know as the "Fraud Triangle," as follows:

Here is a closer look at various methodologies used to perpetrate fraud.

Billing schemes: In billing schemes, a company pays invoices an employee fraudulently submits to obtain payments he or she is not entitled to receive. (22) There are four major types of these schemes: 1) Shell company schemes. An employee sets up a fictitious company and uses that company's name to bill for goods or services the employer has not received. Upon receipt of payment, the employee will deposit the funds into a bank account that has been established in the name of the fictitious company, then withdraw the funds for his or her personal use. 2) Pass-through schemes. A shell company established by the employee will purchase goods or services, mark up the cost, then sell those goods and services to the employer. The funds derived from the mark-up are then converted to the employee's personal use. 3) Pay-and-return schemes. An employee causes a duplicate payment to a legitimate vendor, then requests a refund of the overpayment. When the overpayment is received, the employee embezzles the money. 4) Personal-purchase schemes. Employees order merchandise for their personal use and charge it to the company. Sometimes the employee will keep the merchandise; other times, he or she will return it for a cash refund.

Skimming: Skimming occurs when employees steal incoming funds.23 The term comes from the fact that the money is "taken off the top." The three principal skimming targets are revenues, refunds, and accounts receivable, with revenue skimming the most popular. Any employee that comes in contact with cash should be suspected when skimming has occurred, including top management with the opportunity to override internal controls. When skimming occurs, regardless of the method, the accounting effect will be a decrease in revenues without a corresponding decrease in the costs incurred to generate those revenues.

Check tampering: Although embezzlers prefer to deal with cash, businesses without high volumes of cash may necessitate the altering of Check tampering: Although embezzlers prefer to deal with cash, businesses without high volumes of cash may necessitate the altering of Check tampering: Although embezzlers prefer to deal with cash, businesses without high volumes of cash may necessitate the altering of Check tampering: Although embezzlers prefer to deal with cash, businesses without high volumes of cash may necessitate the altering of checks. Check tampering is affected by these methods: 1) Forged maker. The employee forges the signature of the person with check-signing authority. To accomplish this, the employee must have access to blank or unsigned checks. 2) Forged endorsement. The employee intercepts a company check that is payable to another party, endorses the check using the payee name, and, if necessary, provides a second endorsement. To conceal this act, the employee will remove the original document from the bank statement, erase the second endorsement, or simply destroy the document. He or she will also re-enter the original invoice for payment to the original vendor, often arranging for payment by a manual check. 3) Altered payee. The employee inserts his or her name, the name of an accomplice, or the name of a fictitious entity on the payee line, and converts the check for personal use. 4) Altered payment amount. A check legitimately issued to the employee is altered to increase the amount of the payment.

Returning to the discussion of why employees steal, the opportunity to commit and conceal the act limits the list of "usual suspects" for this type of embezzlement. In most instances, the perpetrator will have access to the incoming bank statements and can remove all incriminating evidence.

Payroll Schemes: The most common payroll schemes include the following: 1) Ghost employees. Payroll checks are issued to a party (real or fictitious) who does not work for the employer. When the party is a real person, he or she is generally a friend or relative of the perpetrator. This fraud is similar to billing scheme fraud, but rather than paying a fictitious invoice, false payroll information is created for the ghost employee. 2) Falsified hours and/or rate of pay. The perpetrator of this scheme either submits un-worked hours for pay or is able to increase his or her rate of pay. 3) Commission schemes. Commissions are used as an incentive for performance, frequently related to sales. As with falsified hours and/or rate of pay, the perpetrator submits nonexistent sales or is able increase the commission rate.

During slow periods of a business cycle, management may promise extra incentives to anyone who generates additional sales during a given month. Analytical review of actual results for the month and for the months preceding and following that month, however, is important before such incentives are offered in the future. It is often found that sales in the month prior will drop from historical levels, and returns in the month following will increase. This suggests that employees practicing fraud hold orders from the prior month for submission during the "bonus" month and persuade customers to overbuy knowing they can return product in the next month.

Non-cash misappropriations: These schemes involve the theft of corporate assets other than cash. Many corporate assets are misused, including company vehicles, computers, supplies and other office equipment, and many of these acts are fraudulent, but cost to employers is relatively small. Theft of a company's assets, however, usually occurs by one of the following four methods: 1) Larceny. Larceny is the outright theft of company assets without any effort at concealment by the perpetrator. 2) Asset requisition and transfer schemes. Fraud perpetrators utilizing this scheme gain control of a company asset for delivery to another location. In the transfer, the asset disappears. 3) Purchasing and receiving schemes. The fraudster may remove items from an incoming shipment, marking receiving records as though the item count was short. To conceal this scheme, the receiver may send one, unedited copy of the invoice to accounts payable so that the vendor receives full payment for the shipment and an edited copy to be entered into the inventory system. 4) False shipment schemes. Perpetrators will record a non-existent sale (usually to a fictitious party or accomplice) and steal the products "sold."

The foregoing schemes involve theft by employees, but vendors and contractors may also deliver defective services, merchandise, or invoices. Defective deliveries include short-counting an order, substituting inferior goods or materials, or pricing items higher than a previously negotiated price.

Register disbursements: These simple schemes generally involve employees removing money from the register and substituting a fraudulent document such as a void or refund slip to conceal the theft. (24)

* Corruption

The last of the workplace frauds is corruption. Although the relative frequency of these frauds, according to the ACFE, was only 12.8%, the median cost to companies was $530,000. Accordingly, the median cost was second only to company losses arising from fraudulent financial statement schemes.

Corruption schemes: These schemes include bribery, kickbacks, contract rigging, extortion, and payment and receipt of illegal gratuities. Numerous high-profile government cases have made most people aware of these frauds, so this discussion will be limited to contract rigging schemes.

Contract rigging generally involves two phases, obtaining the contract and then defrauding the victim. During the bidding process, if the contractor has an accomplice within the contracting firm, the process of obtaining the contract is made easier. Accomplices can often be enticed to divulge information about competing contracts by promises of a kickback from the profits of the awarded contract. Absent an accomplice, however, the contractor may prepare his or her bid not on the basis of what it will cost to perform the contract but intended to be below the price the contractor anticipates other bidders will quote. The dishonest contractor knows there are many ways to make up the profits later on. Most schemes (25) arise from change orders to the contract and include the following: 1) Bidding a low price on contract items they are relatively certain will be eliminated during the term of the contract while bidding a higher price on items they are relatively certain will remain. 2) Deferring work on contract items they know will be changed, then falsely claiming to have invested substantial sums in time and material, for which they are entitled to be reimbursed. 3) Substituting cheaper materials than those specified by the contract.

Timing of the change orders is critical for the fraud perpetrator. There must be substantial work-in-progress so that the contracting entity has no option other than to pay the additional cost.

* Deterrence

According to Joseph T. Wells, all crime is a combination of motive and opportunity. (26) As discussed, motives to commit fraudulent acts have been found to arise from job dissatisfaction, financial pressure, or both. To reduce these motivations, owners and managers should 1) provide an ethical work environment and lead by demonstrating ethical behavior in all business activities; 2) treat employees well; and 3) listen to and address employees' complaints and problems, particularly when they are expressing dissatisfaction with their jobs or discussing financial difficulties. A wary eye for changes in lifestyle with no apparent explanation may also help the business owner or manager spot fraud before the acts become very costly.

To reduce employees' perceptions of opportunities to commit fraud, the best message owners and managers can send is that "someone is watching." If possible, engage an outside accountant to periodically examine the books and records. Add a corporate fraud policy to the company's documents and provide a copy to every employee. Also, discuss the consequences of violating the fraud policy, i.e., termination or prosecution. Be willing to prosecute known offenders.

There may be no way to prevent all acts of fraud. This is particularly true with collusion among employees. Accordingly, to safeguard corporate assets, institute training programs to educate employees about fraud prevention in their areas of responsibility, and evaluate internal controls regularly to assess their effectiveness.

The most important internal control to implement is segregation of duties--designing job functions in such a way that an employee cannot easily perpetrate and conceal the fraud. This is often difficult when a company is staffed leanly, but is of vital importance. For instance, if an employee has a check-writing function, do not allow that employee to reconcile bank statements. If necessary, have the statements delivered to your home. Do not allow payroll personnel to add employees to the payroll system, adjust pay rates, record hours, pay the employees, and reconcile the payroll checking account.

If possible, use a single system to record all business transactions. If a sale is made, either cash or accounts receivable should be simultaneously adjusted, inventory should be reduced, and cost of goods sold should increase. When multiple systems are used, transactions can easily fall through the cracks.

Finally, if the business cannot justify the expense of an audit, prepare and read financial statements monthly. Learn to identify unusual trends that may signal a problem. If possible, employ external accountants to periodically examine records for irregularities. An alternative to an audit is a "review" where analytical procedures are applied that can identify unusual trends and irregularities. The review is significantly less costly than an audit. Work with the accountant to identify potential problem areas, and consider any suggestions for reducing risk of loss from those areas. Also, provide a means for employees to anonymously report known or suspected fraud, such as an ethics hotline.

                                                       Median Cost to
Fraudulent Act                    Relative Frequency     Companies

Billing schemes                         25.2%             $160,000
Skimming                                24.7                70,000
Check tampering                         16.7               140,000
Corruption schemes                      12.8               530,000
Expense reimbursements                  12.2                60,000
Payroll schemes                          9.8               140,000
Non-cash misappropriations               9.0               200,000
Cash larceny                             6.9                25,000
Fraudulent financial statements          5.1             4,250,000
Register disbursements                   1.7                18,000


                                                  Median Cost to
Fraudulent Act               Relative Frequency      Companies

Billing schemes                    25.2%             $160,000
Skimming                           24.7                70,000
Check tampering                    16.7               140,000
Expense reimbursements             12.2                60,000
Payroll schemes                     9.8               140,000
Non-cash misappropriations          9.0               200,000
Cash larceny                        6.9                25,000
Register disbursements              1.7                18,000

(Endnotes)

(1) Klein, M. (2002, September 2-22). Whistleblowers, con artists and corruption to slate at ACFE confab. Accounting Today.

(2) Hamblett, M. (2002, August 29). Two ex-WorldCom executives indicted for securities fraud. New York Law Journal.

(3) Hamblett, M. (2002, July 25). Adelphia founder, sons charged in huge fraud. New York Law Journal.

(4) Schlank, R. (2002, September 16). SEC charges former Tyco officers with fraud. AccountingWEB US.

(5) Duffy, S. P. (2002, March 25). Shareholders' suit revived against makers of cross pens. The Legal Intelligencer.

(6) Hoppin, J. (2002, August 16). Media vision's ex-CFO found guilty of fraud. The Recorder.

(7) Schlank, R. (2002, October 1). Prosecutors investigate PwC for role in Tyco scandal. AccountingWEB US.

(8) American Institute of Certified Public Accountants. Summary of Sarbanes-Oxley Act of 2002. (n.d.). Retrived from http://www.aicpa.org/info/sarbanes_oxley_summary.htm.

(9) Mcgraw, J. (2002, August 30). Sarbanes-Oxley changes face of accounting profession. Memphis Business Journal.

(10) Goodspeed, L. (2002, September 27). White-collar crimes to have longer-lasting ramifications. Boston Business Journal.

(11) American Workers. (2002, August 5). Employers lose 20 percent of every dollar to workplace fraud. Retrieved from www.ey.com.

(12) Association of Certified Fraud Examiners. (n.d.). 2002 report to the nation on occupational fraud and abuse, www.cfenet.com.

(13) Camico Insurance. (2002, September 12). Recession plus PCs equal more fraud. AccountingWeb US.

(14) Association of Certified Fraud Examiners. (n.d.). 2002 report to the nation on occupational fraud and abuse. Retrieved from www.cfenet.com.

(15) Rezaee, Z., (2002, October 1). The three Cs of fraudulent financial reporting. The Internal Auditor.

(16) Sherman, H. D. and Young, S. D. (2001, July-August). Tread lightly through these accounting minefields. Harvard Business Review.

(17) Schlank, R. (2002, September 26). SEC says homestore's "round-trips" were fraudulent. AccountingWEB US.

(18) Makar, S. D., and Pearson, M.A., (2000, January/February). Earnings management: When does juggling the numbers become fraud? The White Paper.

(19) Sherman, H. D., and Young, S. D., ibid.

(20) Klein, M. (2002, September 2-22). Whistleblowers, con artists and corruption to slate at ACFE confab. Accounting Today.

(21) Wells, J. T. (2001, February). Why employees commit fraud. Journal of Accountancy.

(22) Wells, J. T. (2002, July). Billing schemes, part 1: Shell companies that don't deliver. Journal of Accountancy.

(23) Wells, J. T. (2002, January) .... And one for me. Journal of Accountancy.

(24) Wells, J. T. (2002, June). Control cash-register thievery. Journal of Accountancy.

(25) Davia, H. R. (2000). Contract rigging fraud, Fraud 101: Techniques and strategies for detection. John Wiley & Sons, Inc.

(26) Wells, J. T. (2001, February). Why employees commit fraud. Journal of Accountancy.

Patrice Viton, a CPA and Certified Valuation Analyst, provides forensic investigative accounting services through WebsterRogers LLP. She is studying to become a Certified Fraud Examiner.