Forensic Accounting and Fraud Investigation for Non-Experts, 2d ed.Forensic Accounting Forensic accounting, sometimes called investigative accounting, involves the application of accounting concepts and techniques to legal problems. Forensic accountants investigate and document financial Fraud and white-collar crimes and Fraud Investigation for Non-Experts (2nd ed.) by Howard Silverstone and Michael Sheetz 294 pages; hardcover; $50 John Wiley John Wiley may refer to:
Even experienced financial fraud examiners will find this book handy for helping prevent and reduce losses from fraud. Although the book has been written as a primer, it presents a range of case studies every fraud expert can use for quick reference and a blueprint of successful approaches to finding evidence of and proving workplace fraud. The accounting professional's training is key in fraud investigation, of course--but an investigative mind-set and skepticism help as well. The authors say Statement on Auditing Standards no. 99, Consideration of Fraud in a Financial Statement Audit, calls on external auditors The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. to take on more responsibility, to "think like both a thief and a detective and be constantly looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. the weak links in the accounting system and among the people who staff it." The investigative accountant should look for any source--government information, proprietary databases and court records, for example--that might have bearing on a case. CPAs must be savvy in conducting interviews with all suspects and reviewing evidence from accounting records and documentation. To establish a fraud, financial investigators must be able to pick up on motivational and behavioral clues such as a suspect's domestic financial worries, for example. A business has five "typical accounting cycles" that leave audit trails: * The sales and collections cycle can reveal many common frauds: cash thefts, theft of other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. , kickbacks to customers and front-end frauds such as misappropriating rebates. * The purchase and payments cycle includes noncapital procurements for goods, equipment and services, which can lead to dummy Sham; make-believe; pretended; imitation. Person who serves in place of another, or who serves until the proper person is named or available to take his place (e.g., dummy corporate directors; dummy owners of real estate). entities. * The payroll and personnel cycle covers hiring, firing, salaries, employee insurance and expense accounts, where frauds such as paying ghost employees, overstating expenses and filing false medical claims are common. * The inventory and warehousing cycle controls the purchase and storage of goods. The most common frauds consist of ordering unneeded inventory and stealing it for personal use, charging embezzlements occurring in other areas of the company to inventory losses and committing outright theft. * The capital acquisition and repayment cycle accounts for debt and equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. , interest and dividend payments. Most frauds in this category are developed at the executive level; they include borrowing company money for personal use and misuse of interest income or of proceeds from financings. The investigator must thoroughly examine all five cycles for breaches of fundamental controls in maintaining the audit trail, separating duties and keeping proper documentation. The authors take the reader step-by-step through the early stages of an investigation to build a strong foundation for a fraud case. Some of the most important work occurs before any actual interviews have been conducted or documents collected, they say The 22-page chapter on "Interviewing Financially Sophisticated Witnesses" should be placed prominently in every CPAs library. Its three sections address * The fundamentals of whom to interview and why. * The dynamics of the process, including "the theory of cognitive interviewing techniques that are applicable to both suspect and nonsuspect" interviews. * Specific strategies for conducting successful, productive interviews in white-collar crime white-collar crime, term coined by Edward Sutherland for nonviolent crimes committed by corporations or individuals such as office workers or sales personnel (see white-collar workers) in the course of their business activities. cases. Visual aids visual aids Noun, pl objects to be looked at that help the viewer to understand or remember something . Stressing that "visualizing difficult concepts through graphic representation" is the best aid in staying organized and in understanding complicated topics, the authors offer tools to help analyze cases. "Associational tools" such as matrices and social-network diagrams identify relationships among people, places and organizations. "Temporal analysis tools"--time lines, for example--organize the flow of events or data over time. "Inferential in·fer·en·tial adj. 1. Of, relating to, or involving inference. 2. Derived or capable of being derived by inference. in analysis" expands the concept of visual analysis to include visualizing the relationships among pieces of evidence. Advice on documenting and presenting the fraud report and testifying to its findings round out this book. The authors say they adapted the trial lawyers' casebook A printed compilation of judicial decisions illustrating the application of particular principles of a specific field of law, such as torts, that is used in Legal Education to teach students under the Case Method system. system to the investigative arena to ensure their system is applicable to frauds of all sizes. The fraud analyst/expert witness who follows their guidance should be amply prepared for what lies ahead. Barbara J. Shildneck, a former editor of the JofA, is now a contributing editor A contributing editor is a magazine job title that varies in responsibilities. Most often, a contributing editor is a freelancer who has proven ability and readership draw. to the magazine. |
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