Fraud Auditing and Forensic Accounting

Completely revised and updated, Fraud Auditing and Forensic Accounting, Fourth Edition reveals how to develop an investigative eye toward both internal and external fraud and provides crucial information on how to deal with it when discovered. With new chapters on the physiological aspects of the fraudster and on fraud response, as well as new material on non-financial aspects of fraud investigation, body language, discourse analysis, and interviewing techniques, this authoritative, timely book equips auditors, investigators, corporate attorneys, and accountants to identify the signs of financial fraud and successfully investigate it.

TOMMIE W. SINGLETON, CPA, CMA, CISA, CFF, CGEIT, and CITP, is Marshall IS Scholar and coordinator of the Forensic Accounting Program at the University of Alabama at Birmingham. His articles have appeared in such journals as EDPACS, EDP Auditor Journal, White-Collar Crime Fighter, Journal of Corporate Accounting and Finance, and Information Systems Audit and Control journal. Tommie has presented this material to dozens of auditing firms, internal audit departments, and professional organizations as seminars and training. He is a scholar-in-residence for the regional public accounting firm Carr, Riggs & Ingram with responsibilities related to fraud auditing and forensic accounting.

AARON J. SINGLETON, CPA, CISA, has worked for five years at a global public accounting firm performing information technology, financial statement, and regulatory compliance audits. Aaron's prior experience includes managing accounting and systems for a private wholesale company, and experience in systems development, installation, and support. Aaron has published articles related to fraud and forensics in journals including the Information Security Journal and the Journal of Corporate Accounting and Finance. Aaron earned his master's of accountancy from Bowling Green State University, and bachelor's degrees in accounting and management from the University of Alabama at Birmingham.

Preface	p. xi
Acknowledgments	p. xiii
Background of Fraud Auditing and Forensic Accounting	p. 1
Introduction	p. 1
Brief History of Fraud and the Antifraud Profession	p. 3
The Fraud Cycle	p. 7
Review of Technical Literature	p. 9
Forensic Accountant and Audits	p. 11
Forensic Accountants	p. 20
Fraud Auditors	p. 25
Keys to Effectice Fraud Investigation	p. 31
The Antifraud Professional's Career	p. 33
Summary	p. 36
Notes	p. 37
Fraud Principles	p. 39
Introduction	p. 39
Definition: What Is Fraud?	p. 40
Synonyms: Fraud, Theft, and Embezzlement	p. 42
Classic Fraud Research	p. 42
Fraud Triangle	p. 44
Scope of Fraud	p. 47
Profile of Fraudsters	p. 49
Who is Victimized by Fraud Most Often?	p. 53
Fraud Taxonomies	p. 54
Fraud Tree	p. 62
Evolution of a Typical Fraud	p. 65
Summary	p. 68
Notes	p. 69
Fraud Schemes	p. 71
Introduction	p. 71
ACFE Fraud Tree	p. 73
Financial Statement Schemes	p. 80
Corruption Schemes	p. 83
Asset Misappropriation Schemes	p. 84
Summary	p. 94
Notes	p. 94
Red Flags	p. 95
Introduction	p. 95
Professional Standards	p. 97
Common Red Flags	p. 99
Specific Red Flags	p. 101
Fraud Detection Model	p. 110
Summary	p. 111
Notes	p. 112
Fraud Risk Assessment	p. 113
Introduction	p. 113
Technical Literature and Risk Assessment	p. 114
Risk Assessment Factors	p. 115
Risk Assessment Best Practices	p. 119
Risk Management Checklists and Documentation	p. 125
Summary	p. 129
Notes	p. 129
Fraud Prevention	p. 131
Introduction	p. 131
Prevention Environment	p. 132
Perception of Detection	p. 135
Classic Approaches	p. 137
Other Prevention Measures	p. 139
Accounting Cycles	p. 141
Summary	p. 143
Notes	p. 143
Fraud Detection	p. 145
Introduction	p. 145
Fraud Detection Axioms	p. 146
Common Detection Methods	p. 146
Specific Detection Methods	p. 149
Summary	p. 155
Appendix 7A: Beneish's Ratios	p. 156
Fraud Response	p. 157
Introduction	p. 157
Fraud Policy	p. 157
Fraud Response Team	p. 160
Recovery	p. 164
Summary	p. 165
Notes	p. 166
Appendix 8A: ACFE Sample Fraud Policy	p. 167
Appendix 8B: Sample Fraud Policy Decision Matrix	p. 172
Computer Crime	p. 175
Introduction	p. 175
History and Evolution of Computer Crimes	p. 176
Computer Crime Theories and Categorizations	p. 179
Characteristics of the Computer Environment	p. 182
Information Security (INFOSEC)	p. 185
Profiling Internet Fraudsters	p. 186
Summary	p. 192
Notes	p. 193
Fraud and the Accounting Information System	p. 195
Introduction	p. 195
Accounting Concepts	p. 196
Segregation of Duties	p. 202
Accounting Information Systems	p. 203
Key Personnel	p. 204
Computer Hardware	p. 208
Computer Software	p. 210
New Forms of Media	p. 211
Audit Trail Concept	p. 211
Summary	p. 212
Gathering Evidence	p. 213
Introduction	p. 213
Rules of Evidence	p. 213
Hearsay Exceptions	p. 217
Other Rules of Evidence	p. 218
Summary	p. 223
Notes	p. 223
Cyber Forensics	p. 225
Introduction	p. 225
Expectation of Privacy	p. 226
Types of Investigations	p. 227
Sources of Digital Data	p. 230
Types of Cyber Data	p. 231
Cyber Forensics Investigation Process	p. 234
Variety of Specialists in Cyber Forensics	p. 236
Summary	p. 237
Notes	p. 237
Obtaining and Evaluating Nonfinancial Evidence in a Fraud Examination	p. 239
Introduction	p. 239
Interviews	p. 240
Body Language	p. 242
Deception Cues	p. 243
Eye Language	p. 244
Statement Analysis	p. 245
SCAN	p. 246
Summary	p. 247
Notes	p. 247
General Criteria and Standards for Establishing an Expert Witness's Qualifications	p. 249
Introduction	p. 249
Credentials	p. 250
Personal Qualities of the Expert	p. 255
Sources for Locating Expert Witnesses	p. 259
Distinguishing the Actual Area of Competence	p. 261
Summary	p. 261
Notes	p. 262
The Legal Role and Qualifications of an Expert Witness	p. 263
Introduction	p. 263
Role of a Forensic Accountant as a Witness in Court	p. 264
Legal Qualifications for a Forensic Accountant as an Expert Witness	p. 269
Qualification and Admissibility of Accounting Evidence	p. 270
Expert's Role in the Litigation Team	p. 272
Pretestimony Activities	p. 272
Summary	p. 273
Notes	p. 274
Appendix 15A: Transcript of Typical Court Testimony of Expert Witness	p. 275
Effective Tactics and Procedures for the Expert Witness in Court	p. 277
Introduction	p. 277
Effective Profile	p. 278
Being a Credible Expert Witness	p. 278
Expert's Role in the Litigation Team	p. 279
Pretestimony Activities	p. 280
Trial and Testimony	p. 281
Survival Techniques	p. 288
Summary	p. 290
Notes	p. 290
Fraud and the Public Accounting Profession	p. 291
Introduction	p. 291
History of Fraud and the Auditor: A Summary	p. 291
Fraud and the Auditor's Liability	p. 302
Fraud and the Auditor's Responsibility	p. 303
Fraud and the Auditor's Role	p. 306
Summary	p. 308
Note	p. 308
About the Authors	p. 311
Index	p. 313
Table of Contents provided by Ingram. All Rights Reserved.

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Fraud Auditing and Forensic Accounting

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