Index
- A
- Accidental fraudster, 66
- Account analysis method, 471–472
- Accounting anomalies, 271–272
- Accounting changes, 238
- Accounting estimates, 471
- Accounting personnel, fraud prevention and deterrence, 444
- Accounting principles and fraud
- Accounts payable, 363
- Accounts receivable, 240, 363
- Accredited in Business Appraisal Review (ABAR), 44
- Accredited in Business Valuation (ABV), 42–43, 482
- Accrual accounting, 90–91
- Accusations, 336
- Accuser’s actions, 339
- ACL Services Ltd., 366–367
- Adequate hacker detection programs, 419
- Adjusted income reconciliation, 494
- Admission-seeking interview, 328
- Admission-seeking questions, 336–337
- Affirmative Acts, 396
- African organized crime, 383
- After-hours sales, 114
- AICPA and Statement on Auditing Standards No. 99, 92–94
- Albrecht, W. Steve, 285, 447
- Alibis, diffusing, 340–341
- of documents, 301–302
- Allocated costs, 471
- Alteration
- Altheide, David, 62
- Altruism, 340
- American Institute of Certified Public Accountants (AICPA), 42–43, 92–94, 459
- American Society of Appraisers (ASA), 482
- Analyst’s Notebook i2, 372
- Anonymous communications, fraud prevention and deterrence, 444–445
- Antifraud, 426–427
- and compliance efforts
- Anti-hacker measures, 419
- Anti-money-laundering efforts, 399
- Antivirus software, 422
- Application software viruses, 420
- Arrogance, 61–62
- Arthur Andersen, 228
- Artificial intelligence (AI), 281, 354, 426–427
- Ask Until You Admit, 532
- Assessment questions, 333–336
- Assets
- Assets to equity, 246
- Asset valuation models, 487
- Association for Investment Management and Research (AIMR), 482
- Association matrix, 367–368
- Association of Certified Anti-Money Laundering Specialists (ACAMS), 43
- Association of Certified Fraud Examiners (ACFE), 42, 381, 460
- Association of International Certified Professional Accountants, 488
- Attempt and conspiracy, 101
- Attorney–client privilege, 79
- Attorney work-product privilege, 79
- Audio/electronic surveillance, 78
- Audit committees, 265
- fraud prevention and deterrence, 443
- B
- Backdoors, 419
- Background questions, 329
- Bad debts, 119
- Balance sheet, 88–89
- Balance sheet 2013–2018, 479
- Balance sheet adjustments
- Balkan organized criminal enterprises, 379
- Bank, credit card, and investment statements, 296–297
- Banking system in United States, 391–392
- Bank Issuer Model, 428
- Bank records analysis, 308–310
- Bank records method, 308
- Bankruptcy fraud, 401–403
- Bankruptcy loopholes, 101
- Bank Secrecy Act (BSA), 386, 389
- Basic accounting principle, 86–88
- Batch controls, 355
- Bearer securities, 397
- Before and after method, 470
- Behavioral red flags, 58, 269–270
- Behavior blocking scanners, 422
- Below-market discount methods, 500
- Benchmark admission, 341
- Benchmark (“Yardstick”) method, 470
- Benford’s Law, 362
- Best evidence rule, 82
- Bid pooling, 201
- Bid-rigging schemes
- Billing schemes
- fraud prevention
- Bitcoin, 415
- Black Market Peso Exchange, 393
- Blank checks, 161
- Blockchain, 410, 415
- Bluetooth-enabled wireless credit card skimmers, 129
- Board of Directors, 265, 442
- Bogus supporting documents, 168
- Bonds, 522
- Book value, 483
- Boot sector viruses, 420
- Borrowing, 56
- Breach, 50
- Breach of duty, 50–51
- Bribery
- C
- Capital asset pricing model (CAPM), 485
- Capitalized earnings, 485
- Capitalized expenses, 237
- Careers, 36–37
- ACAMS, 43
- American Institute of Certified Public Accountants, 42–43
- Association of Certified Fraud Examiners, 42
- background, 36
- corporate governance, 40–42
- criminology, 38
- education, 45–47
- Forensic CPA Society, 43
- government and nonprofits, 37–38
- information systems and computer forensics, 39–40
- Information Systems Audit and Control Association, 43–44
- Institute of Internal Auditors, 44
- intelligence, 38
- International Fraud Examination and Financial Forensics, 45
- law enforcement agencies, 38
- law firms, 38
- professional services firms, 37
- psychology, 38
- public and private companies, 37
- regulatory agencies, 37
- role of research in a profession, 47
- Society of Financial Examiners, 44–45
- sociology, 38
- Case-by-case method, 500
- Case management software
- CaseMap®, 373
- Cash
- Cash larceny schemes
- Cash register manipulation, 113–114
- Cash T account, 310–311, 313
- Casinos, 396
- Cause in fact, 50
- Cell phone, 399
- Central banks, 392
- Certified Anti-Money Laundering Specialist (CAMS), 43
- Certified Fraud Examiner (CFE), 42
- Certified in Financial Forensics (CFF), 43
- Certified Information Security Manager (CISM), 44
- Certified Information Systems Analyst (CISA), 44
- Certified Information Technology Professional (CITP), 43
- Certified Internal Auditor (CIA), 44
- Certified Valuation Analyst (CVA), 44
- credential, 460
- Chain letters, 425
- Chain of custody, 82
- Change detection scanners, 422
- Channel stuffing, 234
- Charge accounts, 151
- Check-for-currency substitutions, 115
- Check tampering schemes
- Chief executive officer (CEO), 6, 94, 97, 219, 382
- Chief financial officer (CFO), 6, 94, 97, 219, 382
- Chief operating officer (COO), 382
- Children, injuries, 505
- Churning, 404
- City government, 313
- Civil certifications, 98
- Civil justice system
- Civil liability whistleblower protection, 100–101
- Civil litigation, 50–51, 439, 523
- Clark, John P., 60–62
- Clearing House Interbank Payments System (CHIPS), 394
- Closed questions, 330
- Closing questions, 332–333
- Coal Expert Report, 477
- Coal mining expert, 481
- Codes of ethics for senior financial officers, 100
- Collection ratio, 246
- Collusion
- among multiple individuals, organizations, or jurisdictions, 380–381
- Combating internet fraud, 426
- Commercial banks, 392
- Commercial bribery, 195
- Commercial damages
- accounting methods, 466
- application, 477–482
- business and organization types, 465
- capital structure ratios, 469
- causality, 466
- communication and defending, 477
- critical thinking skills, 466
- economic framework, 467–469
- economic loss/restitution damages, 467
- financial profitability, 465
- financing cash flow assessment, 469
- Genuine’s claim for damages, 479
- historical performance and financial conditions, 468
- incremental costs determination, 471–472
- legal framework, 466
- liability, 466
- loss period, 467
- lost profits determination, 470
- lost revenues quantification and increased expenses, 469–470
- nonfinancial data, 468
- operational performance, 465
- Reliance damages, 467
- standard industrial classification code, 467
- time value of money, 476
- tort/breach of contract, 466
- types, 466–467
- valuation litigation engagements, 466
- variable cost application, 472–476
- Committee of Sponsoring Organizations’ (COSO) Enterprise Risk Management Framework (ERM), 103–104
- Common fraud schemes, 7–8
- Company-specific risk premium (RPu), 495–496
- Compensation orders, 522
- Compensatory damages, 467
- Complaints and pretrial activity, 84–85
- Complex frauds
- cyberspace, 426–427
- financial crimes
- bankruptcy fraud, 401–403
- Bank Secrecy Act, 389
- (UK) Bribery Act, 390–391
- conspiracy, 388
- drug trafficking, 383–384
- Foreign Corrupt Practices Act, 390
- mail fraud, 389
- money laundering, 385–387
- organized crime, 382–383
- Racketeering Influence and Corrupt Organizations Act, 387–388
- securities fraud, 403–404
- tax evasion and fraud, 399–401
- terrorist financing, 384
- USA Patriot Act, 388–389
- wire fraud, 389–390
- Computer Fraud and Abuse Act (CFAA), 412
- Computer-generated signatures, 157
- Computer virus, 420
- Concealed check schemes, 162–163
- Concealed liabilities and expenses, 236–237
- Concealed offshore financial accounts, transactions, and loans, 303–304
- Concealing Inventory shrinkage, 134–135
- Concealment, 69, 300
- Confessions, verbal, 341–342
- Confidential sources and informants, 299
- Confiscation orders, 522
- Conflicts of interest
- Conversion, 69
- Co-occupant consent rule, 80
- Cooper, Cynthia, 6, 250, 321
- Coordinate International Money Movement Regulations, 428–429
- Corporate governance, 536–537
- and fraud
- role of, 105
- Cost behavior
- Cost-benefit, 222
- Cost of equity, 476
- Costs of inventory misuse, 130
- Council of Europe Cybercrime Convention, 414
- Counterfeit checks, 155
- scams, 425
- County government, 313
- Courtesy discounts, 125
- Courts, fraud triangle, 287
- Crazy Eddie frauds, 9
- Credibility, 529–530
- Credit card, 296–297
- refunds, 187
- Cressey, Donald R.
- Crime
- financial
- bankruptcy fraud, 401–403
- Bank Secrecy Act, 389
- (UK) Bribery Act, 390–391
- conspiracy, 388
- drug trafficking, 383–384
- Foreign Corrupt Practices Act, 390
- mail fraud, 389
- money laundering, 385–387
- organized crime, 382–383
- Racketeering Influence and Corrupt Organizations Act, 387–388
- securities fraud, 403–404
- tax evasion and fraud, 399–401
- terrorist financing, 384
- USA Patriot Act, 388–389
- wire fraud, 389–390
- financial
- Criminal and civil court actions
- Criminal and civil litigation and internal controls, 30
- Criminal certifications, 97
- Criminal conspiracy, 50
- Criminal Investigations Division (CID), 399
- Criminal justice funnel, 75
- Criminal justice system, 75, 83–84
- Criminal prosecutions, 21
- Criminal sanction whistleblower protection, 101
- Criminology, 49
- Critical thinking, 22
- Cross-examination, 531–532
- Crowe’s Fraud Pentagon, 61–62
- Cryptocurrencies, 410
- Culture of Ethical Behavior, 437
- Currency Transaction Reports (CTRs), 299
- Current ratio, 245
- Cyber banks, 392
- Cybercrime, 39
- D
- Damages, 50. See also Commercial damages
- analysis of earnings losses, 499–503
- earnings losses, 498
- earnings losses analysis, 498–503
- employment earnings, 498
- injured children, homemakers and retired persons, 505
- life-care costs, 498
- lost employment benefits, 503–504
- lost nonmarket services, 504–505
- medical and life-care costs, 505
- medical costs, 498
- nonmarket services, 498
- personal injury, 498
- personal injury and lost compensation application, 505–512
- types, 498
- wrongful death and survival cases, 499
- Data leakage, 418
- Data restoring, 358–359
- Data security, 421–422
- Date functions, 362
- Daubert standard, 79–80
- Death by a thousand cuts, 124
- Debiting the wrong account, 119
- Debt to equity, 246
- Deception
- Decision making, evidence-based, 23
- DeKalb fraud scheme, 81
- Delays, 338
- Deleted emails, 358
- Deleted files recovery, 358
- Demonstrative evidence, 82
- Depersonalizing the victim, 340
- Deposition testimony, 480, 530
- Deposit lapping, 127
- Deposits in transit, 127
- Destroying or altering records of the transaction, 119–120
- Destruction of records, 126
- Deterrence, fraud, 273
- accounting personnel, 444
- anonymous communications, 444–445
- antifraud programs and controls, 442
- audit committee, 443
- board of directors, 442
- corporate leadership, 442
- early warning signals, 447–449
- efforts, 442
- environment, 437–438
- five-step approach, 439
- Fraud Action/Reaction AFTER Discovery, 446
- fraud risk management and compliance program, 445–446
- human resources, 444
- internal auditors, 443–444
- internal controls and fraud prevention efforts, 441
- leadership behavior, 442
- legal and compliance, 445
- line employees and staff, 445
- organizational leadership, 443
- perception of detection, 441–442
- risk management, 441
- Digital environment, 354–355
- data extraction and analysis software, 364–367
- data extraction and analysis software functions, 361–364
- framework for data extraction and analysis tools and techniques, 360–361
- Geek-olithic Era, 411
- IT audits and assurance activities, 356
- Neolithic Era, 411
- overview of information technology controls, 355–356
- Paleolithic Era, 410
- Direct examination, 530–531
- Discounted earnings or cash flows method (DCF), 484–485
- Disgorgement of bonuses, 102
- Dismantling organizations using asset forfeiture and seizure, 382
- Distributed Denial of Service (DDoS), 427
- Divorce, 303–304
- Documentary evidence, 296
- Document destruction, 101
- Dodd-Frank Wall Street Reform and Consumer Protection Act, 103
- Double-declining-balance method, 223
- Drug traffickers, 393
- Drug trafficking, 383–384
- Dummy company, 144
- Dumpster diving, 418
- Duplicate searches, 362
- Dupont Expression, 247
- Duty, 50
- Damages, 50. See also Commercial damages
- E
- Early warning signals, fraud deterrence program
- Earnings losses, 498
- Earnings management and fraud, 264–265
- Ebbers, Bernard, 217, 218
- Economic entity, 221
- Economic extortion, 205
- Economic framework for damages, 467–469
- Effective interviewing and interrogation, 76. see also Interrogations; Interviews
- admission-seeking questions, 336–337
- assessment questions, 333–336
- in cases of suspected fraud or corruption, 325
- closing questions, 332–333
- in fraudulent financial statement and tax return examinations, 325
- general approach to conducting, 326–327
- informational questions, 330–332
- introduction, 324–325
- introductory questions, 328–330
- Joe Wells’ ten commandments, 337–338
- judging deception, 344–348
- preparation and planning, 326
- steps in the admission-seeking, 338–344
- three stages of, 327–328
- of witnesses, 327
- Electronic commerce (E-Commerce), 424
- Electronic funds transfer (EFT), 87
- Electronic Signatures in Global and National Commerce Act (E-SIGN Act), 422
- E-mail, 299
- Employee, 49
- Employer–employee relationships, 54
- Employment Probability, 502
- EnCase, 357
- Encryption, 424
- Engagement, scope of the, 23
- Engineering studies, 472
- Enhanced financial disclosure requirements, 100
- Enhanced interrogation techniques, 323–324
- Enhanced penalties for white-collar crime, 101–102
- Erasable ink, 161
- Ethical problem solving approaches
- Ethics
- Eurasian criminal enterprises, 383
- Evidence, 292–293
- organizing and documenting work product, 294–295
- quality of, 293–294
- rules of, 81–83
- sources of the act, concealment, and conversion, 295
- bank, credit card, and investment statements, 296–297
- big data, data analytics, textual analysis, pattern recognition, and other digital tools, 299–300
- confidential sources and informants, 299
- CTRs, SARs, and FinCen 8300, 299
- documents, 296
- e-mail, text messages, social media, 299
- interviewing and interrogation, 298
- invigilation, 297–298
- other physical evidence, 300
- surveillance and covert operations, 298
- sources specific to concealment, 300–301
- sources specific to conversion
- concealed offshore financial accounts, transactions, and loans, 303–304
- databases, sources of information, and extra-organization intelligence, 312–316
- error/fraud, 303
- indirect methods of income reconstruction, 304–312
- Internet searching, 316–317
- locating hidden assets and unknown sources of income, 303
- F
- Facilitate International information sharing, 428
- Fact gathering, 328
- Fact witness, 520–521
- Failure to write down, 240
- Fair Labor Standards Act, 76
- Fair market value, 484
- Fake sale, 131
- Fake smiles, 345
- False expenses, 247
- False invoicing, 149–150
- False purchase requisitions, 151
- False refunds, 186–187
- False shipments of inventory and other assets, 133–134
- False voids, 187–188
- Falsified hours and salary, 172
- Falsifying incoming shipments, 133
- Family problems, 339
- Federal Bureau of Investigation (FBI), 414
- Federal government, 314–315
- Federal law enforcement agencies, 429
- Fictitious accounts receivable, 240
- Fictitious expense reimbursement schemes, 183–184
- Fictitious refunds, 186–187
- Fictitious revenues, 230–232
- Fictitious sales, 175–176
- and accounts receivable, 135
- Fictitious suppliers, 201
- Financial Accounting Standards Board (FASB), 90, 220
- Financial crimes, 412–413
- bankruptcy fraud, 401–403
- Bank Secrecy Act, 389
- (UK) Bribery Act, 390–391
- conspiracy, 388
- cyberspace, 426–427
- drug trafficking, 383–384
- Foreign Corrupt Practices Act, 390
- mail fraud, 389
- money laundering, 385–387
- organized crime, 382–383
- Racketeering Influence and Corrupt Organizations Act, 387–388
- securities fraud, 403–404
- tax evasion and fraud, 399–401
- terrorist financing, 384
- USA Patriot Act, 388–389
- wire fraud, 389–390
- Financial Crimes Enforcement Network (FinCen), 299
- Financial disclosures, 207
- Financial expert, 98–99
- Financial profiling, 304
- Financial Reporting Fraud (FRF). see Financial statement fraud
- Financial risk (leverage) analysis ratios, 91
- Financial Sector Assessment Program (FSAP), 428
- Financial statement analysis, 242–243
- Financial statement fraud, 218–220
- Financial transactions and financial statements, 464
- FinCen, 394
- FinCen Form 8300, 299
- Fixed-point surveillance, 77
- Flow diagram, 369–370
- “Following the money,” 521
- Force balancing, 119, 125
- Forecasting income and cash flows, 486–487
- Foreign Corrupt Practices Act (FCPA), 203–205, 390
- Foreign trusts, 425
- Forensic accountant, 519
- Forensic accounting, 426–427, 460, 461, 541
- AICPA Practice Aid 07-1, 462–465
- business operational settings, 462
- careers, 36–37
- ACAMS, 43
- American Institute of Certified Public Accountants, 42–43
- Association of Certified Fraud Examiners, 42
- corporate governance, 40–42
- criminology, 38
- education, 45–47
- Forensic CPA Society, 43
- government and nonprofits, 37–38
- information systems and computer forensics, 39–40
- Information Systems Audit and Control Association, 43–44
- Institute of Internal Auditors, 44
- intelligence, 38
- International Fraud Examination and Financial Forensics, 45
- law enforcement agencies, 38
- law firms, 38
- professional services firms, 37
- psychology, 38
- public and private companies, 37
- regulatory agencies, 37
- role of research in a profession, 47
- Society of Financial Examiners, 44–45
- sociology, 38
- Forensic and Valuation Services (FVS), 459
- Forensic Certified Public Accountant (FCPA), 43
- Forensic CPA Society (FCPAS), 43
- Forensic investigative techniques, 461–465
- confidential sources of information and evidence, 463
- financial condition and non-financial evidence, 464–465
- financial performance, 464–465
- financial transactions analysis, 464–465
- interviews of knowledgeable persons, 462–463
- laboratory analysis of physical and electronic evidence, 463
- physical and electronic surveillance, 464
- public document reviews and background investigations, 462
- undercover operations, 464
- Forfeiture, 522
- Forged endorsement schemes, 157–160
- Forged maker schemes, 154–157
- Foundation for Fraud Prevention and Deterrence, 436–438
- Fraud
- cost of, 13
- criminal history of the perpetrators, 17–18
- earnings management and, 264–265
- effect of age on median loss, 17
- effect of collusion on median loss, 17
- effect of education on median loss, 17
- effect of gender on median loss, 16–17
- effect of position on median loss, 16
- elements of, 291
- examination, 11
- impact of antifraud measures on median loss, 20
- interviews in cases of, 325
- investigations centered on the elements of, 24
- legal elements of, 4–6
- mail, 389
- mail and wire, 50, 101
- major categories of, 6
- management, 238
- median loss based on size of the organization, 19–20
- median loss based on type of organization, 19
- methodologies used in fraud examinations, 26–28
- Fraud Action/Reaction AFTER Discovery, 446
- Fraud detection, 273
- accounting anomalies, 271–272
- analytical anomalies, 270
- behavioral red flags, 269–270
- internal control environment, 268–269
- internal control irregularities and weaknesses, 273–274
- power of nonfinancial numbers, 274
- red flags, 274–275
- social media, 266–267
- tips and complaints, 269
- understanding the business, 267–268
- use of red flags, 269
- Fraud deterrence, 273
- accounting personnel, 444
- anonymous communications, 444–445
- antifraud programs and controls, 442
- audit committee, 443
- board of directors, 442
- corporate leadership, 442
- early warning signals, 447–449
- efforts, 442
- environment, 437–438
- five-step approach, 439
- Fraud Action/Reaction AFTER Discovery, 446
- fraud risk management and compliance program, 445–446
- human resources, 444
- internal auditors, 443–444
- internal controls and fraud prevention efforts, 441
- leadership behavior, 442
- legal and compliance, 445
- line employees and staff, 445
- organizational leadership, 443
- perception of detection, 441–442
- risk management, 441
- Fraud examiner, 525–526
- Fraud prevention, 273
- billing schemes, 451–452
- bribery associated with kickbacks and bid rigging, 453
- cash larceny, 451
- check tampering, 452
- corruption, bribery associated with kickbacks and bid rigging, 453
- environment, 437–438
- expense reimbursement schemes, 453
- five-step approach, 439
- noncash misappropriation of assets, 451
- payroll schemes, 452–453
- register disbursements, 453
- skimming, 450–451
- tools and techniques, 450
- Fraud risk management and compliance program, 445–446
- Fraud risk universe, 260
- Frauds
- bankruptcy fraud, 401–403
- Bank Secrecy Act, 389
- (UK) Bribery Act, 390–391
- conspiracy, 388
- drug trafficking, 383–384
- Foreign Corrupt Practices Act, 390
- mail fraud, 389
- money laundering, 385–387
- organized crime, 382–383
- Racketeering Influence and Corrupt Organizations Act, 387–388
- securities fraud, 403–404
- tax evasion and fraud, 399–401
- terrorist financing, 384
- USA Patriot Act, 388–389
- wire fraud, 389–390
- Fraud Tree, 8, 111
- Fraud triangle, 275
- Fraudulent checks, 157
- Fraudulent financial reporting
- Fraudulent financial statement
- interviews, 325
- schemes, 228–229
- concealed liabilities and expenses, 236–237
- costs of, 229–230
- definition, 229
- detection of, 242–249
- deterrence of, 249–252
- fictitious revenues, 230–232
- improper asset valuation, 239–242
- improper disclosures, 237–239
- Snap-on, 234–235
- subscription pricing and revenue recognition, 235
- timing differences, 232–234
- G
- Garden variety fraudster, 48
- Geek-olithic Era, 411
- Gender, 59–64
- Generalization principle, 435
- General ledger, 302, 362–363
- Generally accepted auditing standards (GAAS), 11
- Genuine Coal Corporation, 477
- Genuine financial need, 340
- Genuine financial performance analysis, 480–481
- Genuine’s clean ton production, 482
- Get-rich-quick, 424
- Ghost employee, 169–172
- H
- Hamada adjustment, 486
- Hardware, 421–422
- Harmonize, 428–429
- Harper, Jacqueline, 532–533
- Hassell, Jonathan, 415
- Hawala dealer, 392–393
- Heitger, Les, 523–524
- Heuristic scanners, 422
- High to low method, 472
- Historical cost, 221–222
- Hollinger, Richard C. and Clark, John P./Hollinger-Clark study, 60–62
- Homemakers and retired persons, injuries, 505
- Horizontal ratio analysis, 362
- HTTP exploits, 419
- Human factor, 210
- I
- IDEA data analysis software, 364–366
- Identity Fraud Survey, 423–424
- IIA Practice Advisories 1210.A1 and 1210.A2, 104–105
- Illegal activities
- Improper disclosures, 237–239
- Income reconstruction, 304–312
- Income statement, 89
- Income statement adjustments
- Income statements 2009–2013 and 2014–2018, 479
- Incremental costs determination, 471–472
- Incremental revenues, 471–472
- Independent businessmen, 56
- Industry practice, 222
- Influence of the organization, 59–64
- Informal value transfer system (IVTS), 397–398
- Informational questions, 330–332
- Information Sharing and Analysis Center (ISAC), 428
- Information Systems Audit and Control Association (ISACA), 43–44
- Initial Coin Offerings (ICOs), 410
- Injured homemakers and retired persons, 505
- Insider threats, 417
- Insider trading, 404
- Institute of Internal Auditors (IIA), 44
- Insurance, 522
- Insurance industry, 396–397
- Intent, 343
- Intercepted check schemes, 167
- Internal auditors, 266
- fraud prevention and deterrence, 443–444
- Internal control irregularities and weaknesses, 273–274
- Internal fraud, 7
- Internal Revenue Service (IRS), 75, 399
- Internal Revenue Service and the Securities and Exchange Commission, 422
- International Fraud Examination and Financial Forensics, 45
- International Monetary Fund (IMF), 428
- International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, 388
- International money movement, 393–394
- Internet auction fraud, 426
- Internet-based retailers (ISPs), 419
- Internet Crime Complaint Center (IC3), 429
- Internet fraud
- Internet Fraud Watch (IFW), 423
- Internet of Things (IoT), 412
- Internet searching, 316–317
- Interrogations. see also Effective interviewing and interrogation; Interviews
- admission-seeking questions, 336–337
- assessment questions, 333–336
- closing questions, 332–333
- informational questions, 330–332
- introduction to, 324–325
- introductory questions, 328–330
- judging deception, 344–348
- preparation and planning, 326
- steps in the admission-seeking interview, 338–344
- two stages of, 328
- Interruptions, 338–339
- Interviewing and interrogation, 298
- Interviews, 76
- admission-seeking questions, 336–337
- assessment questions, 333–336
- in cases of suspected fraud or corruption, 325
- closing questions, 332–333
- in fraudulent financial statement and tax return examinations, 325
- general approach to conducting, 326–327
- informational questions, 330–332
- introduction, 324–325
- introductory questions, 328–330
- Joe Wells’ ten commandments, 337–338
- judging deception, 344–348
- preparation and planning, 326
- steps in the admission-seeking, 338–344
- three stages of, 327–328
- of witnesses, 327
- L
- Lack of conscience, 61
- La Cosa Nostra (LCN), 379
- Lanza, Richard B., 210
- Lapping, 118
- Larceny. see also Cash larceny
- Leadership, 29–30
- Leading questions, 331
- Legal and compliance, fraud prevention and deterrence, 445
- Legal elements of fraud, 4–6
- Legal methods, recovery of assets, 522–5223
- Lessons learned, 541
- LexisNexis CaseMap, 373
- Liability/expense omissions, 237
- Liability omissions, 238
- Life Probability, 502
- Lifestyle analysis, 307–308
- Lifestyle probe, 307
- Limited-value purchase orders (LPOs), 148
- Line employees and staff, fraud prevention and deterrence, 445
- Link charts, 368–369
- Liquidation value, 483
- Liquidity ratios, 91
- Litigation advisory
- Logic bomb, 418
- Long-term assets, 240–241
- Long-term contracts, 234
- Long-term violators, 56–57
- Looping. See Network weaving
- Losses
- earnings losses analysis, 498–503
- injured children, homemakers and retired persons, 505
- life-care costs, 498
- lost employment benefits, 503–504
- lost nonmarket services, 504–505
- medical and life-care costs, 505
- medical costs, 498
- nonmarket services, 498
- personal injury, 498
- personal injury and lost compensation application, 505–512
- wrongful death and survival cases, 499
- Lost employment benefits associated with lost earnings, 503–504
- Lost nonmarket services analysis, 504–505
- Lost profits determination, 470
- Lost revenues quantification and increased expenses
- LPE system, 502
- M
- Macro virus, 419–420
- Madoff Ponzi scheme, 403–404
- Mail fraud, 50, 101, 389
- Management fraud, 238
- Management information systems (MIS), 87
- Mandatory audit partner rotation, 99
- Manually prepared timecards, 173
- Map global payment systems, 428
- Marital privileges, 79
- Market and accounting-based comparables models, 488
- Market manipulations, 404
- Market value, 484
- Marks, Jonathan T., 533–535
- Master Analyst in Financial Forensics (MAFF), 44
- Matching concept, 222
- Matching revenues with expenses, 232–233
- Materiality, 82, 222, 263–264
- McKinsey on Payments, 415
- Median loss
- Medical and life-care costs analysis, 505
- Memory cards, 424
- Merchant Issuer Model, 428
- Meta-model, 68–70
- M.I.C.E. (money, ideology, coercion, and ego), 65
- Microsoft Visio, 372
- Mid-and lower-level employees, 219
- Middle Eastern crime, 383
- Minor moral infraction, 340
- Miranda warnings, 76, 337
- Miscellaneous privileges, 79
- Mischaracterized expense reimbursements, 180–182
- Misuse/misappropriation of a customer’s security, 404
- Misuse of noncash assets, 129–130
- Mixed systems and system interfaces, 116
- mobile payment systems, 416
- Mobile surveillance, 77
- Modem hijacking, 425
- Monetary remuneration, 520
- Monetary unit, 221
- Money
- N
- National Association of Certified Valuation Analysts (NACVA), 44, 460, 482, 488
- Negotiated settlements, 85
- Neolithic Era, 411
- Network security, 422
- Network viruses, 420–421
- Network weaving, 418–419
- Net worth method, 305–307
- Nodding Chicken, 532
- Nonaccomplice vendors, 147–148
- Nonbank Issuer Model, 428
- Noncash assets, misuse of, 129–130
- Noncash misappropriation schemes
- O
- Off-balance sheet transactions, 100
- Offshore banks, 392
- Open questions, 330
- Operating efficiency ratios, 91
- Operating profitability ratios, 91
- Optical character recognition (OCR), 300
- Organizational compliance protocol, 440
- Organizational controls and deviance, 62–63
- Organizational crime, 49–50
- Organizational leadership, fraud prevention and deterrence, 443
- Organizational role
- P
- Paleolithic Era, 410
- Parasitic viruses, 420
- Parking, 404
- Parole, 82
- Participant Probability, 502
- Pass-through schemes, 145
- Passwords, 421–422
- Patriot Act, USA, 388–389
- Pay-and-return schemes, 147
- Payroll, 363
- Payroll schemes
- Peer-to-Peer Model, 428
- “Penny stocks,” 410
- Perceived opportunity, 54–56, 60
- Perceived pressure, 54
- Perception of detection, 63
- Performance assessment and decision making, 91–92
- Periodicity, 221
- Personal failures, 53
- Personal injury and lost compensation application
- Personal integrity, 59–64
- Personal purchases with company funds, 148–149
- altering existing purchase orders, 150
- charge accounts, 151
- credit cards or other company accounts, 151
- false purchase requisitions, 151
- falsifying documents to obtain authorization, 150
- fraudster as authorizer of invoices, 150
- preventing and detecting, 152–153
- returning merchandise for cash, 151
- through false invoicing, 149–150
- Pharming, 425–426
- Phishing, 425
- Photocopied forgeries, 156–157
- Physical evidence, 300
- Physical isolation, 53
- Physical padding, 135–136
- Physician–patient privilege, 79
- Physiology of deception, 344–345
- Piggybacking, 418
- Polymorphic viruses, 420
- “Ponzi” scheme, 404, 425
- Poor collection procedures, 114–115
- Poor custody procedures, 174
- Practicing professionals, 460
- Predatory vs. situational fraudsters, 65–67, 379–380
- Predication, 289–290
- Prejudgment interest, lost incremental profits, 476
- Pretrial motions and the civil trial, 85–86
- “Prime Bank” fraud, 404
- Prime bank note, 425
- Primrose Path, 532
- Private banks, 392
- Privilege escalation exploits, 419
- Privileges, 78–80
- Proactive fraud policies, 212
- Probable cause, 80–81
- Processor cards, 424
- Production deviance, 60
- Professional conduct, 93, 436
- Professional skepticism, 22
- Professional standards
- Profit margin, 246
- Pro forma financial information, 100
- Prohibitions on personal loans to executives, 100
- Protections for corporate whistleblowers under Sarbanes–Oxley, 100–101
- Proximate cause, 50
- Public Company Accounting Oversight Board (PCAOB), 75, 102–103
- Public key infrastructure (PKI), 428
- Public vs. private company financial reporting fraud, 220
- Punishment, 30, 38, 49, 57, 62, 75, 84, 212, 423
- Punitive damages, 467
- Purchasing, 363
- R
- Racketeer Influenced and Corrupt Organizations (RICO) Act, 50, 66, 387–388
- Rates of pay, 174
- Ratio analysis, damages
- Recidivism, 83
- Reconciling items, 302
- Record selection and extraction, 361
- Record validation, 355
- Recovery
- Register disbursement schemes
- Register tapes destruction, 125
- Regulatory system, 92
- AICPA and Statement on Auditing Standards No. 99, 92–94
- Committee of Sponsoring Organizations’ Enterprise Risk Management Framework, 103–104
- Dodd-Frank Wall Street Reform and Consumer Protection Act, 103
- enhanced financial disclosure requirements, 100
- enhanced penalties for white-collar crime, 101–102
- IIA Practice Advisories 1210.A1 and 1210.A2, 104–105
- protections for corporate whistleblowers under Sarbanes–Oxley, 100–101
- Public Company Accounting Oversight Board, 102–103
- Sarbanes–Oxley Act of 2002, 94–99
- Related-party transactions, 238
- Relevance and reliability, 223
- Reliance damages, 467
- Remediation, 519
- fraud, 21
- Rental skimming scheme, 111
- Resource diversions, 207
- Restoring data, 358–359
- Restraining orders, 521
- Restrictions on insider trading, 100
- Return on assets (ROA), 247
- Return on equity (ROE), 247
- Returns and allowances and warranties, 237
- Revenge, 340
- Revenue recognition, 222, 233–236
- Reversing entries, 125
- Reversing transactions, 124
- Rights of individuals, 75–76
- S
- Sales skimming, 112–113
- after-hours sales, 114
- big data and data analytics, 117
- cash register manipulation, 113–114
- check-for-currency substitutions, 115
- mixed systems and system interfaces, 116
- poor collection procedures, 114–115
- preventing and detecting, 116–117
- skimming by off-site employees, 114
- theft in the mailroom-incoming checks, 116
- understated sales, 115
- Sarbanes-Oxley Act (2002) (SOX), 6, 75, 94–99, 273
- SAS No. 99/SAS No. 113, 262–263
- Satyam fraud, 259–260
- Scavenging, 418
- Schedule M, 302
- Searches, 77
- Search warrant, 80–81
- Securities fraud, 101, 403–404, 425
- Senior management, 219
- Sensitive questions, 332
- Shadowcrew, 427
- Shadow economy, 415
- Shell companies, 395–396
- Shell company schemes
- collusion, 145
- employee identification, 147
- false invoices, 144
- formation of, 143–144
- invoice identification, 145–146
- pass-through schemes, 145
- preventing and detecting, 145
- purchase of services rather than goods, 145
- reliance on false documents, 144
- “rubber-stamp” supervisors, 144
- self-approval of fraudulent invoices, 144
- testing, 146–147
- verification of existence, 147
- Slush funds, 198
- Smart card, 424
- Snap-on, 234–235
- Social engineering, 418
- Social media, 266–267, 299
- Society for Worldwide Interbank Financial Telecommunications (SWIFT), 394
- Society of Financial Examiners (SOFE), 44–45
- Software, 421–422
- Sorting, 361
- Sources of information, 312–316
- Spamming, 425
- Spear phishing, 425
- Special loss, 413–414
- Special-purpose entities (SPEs), 241
- Stash houses, 393
- State government, 314
- Statement of cash flows, 89–90
- Statement on Auditing Standards (SAS), 11
- Statement on Auditing Standards (SAS) No. 99, 92–94
- Statement on Auditing Standards (SAS) No. 99/No. 113, 229
- Statement on Standards for Valuation Services (SSVS), 488
- Statements of Financial Accounting Standards (SFASs), 90
- Statistical methods, 472
- Status gaining, 54
- Stealth viruses, 420
- Stockholders’ equity, 305
- Stolen statements, 119
- Straight-line depreciation, 223
- Stress, drugs, alcohol, 339
- Subpoena, 81
- Subscription pricing, 235–236
- Subsequent events, 238
- Surprise audits, 213
- Surveillance, 77–78
- Surveillance and covert operations, 298
- Suspected fraud, 325
- Suspected wrongdoer, 78
- Suspicious Activity Reports (SARs), 299
- Sutherland, Edwin H., 49, 51, 380
- Sales skimming, 112–113
- T
- Tableau, 372
- Targeted fraud risk assessment
- Tax evasion and fraud, 399–401
- Tax return examinations, 325
- Tax returns, 302–303
- Teamwork, 29–30
- Technical skill, 55
- Tequila virus, 420
- Terminate and Stay Resident (TSR) viruses, 420
- Terrorism triangle, 385
- Terrorist financing, 384
- Terrorist organization, 379
- Tesco Bank, 415
- Testimonial evidence, 82
- Text messages, 299
- Theft
- Time clocks and other automated timekeeping systems, 174
- Timelines, 370–371
- Time value of money, 476
- Timing differences, 232–234
- Torts, 50–51
- Total-offset method, 501
- “Tracing the money,” 521
- Tracking/case management system, 446
- Trade-based money laundering (TBML), 395
- Traditional scanners, 422
- Transactions and balances exceeding expectations, 362
- Transparent disclosure, 222
- Tranto, Nick, 410
- Trap doors, 418
- Triangle, fraud, 275
- U
- UK Bribery Act, 390–391
- Unconcealed larceny schemes, 130–132
- Underbillings, 207
- Underhill, Jordan, 410
- Understated sales, 115
- Unfair treatment, 339
- Unknown sources of income, 312
- Unsuitable recommendations, 404
- USA Patriot Act, 388–389
- U.S. banking system, 391–392
- U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), 303
- U.S. Securities and Exchange Commission (SEC), 75
- Utilitarian principle, 435
- V
- Validation controls, 355
- Valuation calculations
- build-up method, 496
- capitalization of earnings capitalization rate, 495
- company-specific risk premium, 495–496
- conclusion of, 497–498
- discount for lack of control, 497
- earnings benefit stream capitalization, 495
- earnings indicated value capitalization, 496
- equity risk premium, 495
- excess/nonoperating assets, 497
- lack of marketability, 497
- risk-free rate, 495
- Valuation discounts and premiums, 488
- Valuation engagements
- application, 488–492
- asset transfers, 483
- asset valuation models, 487
- balance sheet adjustments, 492–493
- capitalized earnings, 485
- competitive environment, 482
- conclusion of, 488
- convertible debt, 488
- discounted earnings and cash flows, 484–485
- discounts and premiums, 488
- economic and industry conditions, 482
- fair market values, 484
- forecasting income and cash flows, 486–487
- income statement adjustments, 493–494
- intangible assets, 488
- market and accounting-based comparables models, 488
- market values, 484
- measures of, 483–484
- ownership and control rights, 484
- preferred stock, 488
- risk-adjusted discount/capitalization rate, 485–486
- Rosewood’s historical balance sheet assets, 490–492
- stock, 488
- tax situations, 483
- transaction and litigation, 483
- types, 483
- valuation calculations, 494–498
- valuing debt, 488
- warrants, 488
- Variable cost application, 472
- Venture capital investment deals, 476
- Verbal and nonverbal behavior, 331
- Verbal confession, 341–342
- Verbal cues to deception, 345–346
- Vertical ratio analysis, 362
- Videography, 78
- Violation of ascribed obligations, 53–54
- Violations, corporate, 66
- Virtual currencies, 415
- Virtual money, 398–399
- Viruses
- Z
- “Zapping” money, 411
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