Forensic Accounting and Fraud Investigation for Non-Experts

Preface xiii Acknowledgments xv PART I FORENSIC ACCOUNTING AND FRAUD OVERVIEW 1 CHAPTER 1 Forensic Accounting 3 What Is Forensic Accounting? 3 Why Has Forensic Accounting Become the Buzz? 4 Introduction to a Profession 5 Applications for Forensic Accounting 6 A Third Dimension: Contexts within Each Area of Specialization 11 Conclusion 14 Suggested Readings 15 Notes 15 CHAPTER 2 Fraud in Society 17 What Is Fraud? 17 Types of Fraud 21 Other Types of Financial Fraud 25 Sarbanes-Oxley 27 What the Numbers Tell Us about Fraud 28 Categories of Occupational Fraud 29 Drawing Conclusions 31 Society's Perception of Fraud 32 Who Commits Fraud?--Profile of the Typical Fraudster 33 The Social Consequences of Economic Crime 39 Conclusion 39 Suggested Readings 40 Notes 40 CHAPTER 3 Understanding the Basics of Financial Accounting 43 Where It All Begins 43 The Five Accounting Cycles 46 Journals: Subsidiary and General 54 Conclusion 56 Suggested Readings 56 Note 57 CHAPTER 4 Forms of Entities 59 Basics of Business Structures 59 Sole Proprietorships 60 Partnerships 60 Corporations 63 Business Enterprises in the Global Environment 66 Conclusion 70 Suggested Readings 70 Notes 72 CHAPTER 5 Fundamental Principles of Financial Analysis 73 Good Analysis = Due Diligence? 73 Why Perform Financial Analysis? 76 What and Whom Can You Trust? 76 Other Factors to Consider 77 Financial Analysis for the Non-Expert 78 To the Future 85 Conclusion 86 Suggested Readings 87 Notes 87 CHAPTER 6 The Role of the Accounting Professional 89 The Importance of Accounting Professionals in the Investigation 89 The Audit Process 93 Internal Controls 98 Conclusion 101 Notes 101 PART II FINANCIAL CRIME INVESTIGATION 103 CHAPTER 7 Business as a Victim 105 Introduction 105 Employee Thefts 106 Fraudulent Billing Schemes 112 Fraud Committed by Outsiders 113 Management Thefts 114 Corporate Thefts 117 Identity Theft 118 Conclusion 120 Suggested Readings 120 Notes 120 CHAPTER 8 Business Villains 123 Introduction 123 Organized Crime and Business 123 Money Laundering 130 Conclusion 137 Suggested Readings 138 Notes 139 CHAPTER 9 The Investigative Process 143 Introduction 143 Case Initiation 144 Case Evaluation 145 Solvability Factors 147 Goal Setting and Planning 148 Investigation 156 Background 158 Conclusion 166 Suggested Readings 167 Notes 167 CHAPTER 10 Interviewing Financially Sophisticated Witnesses 169 Introduction 169 The Interview 170 Interviewing Financially Sophisticated Witnesses 185 Conclusion 188 Suggested Readings 189 Notes 190 CHAPTER 11 Proving Cases through Documentary Evidence 193 Introduction 193 Document Collection 194 Document Organization 207 The Process of Proof 211 The Logic of Argument 213 Proof through Inference 217 Conclusion 221 Suggested Readings 222 Notes 224 CHAPTER 12 Analysis Tools for Investigators 227 Introduction 227 Why Use Analysis Tools at All? 227 Associational Analysis 229 Temporal Analysis 246 Conclusion 252 Suggested Readings 252 Notes 253 CHAPTER 13 Inferential Analysis 255 Introduction 255 How Inferential Analysis Helps 255 What Is an Inference Network? 256 Investigative Inference Analysis 259 The Key List 263 Constructing an Investigative Inference Chart 264 Plotting the Chart 268 Some Tips for Charting Success 272 Applying the Chart to the Investigative Process 273 Conclusion 275 Suggested Readings 275 Notes 277 CHAPTER 14 Documenting and Presenting the Case 279 Introduction 279 Creating a System 279 The Casebook System 280 Report Writing 287 Testifying as a Financial Expert 290 Conclusion 305 Suggested Readings 305 Notes 306 About the Authors 309 Index 311