Accounts receivables, 16
American Institute of Certified Public Accountants (AICPA), 4
Antifraud role, 8
correction mechanisms, 101–103
private-sector investigators, 99
public-sector investigator, 99
of short sellers, 97
Artificial neural networks (ANNs), 28
accounts receivables, 16
cash schemes, 16
employee fraud and theft, 17–18
fixed assets schemes, 16
inventory, 16
Association of Certified Fraud Examiners (ACFE), 10, 71, 149
Association of Chartered Certified Accountants (ACCA), 114
Audit risk (AR) model, 37
Benford’s law, 27
Block-chain technology, 150
Board of directors, antifraud role of, 83–87
computer-mediated technique, 21
mind-mapping, 21
open-ended technique, 21
strategic reasoning, 21
Bribery, 149
Cash schemes, 16
Certified Forensic Accounting Credential (CFAC), 2
Certified Fraud Examiner (CFE), 2, 98, 115
Certified in Financial Forensics (CFF), 2
Certified Public Accountants (CPA), 2
Certified Valuation Analyst (CVA), 2
Challenges in forensic accounting, 113–138
corporate governance challenges, 125–128
antifraud program and plan, 134–135
enterprise risk management (ERM), 135–136
financial fraud investigation, 115–120
internal control reporting, 132–133
XBRL-generated financial reports, 136–137
investment decisions by investors, 126
power-sharing, 127
sustainability reporting and assurance, 130–131
Committee of Sponsoring Organizations (COSO), 56–57
Committee of Sponsoring Organizations of the Treadway Commission (COSO), 8, 41
Computer-mediated brainstorming, 21–22
Concealed liabilities, 9, 11–12
Conditions, corporate structure, and choice (3Cs), 66
Control risk (CR), 38
Corporate gatekeepers role in FSF, 83–106
market correction mechanisms, 101–103
private-sector investigators, 99
public-sector investigator, 99
short sellers, 97
to narrow expectation gap, 95
Corporate governance
fraud, forensic accountants role in, 55–108. See also financial statement fraud (FSF)
detecting and preventing, 55–108
Cressey, Donald, 3
Cut-off fraud, 10
Demonstrative evidence, 20
Detection risk (DR), 38
Dundas BI, 124
IBM Cognos Analytics, 124
Microsoft SharePoint, 124
Direct evidence, 19
Documents, 3
Dodd–Frank (DOF) Act of 2010, 129
Dundas BI, 124
Economic, governance, social, ethics, and environmental (EGSEE), 131
Electronic Data Gathering, Analysis, and Retrieval (EDGAR), 136
Emerging issues in fraud investigation, 143–156
bribery, 149
fair value estimation, 145–146
Employee fraud and theft, 17–18
detection, 18
prevention, 18
Enterprise risk management (ERM), 135–136
Error or fraud, 92
demonstrative, 20
direct, 19
planning and preparation, 20–21
reporting, and court proceedings, 21
real or physical, 20
testimonial, 19
Evidence-gathering methods, 21–30
artificial neural networks (ANNs), 28
Benford’s law, 27
computer-mediated technique, 21–22
forensic data analytics, 28
open-ended technique, 21
red flag identification, 22–24. See also individual entry
strategic reasoning, 21
Extensible business reporting language (XBRL), 136–137
External auditors, antifraud role of, 91–97
Federal Deposit Insurance Corporation (FDIC), 136
Federal Financial Institutions Examination Council (FFIEC), 153
Federal Rules of Evidence, 45–46
Financial Accounting Standards Board (FASB), 144–145
Financial fraud investigation, 115–120
Financial reporting analysis, 26
common size, 26
trend analysis, 27
Financial reporting fraud (FRF), 6–8
accountability element of, 7
Financial statement fraud (FSF), 56–71, 114. See also under corporate gatekeepers role
actions, 119
consequences, 119
elements, 118
The Act, 120
The Concealment, 120
The Conversion, 120
forensic accountants’ role, 59
functions, 119
occurrences, reasons for, 58
conditions, corporate structure, and choice (3Cs), 66
prevention, detection, and correction, 78–80
schemes, 70
Fixed assets schemes, 16
Foreign Corrupt Practices Act (FCPA), 149
Forensic Certified Public Accountant (FCPA), 2
Forensic data analytics, 28
economic incentives, 8
fraud diamond, 5
fraud triangle, 4
fraud-on-the-market theory, 101
Pentagon model, 5
Fraudulent misstatements, 9–14
concealed liabilities, 9, 11–12
improper asset valuation, 9, 13
Free of material misstatement, 92
Hermanson, D.R., 4
High-Risk Money Laundering and Financial Crimes Areas (HIFCAs), 148
IBM Cognos Analytics, 124
Improper asset valuation, 9, 13
Information technology, fraud and, 150–152
Inherent risk (IR), 37
Integrated financial and internal control reporting (IFICR), 132
Internal auditors, antifraud role of, 88–91
Internal control over financial reporting (ICFR), 132–133
International Standards Organization (ISO), 152
Inventory fraud schemes, 16
Investigative risk, 37
Investigative techniques, 44–51
Federal Rules of Evidence, 45–46
interrogation, 49
testifying experts, 45
Kedia, B., 7
Management, antifraud role of, 87–88
Market correction mechanisms, 101–103
Market, antifraud role of, 100–101
Matters Under Inquiry (MUI), 104
Microsoft SharePoint, 124
Misstatements, 9–18. See also fraudulent misstatements
fraudulent financial reporting, 9
misappropriation of assets, 9
National Money Laundering Strategy, 148
Opportunities in forensic accounting, 3, 5, 7, 113–138
Certified Fraud Examiner (CFE) certification, 115
SEC initiatives, 115
Tennessee Bureau of Investigation (TBI), 115
Pentagon model of financial reporting fraud, 5
Private-sector investigators, 99
Processes of forensic accounting, 1–31
Public Company Accounting Oversight Board (PCAOB), 14, 37, 93
Public-sector investigator, 99
Real/physical evidence, 20
Red flag identification, 22–24
change in behavior red flags, 23
employee red flags, 23
management red flags, 23
regression models, 24
Regression models, 24
Regulators, antifraud role of, 100–101
audit risk (AR) model, 37
control risk (CR), 38
detection risk (DR), 38
inherent risk (IR), 37
investigative risk, 37
Roles of forensic accounting, 1–31
documents, 3
witness statements, 3
Sarbanes–Oxley (SOX) Act, 12, 56
Securities and Exchange Commission (SEC), 19
Short sellers in discovering fraud, 97
Skepticism, 95
Special-purpose entities (SPEs), 145
Standard setters, antifraud role of, 100–101
Suspicious Activity Reports (SARs), 148
Sustainability reporting, 130–131
Techniques, forensic accounting, 35–53. See also investigative techniques; risk management
Testimonial evidence, 19
Thornton, Grant, 121
Vehicles of variable interest entities (VIESs), 145
Witness statements, 3
Wolfe, D.T., 4