The Handbook of Fraud Deterrence
Author: Harry Cendrowski
The Handbook of Fraud Deterrence encompasses the applicable professional standards and common applications for forensic accounting, fraud deterrence, and fraud investigation services. It is the first book that explains fraud deterrence through internal control improvement within the structure of forensic accounting procedures.
Table of Contents:
List of Exhibits xxiPreface xxiii
Acknowledgments xxv
Professional Environment of Fraud Deterrence 1
Fraud Deterrence as a Business Management Tool 3
Introduction 3
Motivations for Process Improvement and Monitoring 3
How the Mighty Have Fallen 5
Importance of Internal Controls in Dynamic External Environments 6
Environmental Change and Its Effect on the Fraud Triangle 7
Where Is Bedrock for Fraud Deterrence? 9
Conclusion 11
Definition of Fraud Deterrence 13
Overview 13
Deterrence Activities Will Affect Control Culture 14
History of Fraud Deterrence 15
Introduction 15
Early Fraud Deterrence 15
Modern Fraud Deterrence 16
The Role of Professional Standards 29
Introduction 29
PCAOB Standards 29
American Institute of Certified Public Accountants Auditing Standards 31
American Institute of Certified Public Accountants Accounting and Review Standards 38
Institute of Internal Auditors Standards 38
Associationof Certified Fraud Examiners Standards 39
Certified Fraud Deterrence Analyst-National Association of Certified Valuation Analysts 40
The Fraud Triangle 41
Overview 41
Elements 41
The Fraud Triangle and Financial Reporting Fraud 45
Motivations of Fraud Deterrence and the Transition to Investigation 47
Introduction 47
Motivations for Deterrence Analysis 48
Transition to Investigation 50
Conclusion 55
A Fraud Deterrence Professional's Overview of the Legal Process 57
Introduction and Objectives 57
Basics of Opinion Testimony and the Role of the Judiciary 57
Expert Qualification Standards: When Is a Witness an "Expert"? 59
Admissibility versus Weight: When Is an Expert's Opinion and/or Testimony Admissible? 60
Limitations on the Scope of Expert Opinion Testimony 63
Reports and Discovery Obligations 64
Conclusion 65
Human Resources Concerns 69
Retaliation: The Newest Wave of Employment Litigation 69
An Ounce of Prevention: Background Checks and Employment Inquiries Under the Fair Credit Reporting Act 79
Checklist for Complying with the FCRA When Using a Third Party to Obtain "Consumer Reports" 83
Conclusion 84
Selected Federal Whistleblower Statutes 85
The U.S. Equal Employment Opportunity Commission 86
Disclosure to Applicant Regarding Consumer Reports 103
Disclosure to Employee Regarding Consumer Reports 104
Sample Notice of Intent to Obtain an Investigative Consumer Report 105
Fair Credit Reporting Act 106
Sample Disclosure of Nature and Scope of Investigative Consumer Report 109
Sample Pre-Adverse Action Notice 110
Sample Adverse Action Notice 111
Applicant 112
Current Employee 113
Tools of Fraud Deterrence 117
Internal Control and Fraud Deterrence: The COSO Integrated Framework 119
Background 119
Control Environment 122
Information and Communication 126
Risk Assessment 128
Control Procedures 131
Monitoring 137
Recent Corporate Governance Reforms Enacted to Deter Financial Fraud: The Sarbanes-Oxley Act of 2002 and Related Rules and Regulations 143
Introduction 143
Board of Directors 148
Audit Committee 149
Management 152
Internal Auditors 153
Enforcement 154
Protections for Directors and Officers 154
Conclusion 155
Generation-X Technologies and Information Assurance 161
Overview 161
Do We Need a Paradigm Shift in Systems Assurance and Auditing? 161
Generation X Enterprise Technologies: State of the Art 162
Information Systems Integration: A Challenge 163
Assured Information Emanates from Assured Systems 166
Information Assurance: A Function of Strategic Importance 166
Various Information Assurance and Control Measures 170
British Standards: BS7799 and BS 7799-2:2002 173
System Security Engineering Capability Maturity Model: SSE-CMM 174
Conclusion 174
The Impact of Communications Infrastructure on Fraud Detection and Deterrence 177
Introduction 177
Fraud and Technology 177
Communication Security Solutions 178
Correlation 187
Process and Information Validation 189
Interview and Interrogation Process 189
Difference between Interview and Interrogation 190
Preparation and Room Setting 190
Interviewer/Interrogator Demeanor 193
Detecting Deception 195
Conducting the Interview 199
Interrogation 208
Structured Approach to the Interview and Interrogation of a Suspect in a Fraud Investigation 212
Conclusion 215
Forensic Document and Handwriting Examination 216
What Is a "Document"? 216
Forgery 217
Red Flags of Document Examination 218
Caution 219
Red Flags of Handwriting Identification 220
Suggested Reading 221
Data Analysis and Monitoring: How Effective Data Analysis Can Identify Fraud Risk Indicators and Promote Business Intelligence 223
Introduction 223
Data Basics 225
Information Systems 237
Generating Business Intelligence 244
What to Look for in Data Analysis Technology 247
Putting It All Together 248
Reporting 249
Introduction 249
Function of Fraud Deterrence Reports 249
Reporting on Internal Control 251
Reporting in an Investigation 254
Importance of Documentation 258
Conclusion 259
Applications of Fraud Deterrence 261
Deterring Fraudulent Financial Reporting and Asset Misappropriation 263
Introduction 263
Organizational (Corporate) Culture 264
Organizational (Corporate) Governance 266
Internal Controls for Deterrence 268
Deterrence Monitoring 268
Fraud and the Bankruptcy Code 271
Introduction 271
Bankruptcy Refuge for Fraudulent Actors 272
Bankruptcy Fraud 285
Fraudulent Transfer Statutes 296
Intentionally Fraudulent Transfers 302
Constructively Fraudulent Transfers 303
Application of Fraudulent Transfer Laws 306
Remedies for the Recovery of Fraudulent Transfers 311
Corporate Actors/Individual Liability 313
Conclusion 317
Uniform Fraudulent Conveyance Act and Uniform Fraudulent Transfer Act 318
Uniform Fraudulent Conveyance Act 320
Uniform Fraudulent Transfer Act 322
18 U.S.C. [Section Section] 152-157 328
11 U.S.C. [Section] 548. Fraudulent Transfers and Obligations 330
11 U.S.C. [Section] 522 Exemptions 333
11 U.S.C. [Section] 101(31). Definitions 336
Discovering and Preventing Fraud in Business Formation and Dissolution 351
Introduction 351
Fundamental Assessments 351
Factors Affecting Whether the Fraud Will Succeed 353
Informational Rights and Fraud 353
Approval Rights and Governance 354
Additional Drafting Solutions 355
Minimizing the Occurrence of Fraud 355
Discovery of Fraud 356
Remedies 356
Identity Theft and Privacy Protection 359
Introduction 359
Definition 360
Development of an Epidemic 361
The Outbreak and Law Enforcement 366
Protecting Personal Information 369
Detect Unauthorized Use 373
Defend and Regain Your Identity 374
Bulk Data Breaches 375
The Online Frontier of Phishing and Spoofing 378
Impact on Fraud Deterrence 380
Intellectual Property 383
Introduction 383
How to Tell When Your Company Has Intellectual Property 387
Basic Reasons for Protecting 389
Routine Protection 390
Policing Intellectual Property Rights 394
Possible Recoveries through Litigation 396
Conclusion 397
Fraud Deterrence in the U.S. Private Equity Finance System 399
Introduction 399
U.S. Private Equity System and Its Governance Structure 399
Foundations of a Fraud Deterrence System in Private Equity 405
Adoption of Internal Control Systems within the U.S. Private Equity System 408
Conclusions and Recommendations 413
Glossary of Terms 415
Index 423
Read also The Principles of Scientific Management or Start up Guide
Purchasing Population Health: Paying for Results
Author: David A Kindig
David Kindig's training as a physician, a health care executive, and his academic work in the field of health policy came together to inspire this innovative approach for extracting a higher quality of care at reasonable cost by establishing clear health outcomes measures as a purchasing standard.
Despite the massive resources it consumes, the American health care system remains under stress. While we are global leaders in technical accomplishments in medicine, the quality of health outcomes we achieve per dollar invested is far from optimal. Neither market nor regulatory reforms have addressed this failure of our system.
In the wake of the failed 1994 federal reform effort the system is changing without legislation through market forces. There is no evidence, however, that these changes are reducing costs, increasing quality, or covering the uninsured.
This book details how Dr. Kindig's plan could work and the stages of implementation. It concludes with an examination of the price of inertia in facing this long-standing problem.
This work will appeal to senior policymakers in the private and public sector, including legislators and staff, officials of corporations, and professional organizations. In addition, faculty and students in schools of medicine, nursing, public health, and business, as well as health services researchers and a sophisticated lay audience will find it interesting.
"...a major contribution to our understanding of the forces driving the health care system and the need to create the incentives for a healthier America in the 21st century." --Philip R. Lee, M.D., former Assistant Secretary for Health, Department of Healthand Human Services
David A. Kindig is Professor of Preventive Medicine, University of Wisconsin- Madison School of Medicine.
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