Self-Study
12
Overview
Accounting
There are no prerequisites.

Course Description

Each year, businesses around the world fall victim to fraudulent acts. This course is a practical reference for how to prevent, detect, and investigate fraud within a business. Topics covered include the different types of fraud and how to construct an environment in which fraud is minimized. In addition, this course describes the many indicators of fraud necessary for early detection as well as the process for investigating fraud, including interviewing techniques, document examination, and how to write a fraud report.



Instructor

Steven M. Bragg, CPA

Steven M. Bragg, CPA, is a full-time book and course author who has written more than 70 business books. He provides Western CPE with self-study courses in the areas of accounting and finance, with an emphasis on the practical application of accounting standards and management techniques. A sampling of his courses include the The New Controller Guidebook, The GAAP Guidebook, Accountants’ Guidebook, and Closing the Books: An Accountant’s Guide. He also manages the Accounting Best Practices podcast.

Steven has been the CFO or controller of both public and private companies and has been a consulting manager with Ernst & Young and an auditor with Deloitte & Touche. He holds an MBA from Babson College, a Master of Finance from Bentley College, and a BA from the University of Maine (summa cum laude).



Course Specifics

Accounting
Aug 24, 2018
There are no prerequisites.
SS1163437
222
None


Compliance Information

103220
Qualifies for CA Fraud: 12 CA Fraud


Learning Objectives

Upon successful completion of this course, participants will be able to:

Chapter 1

  • Recognize the conditions under which fraud is most common.
  • Cite the types of rationalization used for committing fraud.
  • Note the circumstances under which collusion is more likely to occur.
  • Note the different types of fraud as well as the individuals or entities that are harmed in the process.
  • Identify the activities in which a fraud examiner may be engaged.

Chapter 2

  • Note the methods used to falsify expense reports.
  • Recognize the different types of fraud related to each functional area of a business.
  • Recognize the various techniques used to falsely modify the financial statements.
  • Identify the goal of misreporting cash flows.

Chapter 3

  • Identify the positions most likely to be engaged in financial statement falsification.
  • Note the formula used to construct a balance sheet.
  • Note the components of the liquidity concept, including the sequencing.
  • Recognize the different types of analysis used to detect fraud.
  • Note the inter-relationships among accounts and the financial to non-financial comparisons that can be used to find instances of fraud.

Chapter 4

  • Recognize the methods available for reducing the perceived pressure on employees.
  • Identify the situations in which background checks should be used.
  • Identify the alternative responses to the discovery of fraud by an employee.
  • Cite the protective measures that an outside investor can use to protect himself against fraud.

Chapter 5

  • Note the policies most useful for preventing fraud.
  • Identify the uses to which the dual custody concept can be put.
  • Recognize the negative effects of installing controls.
  • Note the different controls that can be used to specifically combat fraud.
  • Cite the indicators of a possible problem with a journal entry.
  • Note the circumstances under which a shares services center is most useful.
  • Recognize those controls that are most useful in a smaller organization.

Chapter 6

  • Cite fraud symptoms and examples that indicate the presence of fraud as well as fraud risks associated with operating in an emerging market.
  • Identify the actions to take when searching for different types of fraud.
  • Note the best practices for operating an employee hotline.
  • Recognize the concept underlying Benford’s Law.
  • Note the circumstances under which a z-score can be used to identify fraud.
  • Identify the different types of risk associated with the examination of documents.
  • Note the types of fraud schemes that are least likely to be noticed.

Chapter 7

  • Recognize the procedures needed to deal with fraud situations.
  • Cite the different types of fraud investigation techniques.
  • Identify the steps to be followed when examining a hard drive for evidence.

Chapter 8

  • Note the how the Bates numbering system is used and where to obtain evidence for document examination.
  • Recognize the calculation for estimating the income of an employee.

Chapter 9

  • Cite the characteristics of an ideal fraud interviewer, and the types of questions that this person asks.
  • Identify how assessment questions are used.
  • Recognize the different types of integrity tests.

Chapter 10

  • Recognize the contents of a typical fraud report, noting the proper report tone that should be used.
  • Cite the documentation requirements for a fraud interview.

Chapter 11

  • Identify the methods available for recovering funds from a fraud.
  • Describe the purpose of a grand jury.


Table of Contents

Chapter 1 – Introduction to Fraud

Learning Objectives

Introduction

What is Fraud?

Confidence

The Effects of Fraud

Fraud Triggers

Perceived Pressure

Opportunity

Rationalization

Fraud Addiction

Collusion

Types of People More Likely to Engage in Fraud

Types of Fraud

Financial Statement Fraud

Embezzlement

Supplier Fraud

Customer Fraud

Investment Scams

Common Fraud Risk Indicators

Responsibility for Fraud Prevention

The Fraud Examiner

Summary

Chapter 1 – Review Questions

Chapter 2 – Fraud and Theft Schemes

Learning Objectives

Introduction

Cash Theft

Disbursement-Related Theft

False Expense Reports

Mis-use of Company Credit Card

Billings from Fake Suppliers

Self-Insurance Fraud

Unauthorized Shipments

Redirected Payments

Check Theft

ACH Debits

Compensation Fraud

Executive Loans

Workers’ Compensation Fraud

Check Kiting

Solicitations Disguised as Invoices

Lapping

Inventory Theft

Product Replacement Fraud

Fixed Asset Theft and Misuse

Bust-Out Scams

Advance-Fee Loan Schemes

Kickbacks

Bid Rigging

Bribery

Conflicts of Interest

Insider Trading

Stock Option Backdating

Information Theft

Time Theft

Money Laundering Schemes

Financial Statement Fraud Schemes

Sales Inflation

Expenses Falsification

Marketable Securities Falsification

Prepaid Expenses Falsification

Receivables Falsification

Loss Reserves Falsification

Inventory Falsification

Fixed Asset Falsification

Liability Falsification

Debt Falsification

Discontinued Operations Stuffing

Cash Flow Reclassifications

Operating Activity Cash Inflows and Outflows

Financing Activity Cash Inflows and Outflows

Acquisition Falsification

The Most Difficult Financial Statement Fraud Areas to Detect

Financial Statement Disclosure Fraud

Fraud Schemes More Common in Closely-Held Businesses

Summary

Chapter 2 – Review Questions

Chapter 3 – Financial Statement Fraud

Learning Objectives

Introduction

Reasons for Financial Statement Fraud

Instigators

How Financial Statement Fraud Begins

The Financial Statements

The Balance Sheet

The Income Statement

The Statement of Cash Flows

Interactions between the Financial Statements

Horizontal Analysis

Vertical Analysis

Interrelationships Analysis

Revenue Interrelationships

Cost of Goods Sold Interrelationships

Capitalization Interrelationships

Ratio Analysis

Financial to Non-financial Relationships

Time-Based Analysis

Other Red Flags

A Note of Caution

The Auditor’s Approach

Other Factors to Consider

The Management Team

The Organizational Structure

The Size of the Organization

The Board of Directors

The Auditors

Legal Issues

Short Selling

Related Entities

Footnotes

Industry Analysis

Summary

Chapter 3 – Review Questions

Chapter 4 – Fraud Prevention

Learning Objectives

Introduction

1. Combatting Perceived Pressure

2. Minimizing Fraud Opportunities

Cultural Adjustment Activities

Hire Correctly

Communicate Expectations

Provide an Example

Establish the Work Environment

Handle Fraud Situations Correctly

Minimizing Collusion

Engaging in Fraud Auditing Activities

3. Combatting Rationalization

Fraud Prevention for the Small Company

Fraud Prevention for Outsiders

Summary

Chapter 4 – Review Questions

Chapter 5 – Fraud Policies and Controls

Learning Objectives

Introduction

Policies

Audit Policy

Check Signing Policy

Employee Background Check Policy

Employee Bonding Policy

Expense Receipt Policy

Expense Review Policy

Employee Transfer Policy

Missing Check Policy

Stock Sale Investigations

Supplier Background Check Policy

Vacation Policy

Whistleblower Rewards Policy

Control Activities

Segregation of Duties

Authorization Levels

Independent Reviews

Physical Safeguards

Documentation

Preventive and Detective Controls

Manual and Automated Controls

When to Add Controls

Control Overrides

Fraud-Specific Order Entry Controls

Fraud-Specific Credit Controls

Fraud-Specific Shipping Controls

Fraud-Specific Billing Controls

Fraud-Specific Cash Controls

Fraud-Specific Inventory Controls

Fraud-Specific Fixed Asset Controls

Fraud-Specific Payable Controls

Fraud-Related Purchasing Controls

Fraud-Related Receiving Controls

Fraud-Related Payroll Controls

Fraud-Specific Journal Entry Controls

General Controls

Oversight Capabilities

Incentive Systems

Small Business Controls

Summary

Chapter 5 – Review Questions

Chapter 6 – Fraud Detection

Learning Objectives

Introduction

Fraud Symptoms

Accounting Anomalies

Analytical Anomalies

Lifestyle Symptoms

Unusual Behavior

Assistance in Spotting Fraud

Assistance from Employees

The Employee Hotline

Assistance from Suppliers and Customers

Assistance from Auditors

Records Examination

Publishing Activities

Data Analysis

Data Analysis Techniques

Benford’s Law

Cross-Matching Analysis

Outlier Analysis

Trend Analysis

Discovery Sampling

Access to Documents

Nonfraud Factors

Where Fraud Does Not Occur

Undetectable Fraud

Role of the Auditor in Fraud Detection

Summary

Chapter 6 – Review Questions

Chapter 7 – Fraud Investigation

Learning Objectives

Introduction

Whether to Investigate

Investigation Policies and Procedures

Fraud Investigative Techniques

Documentary Evidence

Personal Observation

Physical Evidence

Testimonial Evidence

Invigilation

The Need for Objectivity

The Need for Investigation Secrecy

Involving the Police

Signed Confessions

Summary

Chapter 7 – Review Questions

Chapter 8 – Investigation of Concealment and Conversion

Learning Objectives

Introduction

The Chain of Custody

Organizing the Evidence

Document Examination

Conversion and Incarceration Information Sources

National Crime Information Center

Interstate Identification Index

Federal Inmate Database

Tax Returns

State-Level Information

County-Level Information

Divorce Information

Probate Court Information

Professional Licensing Information

Rental Information

SEC Filings

Tax Assessor Information

Title Information

Voter Registration Information

Acquaintances Information

Trash Analysis

Fee-based Search Tools

Investigations Related to Mail Fraud

Calculating the Amount Stolen

Summary

Chapter 8 – Review Questions

Chapter 9 – Fraud Interviewing Techniques

Learning Objectives

Introduction

The Ideal Interviewer

Types of Interviewees

The Ideal Interview

Interview Planning

The Interview

Interactions with Friendly Interviewees

Interactions with Unfriendly Interviewees

Asking for an Admission of Guilt

Additional Interviewing Rules

Activities Following the Interview

Income Questions

Lifestyle Questions

Interviewee Motivations

Reactions to Fraud

Integrity Testing

Summary

Chapter 9 – Review Questions

Chapter 10 – The Fraud Report

Learning Objectives

Introduction

Report Tone

Sample Text of the Report

Summary

Chapter 10 – Review Questions

Chapter 11 – Legal Aspects of Fraud

Learning Objectives

Introduction

Types of Prosecution

The Civil Litigation Process

The Criminal Litigation Process

The Fraud Examiner Role in Lawsuits

Federal Statutes Covering Fraudulent Activities

17 CFR 240.10b5-1 - Trading “on the basis of” Material Nonpublic Information

15 U.S. Code § 78dd–1 - Prohibited Foreign Trade Practices

18 U.S. Code § 201 - Bribery of Public Officials and Witnesses

18 U.S. Code § 500 - Money Orders

18 U.S. Code § 1030 – Fraud and Related Activity in Connection with Computers

18 U.S. Code § 1037 - Fraud and Related Activity in Connection with Electronic Mail

18 U.S. Code § 1341 – Frauds and Swindles

18 U.S. Code § 1342 - Fictitious Name or Address

18 U.S. Code § 1344 – Bank Fraud

18 U.S. Code § 1956 - Laundering of Monetary Instruments

18 U.S. Code § 1961 – Racketeer Influenced and Corrupt Organizations

26 U.S. Code § 7201 – Attempt to Evade or Defeat Tax

41 U.S. Code § 8701 – Prohibited Conduct (Kickbacks)

Summary

Chapter 11 – Review Questions

Review Question Answers and Rationales

Glossary

Index

Final Examination

Answer Sheet

Course Evaluation

 



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