Corporate Fraud and Internal Control : A Framework for Prevention -- Contents -- Preface -- 1 Nature of Fraud -- FRAUD AND IRREGULARITIES: DEFINITIONS AND CONCEPTS -- Victims of Fraud -- Nature of Fraud -- Pressure or Motivation -- Red Flags -- Types of Fraud -- COST OF FRAUD -- Costs of Corruption -- NOTES -- 2 Elements of the Crimes of Theft and Fraud -- DOCUMENT FRAUD -- CORROBORATING DOCUMENTS -- PROCUREMENT FRAUD -- Price Fixing -- Bid Rigging -- Supply of Defective Products and Product Substitution -- Defective Pricing -- Cost/Labor Mischarging -- BRIBERY AND CORRUPTION -- INDUSTRIAL ESPIONAGE -- CHECK FRAUD AND MONEY LAUNDERING -- NOTES -- 3 Frauds Against the Individual -- ONLINE AUCTION FRAUD -- Controls to Prevent Online Auction Fraud -- CONSUMER FRAUDS -- Controls to Identify Rogue Dialers -- Lottery/Prize Scams -- Controls to Identify Lottery/Prize Scams -- TELEPHONE FRAUDS -- Controls to Identify Telephone Frauds -- CHARITY FRAUDS -- Controls to Identify Charity Frauds -- MISREPRESENTATION OF MATERIAL FACTS -- CONCEALMENT OF MATERIAL FACTS -- Controls to Identify Misrepresentation or Concealment -- ADVANCE FEES (4-1-9) FRAUDS -- Controls to Avoid 4-1-9 Frauds -- "MIDDLEMAN" FRAUDS -- BAIT AND SWITCH -- Controls to Prevent Bait-and-Switch Fraud -- LARCENY -- EXTORTION -- COUNTERFEIT GOODS AND INTELLECTUAL PROPERTY -- AFFINITY FRAUDS -- Controls to Identify Affinity Frauds -- PYRAMID SCHEMES -- Controls to Identify Pyramid Schemes -- PONZI SCHEMES -- Controls to Identify Ponzi Frauds -- CAREER OPPORTUNITIES -- Identifying Career Opportunity Frauds -- CASH RECOVERY FRAUDS -- 4 Frauds Against the Organization -- BANKRUPTCY FRAUD -- CHECK FRAUD -- OBTAINING FRAUDULENT LOANS -- Internal Controls to Prevent Loan Fraud -- UNSOLICITED ORDERS -- Internal Controls to Detect Unsolicited Order Fraud -- EMBEZZLEMENT.

Internal Controls to Detect Embezzlement -- BRIBERY -- CORRUPTION -- CONFLICTS OF INTEREST -- Internal Controls to Prevent Conflicts of Interest -- BREACH OF FIDUCIARY DUTY -- THEFT OF TRADE SECRETS -- Internal Controls to Prevent Theft of Trade Secrets or to Seek Redress for such Theft -- FALSE CLAIMS -- Health Care Fraud -- Pharmaceutical-Related Fraud -- Construction and Procurement Frauds -- Defense Fraud -- Disaster Relief Fraud -- Overseas Reconstruction Fraud -- Research Fraud -- Internal Controls to Prevent Claims Fraud -- FALSE CONVEYANCING -- TUNNELING -- CONSPIRACY -- LAPPING -- KITING -- Internal Controls to Prevent and Detect Lapping and Kiting -- FRAUDULENT AFFILIATIONS -- COUNTERFEIT MONEY -- BENEFIT FRAUDS -- INSURANCE FRAUD -- Property Insurance -- Fire Insurance -- Automobile Insurance -- Life Insurance -- PAYMENT CARD FRAUDS -- PENSION FRAUDS -- TAX FRAUD -- INSIDER TRADING AND MARKET ABUSE -- CLICK FRAUD -- Internal Controls for Detecting Click Fraud -- COUNTERFEIT GOODS AND INTELLECTUAL PROPERTY -- PROCUREMENT FRAUD -- NOTES -- 5 Fighting Corruption -- BRIBERY IN CONTRACTS -- How Does Bribery Occur? -- Procurement Planning -- Product Design -- Advertising -- Invitation to Bid -- Prequalification of Bidders -- Technical Evaluation -- Financial Evaluation -- Postqualification -- Contract Award -- Contract Implementation -- Verification and Follow-up -- RED FLAGS AT ENRON AND WORLDCOM -- NEPOTISM AND FAVORITISM -- Nepotism Policy -- Other Forms of Favoritism -- Controlling Favoritism -- ABUSE OF AUTHORITY -- DEVELOPING AN OVERALL ANTICORRUPTION CULTURE -- NOTES -- 6 Role of Ethics in Fighting Fraud -- HOW MORAL DECISIONS ARE MADE -- NATURE AND ROLE OF ETHICS -- Employee Ethics -- Codes of Conduct -- MANAGING ETHICAL RISK -- Reviewing the Code of Ethics/Code of Conduct -- REPORTING OF FRAUD -- Individual Reporting of Fraud.

Encouraging Reporting and Whistleblowing -- NOTES -- 7 Controlling Fraud -- CORPORATE GOVERNANCE AND FRAUD PREVENTION -- Corporate Culture versus Legislation -- AUDIT COMMITTEE'S ROLE IN FIGHTING FRAUD -- Audit Committees in the Public Sector -- INTERNAL CONTROL AND THE PREVENTION OF FRAUD -- COSO's Approach -- Internal Controls -- Control Objectives -- Internal Control and Detection -- FIGHTING SHRINKAGE -- INTERNAL AUDIT ROLE -- Control Self-Assessment -- NOTES -- 8 Fraud Risk Management -- ESTABLISHING THE CORPORATE FRAUD RISK PROFILE -- CASCARINO CUBE -- ROLES OF THE INTERNAL, EXTERNAL, AND FORENSIC AUDITOR -- Internal Audit -- External Audit -- Fraud Examiners and Forensic Auditors -- WHISTLEBLOWING IN DETECTING FRAUD -- NOTE -- 9 Investigating Fraud -- RED FLAGS AND INDICATORS OF FRAUD -- Triggering Events -- Personal Red Flags -- Profile of the Fraudster -- Managerial-Level Red Flags -- CORPORATE FRAUD INDICATORS -- Reduced Cash Flow -- Overstated Assets -- Decreases in Corporate Earnings -- Strange Entries in the Accounts -- Payroll Red Flags -- Glaring Omissions in Controls -- Procurement Red Flags -- Mortgage Processing Red Flags -- Red Flags in the Medical Field -- Contract Fraud Red Flags -- CONDUCTING AN INVESTIGATION -- Motivation -- Opportunity -- Means -- Method -- Starting the Investigation -- TOOLS AND TECHNIQUES -- Documentary Analysis -- Data Analysis -- Interviewing -- Neutral Third-Party Witnesses -- Corroborative Witnesses -- Co-conspirators -- Fraudsters -- Lies, Lies, Lies -- USE OF THE POLYGRAPH -- DOCUMENTING THE INVESTIGATIVE PROCESS -- EVIDENCE ANALYSIS -- INVESTIGATIVE ERRORS -- AFTER THE EVENT -- ESTABLISHING AN INVESTIGATIONS FUNCTION -- TRACING AND RECOVERING ASSETS -- Overseas Asset Movements -- NOTES -- 10 Computer Fraud and Countermeasures -- MAINFRAME ARCHITECTURES -- MAINFRAME COMMUNICATIONS -- CONTROL OF SERVERS.

WAN COMMUNICATIONS -- WORKSTATION SECURITY -- MOBILE COMPUTING AND THE INTERNET -- Internet Fraud -- CLOUD COMPUTING -- COMPUTER AND INFORMATION FRAUD -- General Controls -- Effective Monitoring -- MONITORING TOOLS -- PREVENTING E-COMMERCE FRAUD -- Business to Consumer -- Business to Business -- Consumer to Consumer -- E-Governance -- E-COMMERCE CONTROL OPPORTUNITIES -- E-PAYMENTS -- INTERNAL CONTROL BEST PRACTICES -- NEWER FRAUD SCHEMES -- PROTECTING DIGITAL ASSETS -- FOILING THE HACKERS -- INVESTIGATING COMPUTER FRAUD -- Pre-incident Preparation -- Detection of Incidents -- Initial Response -- Response Strategy Formulation -- Making Forensic Backups -- Investigation -- Security Measure Implementation -- Network Monitoring -- Recovery -- Reporting -- Follow-up -- COMPUTER LAW -- NOTE -- 11 Legal Issues Surrounding Fraud -- IMPACT OF A CONSTITUTION -- FRAUD AND THE LAWS OF EVIDENCE -- ASSET RECOVERY -- LABOR LEGISLATION AND FRAUD -- NOTE -- 12 Industry-Related Fraud Opportunities -- BANKING FRAUD -- Money Laundering -- Card Fraud -- Check Fraud -- Wire Fraud -- Online Fraud -- Online Banking Weaknesses and Controls -- MONEY LAUNDERING -- HEALTH CARE FRAUD -- Cost of Fraud -- Nature of Health Care Fraud -- Controls around Health Care Fraud -- Controls at the Individual Level -- INSURANCE FRAUD -- Fraud Prevention Initiatives -- Insurance Fraud Detection -- Detection of Fraud Against the Consumer -- TAX FRAUD -- Use of Tax Shelters -- Indirect Tax Fraud -- Use of Tax Shelters -- Offshore Tax Havens -- SOCIAL SECURITY FRAUD -- FRAUD AFTER DEATH -- CONSTRUCTION FRAUD -- Fraud at a Personal Level -- Fraud within Construction Companies -- NOTES -- APPENDIX A Audit Committee Charter -- APPENDIX B Corporate Fraud Policy -- POLICY -- BACKGROUND AND IMPLEMENTATION -- FRAUD AWARENESS TRAINING -- APPENDIX C Whistleblowing Policy -- REPORTING AND INVESTIGATION.

APPENDIX D Fraud Prevention Checklist -- APPENDIX E Fraud Risk Questionnaire Sample -- APPENDIX F Fraud Risk Analysis -- APPENDIX G Fraud CAATs -- TECHNIQUES -- Source Code Review -- Use of Test Data -- Integrated Test Facility -- System Collection Audit Review Files -- Parallel Simulation -- TOOLS -- Application Software -- Information Retrieval Software -- Online Inquiry -- Standard Utilities -- Industry-Related Software -- Customized Audit Software -- Generalized Audit Software -- Analytical Techniques Using CAATs -- CONTINUOUS MONITORING -- Glossary -- About the Author -- About the Web Site -- Index.