Corporate fraud handbook : prevention and detection

"The Corporate Fraud Handbook offers insightful information for fraud detection and prevention and is illustrated with a multitude of actual case examples."
- Mary-Jo Kranacher , Editor-in-Chief, The CPA Journal

"I have worked with Dr. Wells for more than a decade. In my opinion, his knowledge of fraud puts him in the top echelon of professionals anywhere."
- Barry C. Melancon , President and CEO, American Institute of Certified Public Accountants

"Joe Wells is a pioneer in the anti-fraud field, as well as a terrific writer."
- Greg Farrell , Investigative Reporter, USA Today

"This book harmonizes the study of actual fraud cases and related theories. A must-read for anyone interested in the global fight against fraud."
- Pedro Fabiano , Fraud Investigator, Buenos Aires, Argentina

"This book should be the cornerstone of any good fraud investigator's library."
- Isabel Mercedes Cumming , Assistant State's Attorney, Baltimore City, Maryland

"Dr. Wells is a brilliant author. His writing is clear, to the point, and entertaining. I find the Corporate Fraud Handbook indispensable."
- Corey A. Bloom , Senior Associate, RSM Richter, Montreal, Canada

"A wonderful read! A systematic approach with many examples from real life."
- Dr. Dimiter Dinev , Associate Professor, University of National and International Economy, Sofia, Bulgaria

"I have been an admirer of Dr. Wells' work for more than twenty years. He's a world leader in the prevention and detection of fraud. I highly recommend this book to anyone concerned with compliance, controls, and keeping their organizations immune from the ever-growing risks of fraud."
- Mike Comer , Corporate Fraud Investigator, London, England

"The Corporate Fraud Handbook provides unparalleled insights on the scams used by employees to perpetrate fraud."
- Robert DiPasquale , Partner, J.H. Cohn LLP

Author Notes

Dr. Joseph T. Wells , CFE, CPA, is the founder and Chairman of the Association of Certified Fraud Examiners (ACFE) and has previously served as an adjunct professor of fraud examination at the University of Texas at Austin. He writes, researches, and lectures to business and professional groups on fraud-related issues and is frequently quoted in the media. He has won top writing awards from both Internal Auditor and the Journal of Accountancy, and is a winner of the Innovation in Accounting Education Award presented by the American Accounting Association. For his landmark research in fraud detection and deterrence, Dr. Wells has been inducted into the American Institute of Certified Public Accountants Business and Industry Hall of Fame and named nine times to Accounting Today's list of top 100 most influential people.

Reviews 1

Choice Review

Wells, founder and chair of the Association of Certified Fraud Examiners (ACEF), is regarded by many as the most authoritative writer on the subject of occupational fraud, and he has published several other books on fraud and forensic accounting. The current work includes data from the ACEF's 2006 "Report to the Nation on Occupational Fraud and Abuse." The volume is organized in three parts: "Asset Misappropriations," "Corruption," and "Fraudulent Statement." After a general introduction in the first two chapters, the subsequent chapters each cover a specific type of fraudulent misappropriation such as skimming, check tampering, and billing schemes. At least one illustrative case is included in each of these chapters, providing realistic examples of how each scheme is accomplished. The book is very readable and is well documented with chapter endnotes and an extensive bibliography and index. It is an excellent reference for courses in fraud examination or forensic accounting and an excellent library resource for institutions offering such courses. Summing Up: Highly recommended. Upper-division undergraduate through professional collections. F. A. Marino Assumption College

Preface	p. ix
About the ACFE	p. xiii
1 Introduction	p. 1
Defining "Occupational Fraud and Abuse"	p. 2
Research in Occupational Fraud and Abuse	p. 6
2010 Report to the Nations on Occupational Fraud and Abuse	p. 25
Notes	p. 42
Part I Asset Misappropriations	p. 45
2 Introduction to Asset Misappropriations	p. 47
Overview	p. 48
Definition of "Assets"	p. 48
How Asset Misappropriations Affect Books of Account	p. 49
Notes	p. 58
3 Skimming	p. 59
Overview	p. 63
Skimming Data from ACFE 2009 Global Fraud Survey	p. 63
Unrecorded Sales	p. 68
Understated Sales and Receivables	p. 73
Theft of Checks through the Mail	p. 74
Short-term Skimming	p. 79
Converting Stolen Checks	p. 80
Concealing the Fraud	p. 83
Detection	p. 89
Prevention	p. 90
Notes	p. 91
4 Cash Larceny	p. 93
Overview	p. 96
Cash Larceny Data from ACFE 2009 Global Fraud Survey	p. 96
Incoming Cash	p. 101
Cash Larceny from the Deposit	p. 106
Miscellaneous Larceny Schemes	p. 110
Detection	p. 111
Prevention	p. 113
5 Check Tampering	p. 115
Overview	p. 118
Check Tampering Data from ACFE 2009 Global Fraud Survey	p. 119
Forged Maker Schemes	p. 123
Intercepted Checks	p. 129
Forged Endorsement Schemes	p. 129
Altered Payee Schemes	p. 133
Concealed Check Schemes	p. 137
Authorized Maker Schemes	p. 137
Concealment	p. 141
Detection	p. 149
Prevention	p. 151
Electronic Payment Tampering	p. 153
Prevention and Detection	p. 153
Notes	p. 155
6 Register Disbursement Schemes	p. 157
Overview	p. 157
Register Disbursement Data from ACFE 2009 Global Fraud Survey	p. 161
False Refunds	p. 165
False Voids	p. 171
Concealing Register Disbursements	p. 171
Detection	p. 174
Prevention	p. 174
7 Billing Schemes	p. 177
Overview	p. 181
Billing Scheme Data from ACFE 2009 Global Fraud Survey	p. 181
Cash-Generating Schemes	p. 185
Invoicing via Shell Companies	p. 186
Invoicing via Nonaccomplice Vendors	p. 191
Personal Purchases with Company Funds	p. 195
Detection	p. 202
Prevention	p. 203
8 Payroll and Expense Reimbursement Schemes	p. 205
Overview	p. 208
Payroll Scheme Data from ACFE 2009 Global Fraud Survey	p. 208
Payroll Schemes	p. 212
Expense Reimbursement Data from ACFE 2009 Global Fraud Survey	p. 226
Expense Reimbursement Schemes	p. 230
Detection of Payroll Schemes	p. 237
Detection of Expense Reimbursement Schemes	p. 238
Prevention of Payroll Schemes	p. 239
Prevention of Expense Reimbursement Schemes	p. 241
9 Inventory and Other Assets	p. 243
Overview: NonCash Misappropriation Data from ACFE 2009 Global Fraud Survey	p. 246
Misuse of Inventory and Other Assets	p. 251
Theft of Inventory and Other Assets	p. 252
Concealment	p. 264
Detection	p. 266
Prevention	p. 269
Misappropriation of Intangible Assets	p. 271
Note	p. 272
Part II Corruption	p. 273
10 Bribery	p. 275
Overview	p. 278
Corruption Data from ACFE 2009 Global Fraud Survey	p. 282
Bribery Schemes	p. 286
Something of Value	p. 300
Economic Extortion	p. 301
Illegal Gratuities	p. 301
Detection	p. 301
Prevention	p. 303
Notes	p. 305
11 Conflicts of Interest	p. 307
Overview	p. 311
Purchasing Schemes	p. 312
Sales Schemes	p. 315
Other Schemes	p. 316
Detection	p. 318
Prevention	p. 319
Note	p. 319
Part III Fraudulent Statements	p. 321
12 Fraudulent Statements	p. 323
Introduction	p. 323
Fraud in Financial Statements	p. 327
Major Generally Accepted Accounting Principles	p. 330
Responsibility for Financial Statements	p. 334
Users of Financial Statements	p. 335
Types of Financial Statements	p. 335
Sarbanes-Oxley Act	p. 336
Financial Statement Fraud Data from ACFE 2009 Global Fraud Survey	p. 347
Notes	p. 352
13 Fraudulent Financial Statement Schemes	p. 353
Methods of Financial Statement Fraud	p. 359
Fictitious Revenues	p. 359
Timing Differences	p. 362
Concealed Liabilities and Expenses	p. 368
Improper Disclosures	p. 371
Improper Asset Valuation	p. 374
Detection of Fraudulent Financial Statement Schemes	p. 379
Prevention of Financial Statement Fraud	p. 395
14 Occupational Fraud and Abuse: The Big Picture	p. 401
Defining "Abusive Conduct"	p. 401
Measuring the Level of Occupational Fraud and Abuse	p. 402
Understanding Fraud Deterrence	p. 405
Corporate Sentencing Guidelines	p. 409
Ethical Connection	p. 411
Concluding Thoughts	p. 413
Notes	p. 414
Appendix: Sample Code of Business Ethics and Conduct	p. 415
Introduction	p. 415
Conflicts of Interest	p. 417
Company Assets	p. 421
Political Contributions	p. 423
Employee Conduct	p. 423
Compliance Letter and Conflict of Interest Questionnaire	p. 425
Bibliography	p. 427
Index	p. 435

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