Managers and Auditors: Fraud Examination (Course #1005)

Transcription

1 Managers and Auditors: Fraud Examination (Course #1005) PART I: FRAUD EXAMINATION Table of Contents Chapter 1: Law Related to Fraud Criminal and Civil Actions for Fraud 1-2 Basic Definition and Types of Fraud 1-4 Federal Criminal Fraud Statutes 1-11 Corporate Sentencing Guidelines 1-26 Concluding Remarks 1-28 Review Questions & Solutions 1-29 Chapter 2: Criminology Related to Fraud Amateurs and Professionals 2-1 White-Collar Crime 2-2 Organizational Crime 2-5 Corporate Organization and Criminal Behavior 2-6 Occupational Crime 2-15 Concluding Remarks 2-24 Review Questions & Solutions 2-25 Chapter 3: Employee Fraud Cash Schemes 3-1 Accounts Receivable Schemes 3-4 Inventory Schemes 3-5 Purchasing Schemes 3-7 Investments and Fixed Assets Schemes 3-10 Payroll Schemes 3-12 Personal Expense Reimbursement Schemes 3-13 Internal Fraud Prevention 3-14 Appendix: Sample Fraud Policy Statement 3-20 Review Questions & Solutions 3-23 Chapter 4: Management Fraud Improper Revenue Recognition 4-3 Revenue Recognition in Wrong Period 4-5 Improper Sales Accounting 4-8 Improper Percentage-of-Completion Accounting 4-11 Inadequate Disclosure of Related-Party Transactions 4-12 Improper Asset Valuation 4-15 Inadequacies in Disclosures 4-25 Review Questions & Solutions 4-30 Table of Contents 1

2 Chapter 5: Fraud Examination Fraud Theory Approach 5-1 Characteristics of Fraud Examiners 5-2 Document Examination 5-4 Interviews 5-6 Employee s Rights During Examinations 5-20 Public Record Information 5-25 Fraud Examination Reports 5-25 Review Questions & Solutions 5-29 PART II: AUDITING FOR FRAUD DETECTION Chapter 6: Fraud Awareness Auditing Introduction 6-1 Definitions Related to Fraud 6-2 Conditions that Make Fraud Possible, Even Easy 6-6 Fraud Prevention 6-8 Fraud Detection 6-11 Schemes and Detection Procedures 6-15 Documents, Sources and Extended Procedures 6-22 Social Security Number Table 6-25 After Discovering a Fraud 6-32 Summary 6-33 Practical Case Problems 6-34 Case Study: Thank Goodness It s Friday 6-35 Case Study: The Phantom of the Inventory 6-38 Case Study: Is This the Perfect Crime? 6-41 Review Questions & Solutions 6-43 Chapter 7 Overview of Internal Control Introduction The COSO Report 7-1 Management versus Auditor Responsibility 7-5 Reasons for Internal Control Evaluation 7-6 Financial Reporting Control The Auditor s Evaluation Process 7-8 Control Environment and Risk Assessment 7-9 Information and Communication The Accounting System 7-9 Monitoring 7-11 Control Activities 7-11 Transaction Processing Control Objectives and Activities 7-12 Performing Test of Controls Audit Procedures 7-19 Control Evaluation and Cost-Benefit 7-20 Summary 7-21 Review Questions & Solutions 7-22 Table of Contents 2

3 Chapter 8: Cash Collections and Receivables Revenue and Collection Cycle: Typical Activities 8-1 Audit Evidence in Management Reports and Data Files 8-6 Special Note: The Existence Assertion 8-7 Special Note: Using Confirmations 8-9 Special Note: Audit of Bank Reconciliations with Attention to Lapping and Kiting 8-16 Bank Transfer Schedule and Proof of Cash 8-21 Audit Cases: Substantive Audit Procedures 8-23 Case 8.1: The Canny Cashier 8-25 Case 8.2: The Taxman Always Rings Twice 8-28 Case 8.3: Bill Often, Bill Early 8-31 Case 8.4: Thank Goodness It s Friday 8-34 Summary 8-37 Review Questions & Solutions 8-38 Chapter 9 Cash Disbursements and Payables Acquisition and Expenditure Cycle: Typical Activities 9-1 Audit Evidence in Management Reports 9-4 Special Note: The Completeness Assertion Search for Unrecorded Liabilities 9-6 Special Note: Physical Inventory Observation 9-8 Audit Cases: Substantive Audit Procedures 9-11 Case 9.1: Printing (Copying) Money 9-13 Case 9.2: Real Cash Paid to Phony Doctors 9-16 Case 9.3: Receiving the Missing Oil 9-19 Case 9.4: Go For the Gold 9-22 Case 9.5: Retread Tires 9-25 Case 9.6: Amortize Bang the Drum Slowly 9-28 Summary 9-31 Practical Case Problems 9-32 Case Study: Like A Son 9-33 Case Study: The Bulging Desk Drawers 9-36 Review Questions & Solutions 9-42 Chapter 10: Payroll Accounting Payroll Cycle Typical Activities 10-1 Audit Evidence in Management Reports and Files 10-5 Audit Cases: Substantive Audit Procedures 10-9 Case 10.1: Time Card Forgeries Case 10.2: Cleverly Hidden Paychecks Summary Review Questions & Solutions Table of Contents 3

4 Chapter 11: Cost Accounting Production Cycle Typical Activities 11-1 Audit Evidence in Management Reports and Files 11-5 Audit Cases: Substantive Audit Procedures 11-8 Case 11.1: Unbundled Before Its Time 11-9 Case 11.2: When in Doubt, Defer! Summary Review Questions & Solutions Chapter 12: Investments, Liabilities and Equities Finance and Investment Cycle: Typical Activities 12-1 Control Over Accounting Estimates 12-9 Assertions, Substantive Procedures, and Audit Cases Case 12.1: Unregistered Sale of Securities Case 12.2: Tax Loss Carryforwards Case 12.3: Off-balance Sheet Inventory Financing Case 12.4: A Consolidation by any Other Name Other Aspects of Clever Accounting and Fraud Summary Practical Case Problems Case Study: In Plane View Case Study: Sharp Hedge Clippers Review Questions & Solutions PART III: SKILLS AND RESPONSIBILITIES Chapter 13: Fraud Detection Audit Procedures Two Barriers 13-1 Client Relations and Normality 13-2 Fraud-Detection Audit Procedures 13-2 Procedures for Cash Receipts, Sales, Accounts Receivable 13-3 Procedures for Cash Disbursements, Purchasing, Accounts Payable 13-6 Procedures for Inventory Procedures for Payroll Procedures for Employee Expense Accounts Procedures for Property, Plant, and Equipment Procedures for Income Taxes Recent Developments Madoff Case Study Review Questions & Solutions Table of Contents 4

5 Chapter 14: Auditors and Investigators Responsibilities External Auditors Responsibilities 14-1 Internal Auditors Responsibilities 14-9 Government Auditors Responsibilities Fraud Examiners Responsibilities Association of CFE Code of Professional Standards Summary Review Questions & Solutions Chapter 15: Analysis of Digit and Number Patterns Benford s Law 15-1 Sequence of Tests 15-5 Fraudulent Data 15-9 Rounded Numbers: Fictitious Invoices Digital Analysis Software Summary Review Questions & Solutions Glossary Index Table of Contents 5