Journal of Forensic & Investigative Accounting
Senior Editor:  D. Larry Crumbley
Editor: Tanweer Hasan
 
.  .  .  .  .  .



Journal of Forensic & Investigative Accounting

Senior Editor
D. Larry Crumbley

Louisiana State University
Department of Accounting
3106A Patrick Taylor Hall
Baton Rouge, LA 70803
Phone: 225-578-6231
Fax: 225-578-6201
dcrumbl@lsu.edu
 

Editor
Tanweer Hasan

Roosevelt University
430 S. Michigan Avenue
Chicago, IL 60605
Phone: 847-619-4886
Fax: 847-619-4852
thasan@roosevelt.edu


Volume 2: No. 1, January-June, 2010

Table of Contents

Abstract: This experimental study assesses whether familiarity with an interviewee’s communicative style improves an interviewers’ ability to detect deception. In the experimental treatment, interviewers observed interviewees as they told truths and white lies over the course of ten weeks. During this period, the accuracy of detecting white lies increased from sixty-one percent to eighty-one percent, suggesting the acquisition of familiarity. After the experimental treatment, the interviewer and interviewee participated in an interview to assess a company’s hiring practices. The interviewee answered interview questions, either truthfully or falsely, about an employee’s job qualifications. Interviewers made a decision as to whether the interviewee had responded truthfully in the interview. Familiarity with the interviewee’s communicative style had an insignificant effect on deception-detection accuracy in the interview. White-lie detection skills may not pertain to deception-detection in interviews perhaps because interviewees behave differently in interviews than in non-interview communicative situations.

Keywords: Deception detection; deception-detection ability; familiarity; inquiry; interview.

Data Availability: Confidentiality agreements with participants, written with the assistance of the host university’s human subjects committee, prevent the sharing of data with others.


Abstract: During each phase of an audit, members of the engagement team ask numerous questions of personnel of the organization being audited, the answers to which may affect both the course and outcome of the audit. An understanding of the psychology of lying/deception can assist auditors in evaluating verbal responses to audit inquiries and thereby lessen detection risk. A large body of literature suggests that people are only about 4% better than chance at identifying deception. This paper provides a review of audit inquiry standards and past research on deception detection. Further, this paper specifically addresses the importance of veracity judgments in four key areas of the audit: audit planning, fraud risk consideration, the understanding of internal controls and its effectiveness, and the collection of audit evidence. In addition, this paper provides guidelines that can assist auditors in making more accurate judgments of truth or deception.

Keywords: Audit inquiries, deception detection, detection risk, audit red flags, veracity, lying.


Abstract: Using ratings of corporate governance developed by RiskMetrics Group (RMG), formerly Institutional Shareholder Services, we investigate whether relatively poor governance is associated with financial restatement, and whether restatement results in improved governance. We identify 150 firms that restated their 2003 financial statements to correct material error, and we use Compustat to generate a control sample matched on the basis of Global Industry Classification Standard (GICS), auditor type, year, and size. Compared to control firms, we find that restatement firms have significantly lower governance ratings in the restated year suggesting that poor governance results in financial impropriety. We also find that restatement firms improve their governance ratings in the year following the restated year, primarily by strengthening board independence, to the extent that significant differences with the control firms no longer exist. To test for the robustness of the results and provide insight into the likely direction of causation, we (1) match our test sample with other firms that did not restate in 2003, but had the same RMG corporate governance ratings (for evidence on post-SOX 2002), and (2) expand the examination period to pre-SOX (2002) and identify new test and control samples. The alternative empirical designs and related analyses support the finding that financial restatement results in board changes, which in turn improve governance ratings and reduction in chances of subsequent restatement.

Keywords: Financial restatements, corporate governance.

Data Availability: Performance and financial data are available from Compustat. Restatement and select audit committee and executive compensation data are from public sources identified in the manuscript. Corporate governance ratings were obtained from Institutional Shareholder Services.


Abstract: This paper provides an in-depth illustration of the conduct of a forensic audit for a major fraud case in a local government setting. Extensive detail on techniques employed in a forensic audit is typically not publicly available. Further, fraud cases outside the corporate arena have not been well represented in the literature.

The paper describes the forensic audit carried out by state auditors in the case of a major fraud in a local school district. Two lengthy public reports by the State Comptroller’s Office provide richness of detail for this illustration.

Even in the face of missing documents and records and manipulation of the accounting system, auditors were able to reach a good understanding of what had transpired, how it had been accomplished, how much loss the school district had incurred, and who was responsible. The thoroughness of the audit led to the subsequent conviction of most of the perpetrators.

Keywords: Governmental forensic audit; public sector; school district audit; credit cards; fraud.


Abstract: Discussion is needed about the appropriateness of having several of Enron’s investment banks escape liability after participating in fraudulent schemes with Enron. This article takes issue with the appropriateness of the AICPA’s legal position in Stoneridge Investment Partners v. Scientific America, which the Supreme Court decided in 2008 in a 5–3 decision. The AICPA’s concern was about liability for third parties related to services other than the annual audit. The author presents the legal background on securities law on fraud by third parties and provides analysis. The author believes the AICPA’s position opposing private party lawsuits against third party fraudsters was a strategic mistake for a service profession which relies on integrity and attempts to ensure reliable financial reporting. Refocusing the accounting profession on investor interests requires supporting reasonable legal accountability for any third parties engaged in financial fraud.

Keywords: Third party liability; fraud; private party litigation; Enron’s banks; financial fraud.


Abstract: This study examines the value-relevance of alternative earnings measures in the presence of non-financial measures for firms in the IT Professional Services industry. We begin our analysis by examining the value-relevance of GAAP earnings, S&P core operating earnings, and firm-specific pro forma earnings. During a period of market expansion, we find that pro forma earnings are more highly associated with stock price than either GAAP or S&P earnings. However, in a period of market contraction, we find that GAAP and S&P earnings are more highly correlated than pro forma earnings. We next examine the incremental relevance of industry specific non-financial measures. We find that the information contained in pro forma earnings is supplanted by non-financial measures. Lastly, we find that the information eliminated from GAAP-based earnings to arrive at pro forma earnings is value relevant throughout the period examined even after including non-financial information.

Keywords: GAAP based earnings; proforma earnings; alternative earnings measures; IT Professional Services sector; performance indicators.


Abstract: This study uses data on user perceptions before and after Enron and other high profile frauds to explore how perceptions of the internal audit function were affected and to consider what, if any, response is appropriate. While internal auditors shared little blame for recent frauds, our results show a clear drop in user perceptions of the internal audit function irrespective of the structure of the function. This generalized effect likely stems from a general drop in confidence in the accounting profession.

Results also indicate that internal audit departments that report to senior management are perceived as less likely to prevent financial statement fraud than outsourced internal audit functions, even when the function is outsourced to the financial statement auditor. This finding implies that the SEC should consider more closely whether to regulate the relationship between the audit committee and the internal auditor. The internal audit profession may also take voluntary actions to enhance corporate governance and public perceptions.

Keywords: Internal audit; outsourcing; financial statement fraud; user confidence.

Data Availability:  Please contact the first author for data availability.


Abstract: This research develops a rationale for why religious organizations are particularly vulnerable to financial fraud and embezzlement. The rationale is then validated through an exploratory survey of Christian Churches in California and Hawaii. Data from 41 church members and 32 pastors from churches were analyzed to examine the relationship between trust and the oversight of financial management and segregation of duties affecting the opportunity for fraud. The results provide a framework for future empirical research that would test the unique roles of trust and opportunity in the financial management practices of churches and the incidence of fraud and embezzlement.

Keywords: Fraud, non-profit organizations, trust, embezzlement.


Abstract: We conducted a forensic audit of staffing and census data in a 60-bed nursing home to identify errors in daily staffing ratios and to evaluate evidence in a Federal false claims fraud case alleging that insufficient staffing had been provided. These claims were based largely on daily staffing ratios shown on the Management Staffing Report (MSR), which was an informal management reporting tool. The MSR was not linked to audited payroll records and it was not reconciled with the facility’s accounting records.

Our audit focus was on daily nursing hours paid (worked) and daily census data. We reconciled and corrected the original daily staffing data and census data based on our audit results. We reconstructed payroll and census records for four years (1997-2000). Payroll records were the best available source data that could be used to validate nurse staffing hours.

When we conducted our audit, the facility’s electronic payroll records had been lost or corrupted. The only available payroll records were ‘hard-copy’ records from the patient units and from the outside vendor that had been computing the bi-weekly payroll. In order to reconstruct the direct nursing hours, we began with daily time sheets for all nursing staff and reconciled them to biweekly reports from the external payroll service. We relied on the external payroll records for both hourly and salaried nursing staff. To validate the daily patient census, we relied on internal daily patient logs and other source documents. Finally, we used the reconstructed data to compute the ratio of nursing hours per patient day (PPD) and compared those results to those PPD ratios shown on the MSR.

We identified significant reporting errors in both staffing and census data as originally reflected on the MSR. No other prior research has examined census and staffing reporting errors at this level of detail. The ‘denominator effect’ of census errors has not been previously reported.

We found a 9% average staffing understatement and annual understatements of 4-21% in nursing hours per patient day (PPD). The ‘denominator effects’ of census errors were skewed and not randomly distributed. The highly variable and predominantly one-sided staffing and census adjustments were unexpected and somewhat counter-intuitive. We summarize the evidentiary nature of our staffing and census audit adjustments in several data tables. Improving the accuracy of staffing hours and census will improve analysis and public policy in long-term care. Fraud auditors in any health care setting must be concerned about the reliability of nurse staffing ratios and the PPD ratios. Care must be exercised to validate the accuracy and usability of this prominent staffing ratio.

Keywords: Long-term care, nursing homes, nursing hours PPD, hours per resident day (HPRD), census reporting errors, nurse staffing reporting errors, and forensic audit.


+ University Athletics Fumble the Ball on Charitable Giving Rules
    • Beth McCarron Knipscheer
    • Patricia Hardin Mounce
Abstract: Taxpayers are, for the most part, philanthropic. Americans contributed more than $200 billion to nonprofit groups in 2005. University athletics is a popular beneficiary of charitable gifts from alumni and fans. A charitable contribution to an educational institution seems like it would be a fairly straightforward deduction since most educational institutions are qualified charitable organizations, and therefore a donation to such an organization would be tax deductible. However, when the donation provides the taxpayer with ticket rights, the Internal Revenue Code (Code) contains a provision that may limit a taxpayer’s deductible amount. This article presents the findings of a preliminary investigation into the compliance of provisions in Code Section (§) 170(l) regarding treatment of amounts paid to institutions of higher learning, specifically when the contribution allows for the right to purchase athletic tickets. The study found that, in the NCAA Division II conference investigated, that 70 percent of the universities offering ticket benefits did not provide adequate information to donors concerning the limitation on tax deductibility of their contributions.

Keywords: University athletics; charitable contributions; nonprofit groups; ticket benefits; educational institutions; IRC §170(l).


An excellent addition to a forensic accounting or fraud course is a mock trial near the end or at the end of a semester. My students have engaged in a mock trial on several occasions. I break my students into three or four member teams. I prefer to have my student groups prepare for more than one trial, so they do not cheat and fall over each other while researching. Since you need both a prosecuting team (criminal) or plaintiff (civil), and a defense, if you have 24 students there is a need for 3 disputes (24÷8). Thus, for a 16 group class, there would be a need for two disputes (16÷8). I prefer 3 person teams rather than 5 person teams. Four person teams will work also.

Keep in mind that one student can play more than one part (e.g., a fact witness and an expert witness). Students will wear wigs, different hats, etc. In general, each team will need one or two attorneys, at least one fact witness, and one expert witness. While two teams are engaged in a trial, the other students can be jurors, bailiff, investigative reporter, etc. I bring in a lawyer for the judge, and I use the courtroom at LSU’s law school. I prefer a mock trial dealing with an accounting, auditing, or taxation subject. In a three hour night class I can get in at least two trials, and possibly have the other teams give their opening and closing arguments. In the Spring 2009 class, I had 38 students, so I had two juries. I randomly select the trial five minutes before the night class. If you want only one sample trial, the first time I used the facts in J.T. Reisch, “Brodnax Minerals Company: A Case Study for Auditors’ Responsibility,” Issues in Accounting Education, Vol. 14, No. 4, November 1999, pp. 601-612. I handed out a copy of the article to my class.

Other sources on the Internet are:

Steps in Conducting a Mock Trial

  1. Pre-trial preparation of information gathered from different sources by students.
  2. Courtroom participants: Judge, attorneys, witnesses, jurors, plaintiff, defendant, and a bailiff.
  3. Beginning the trial, the bailiff announces: "All rise. The Court of the _______________ is now in session; the Honorable Judge ____________ is presiding." Everyone remains standing until the judge enters and takes the bench. The judge asks the bailiff to call the day’s calendar and the bailiff says, "Your Honor, today’s case is _______________vs.________________." The judge asks the attorneys for each side if they are ready to begin the trial.
  4. The Trial. Each attorney introduces him/herself: "May it please the court and members of the jury, my name is _________, counsel for _________ in this action."
  5. Attorneys for the plaintiff (first) and the defense (second) deliver their opening statements prepared from studying the facts of the dispute.
  6. Plaintiff calls each witness until finished calling witnesses and conducts direct examination for each one (direct examination).
  7. Defense cross-examines the witnesses called by the plaintiff before each witness steps down.
  8. The defense calls witnesses after the plaintiff rests the case (direct). Plaintiff’s attorney may cross-examine witnesses called by the defense before each witness steps down.
  9. Defense rests. Preparation of closing arguments.
  10. Closing arguments in a trial: Plaintiff’s (or Prosecutor) attorney first, then defense.
  11. Jury instructions if a jury trial. Jury’s verdict. This verdict must be unanimous in a criminal trial, but not in a civil trial.
  12. The sentence. The judge decides the punishment: jail, money, and/or time of volunteer service in a criminal trial.

Some Mock Trial Topics

  1. Should Timothy Geithner, current Secretary of the Treasury, be prosecuted, either criminally or civilly, for failure to pay $34,000 and $40,000 in back taxes and interest? Should penalties under Section 6662 be accessed? He prepared his own taxes for 2001 and 2002, but used paid preparers for 2003 and 2004. See Michael Joe, "Finance Committee OKs Treasury Secretary Nominee Geithner," Tax Notes, January 26, 2009, pp. 461-462.
  2. A lab assistant at Honeybun Inc., Bud Albert, is run over by a train after taking samples from a tank on Honeybun’s premises. The railroad employees are in the process of spotting the train cars in front of numerous tanks. No one saw how the accident happened. This lawsuit is for damages by the spouse of Bud Albert. Pay special attention to the value of the employee’s life. See Butler v. Illinois Central Railroad (Baton Rouge).
  3. Barry Bonds has pleaded not guilty to perjury and obstruction of justice charges and has been free on $500,000 bond. These charges stem from his 2003 appearance before a federal grand jury probing the distribution of steroids in the San Francisco area. Did Bonds commit perjury and obstruction of justice? [You also can use Roger Clemens or Sammy Sosa. See Topic 9 below.]
  4. Insider Trading Charges Against Mark Cuban. SEC Litigation Release No. 20810/November 17, 2008.
  5. SEC v. Whitworth Energy, Resources et al. U.S. District Court Central District of California Western Division (Ponzi Scheme).
  6. John Q. Auditor, a recent accounting graduate from the University of Cardinals, knew little about auditing liability. Because of a heavy workload, John’s accounting firm provided him with minimal guidance—especially about the risks involved in auditing and reviewing the financial statements of a large corporation with significant accounts receivable. The accounting firm also failed to instruct him on the Statement of Auditing Standards (SAS) 99 in regards to the consideration of fraud in financial statement audits. While auditing the financial statements of a new Louisiana wireless telephone company that had recently gone public, John failed to confirm several large accounts receivable. Most of the accounts he failed to confirm turned out to be fraudulent. These accounts exceeded $4 million and provided the company with a positive net worth. As a result of the unsupervised work performed by John Q., the accounting firm issued an unqualified opinion. The client subsequently used the opinion, along with the fraudulent financial statements, to obtain a $3.5 million loan from a local New Orleans bank. Three months later, the wireless telephone company filed for Chapter 11 bankruptcy protection and the fraudulent accounts were discovered. The bank and the company’s shareholders sued the accounting firm for accounting malpractice.
  7. A wealthy Baton Rouge client sought estate-planning advice from a midsize accounting firm. The client’s goal was to avoid any "generation-skipping" tax. An accountant, Jane M. Doe, who had little gift and estate tax experience, was asked to attend the initial meeting with the client and was then instructed to complete the appropriate tax forms.
  8. At that time, the Internal Revenue Service had not issued regulations on the key provisions of the "generation-skipping" tax. Unfortunately, the accountant misunderstood the statute and failed to properly complete and check the appropriate generation-skipping portion of the tax form. A senior partner briefly reviewed the tax form and approved it without revision. As a result of the oversight, the client faced a substantial increase in tax liability and sued the accounting firm for $4 million for accounting malpractice.

  9. Bubba Adder, a recent accounting graduate from an accredited university in the south, knew little about accountants’ liability. Because of a heavy workload, Bubba’s accounting firm provided him with minimal guidance, other than giving him last year’s workpapers. They failed to instruct him on SAS No. 99.

    Bubba mailed confirmations for accounts receivable and the major bank account balances from the client’s mailroom. One of the bank accounts was a $3.4 million Bank of America account in the Cayman Islands, which provided the agricultural business with a positive net worth. As a result of the work performed by Bubba, the accounting firm issued an unqualified opinion. The company subsequently used the financial statements to obtain a $3.2 million loan from a local Baton Rouge bank.

    Four months later the agricultural company filed for Chapter 11 bankruptcy protection, and it was discovered that the company had prepared a fake confirmation letter from the BOA bank in the Cayman Islands and mailed it back to the accounting firm (there was no money in the bank). The Baton Rouge bank and the company’s shareholders sued the accounting firm for accounting malpractice.

  10. Did Roger Clemens take steroids or human growth hormones (HGH)? Did Roger Clemens commit perjury and obstruction of justice in his testimony on February 14, 2008?
  11. Defamation lawsuit against Oprah Winfrey brought by a former headmistress of a school that Oprah set up in South Africa.
  12. Criminal trial of R. Allen Stanford accused of operating a ponzi scheme.
  13. Criminal trial of two computer programmers for Bernard Madoff’s firm, Jerome O’Hara and George Perez. An alternative is to have a criminal trial of the accountant for Madoff.
  14. Roger Clemens' defamation suit against Brian McNamee.
  15. Should Charles Rangel, current chairman of the House Ways and Means Committee be prosecuted for failure to disclose rental income from an apartment in Dominican Republic?
  16. Criminal tax trial against Richard Hatch for the failure to report $1 million of Survivor winnings and $350,000 for professional appearances.
  17. Criminal or civil tax trial against Tom Daschle for failure to report the free use of a car and driver provided to him by Leo Hindery, Jr., plus about $80,000 of consulting income, and $25,000 in payroll taxes. He paid more than $100,000 in back taxes on January 2, 2009.
  18. Criminal trial of Sir Allen Stanford (ponzi scheme).
  19. Criminal/ Civil trial of the New York Mets board member Arthur Friedman, CPA, lawyer who served as liaison to Bernard Madoff's operation. See New York Times, February 21, 2011, A-1, "Met's Owners Guarded an Investment Pipeline." Possibly include Fred Wilpon and Saul Katz.
  20. Donald J. Bisenius, an executive vice-president at Freddie Mac received a wells notice from the SEC (e.g., an enforcement action against him). Possibly include Anthony S. Piszel (known as Buddy). He was CFO. Bisenius ran Freddie Mac's single family credit guarantee business. Possible action: Possible violations of securities laws in 2007/ 2008.
  21. Lee Farkas, former chairman of Taylor Bean & Whitaker Mortgage. Alleged $1.9 billion fraud that targeted the government's TARP and contributed to the failure of Colonial Bank. Allegedly conspired to transfer funds between closely held Taylor Bean and Colonial Bank.
  22. Criminal tax fraud against Bernard Madoff's brother (Peter Madoff) and his two sons, Mark and Andrew.
  23. U.S. Security and Exchange commission v. Brian H. Stoker, CitiGroup Global Markets, Inc.
  24. State of Calif. v. George B. Kaiser (Solyndra).
  25. Lenny Dykstra, Downtown Auto Dealership, Robert Hymers (accountant).
  26. The Frumpy Bookkeeper, Kinde Durkee, campaign treasurer, California.
  27. SEC v. Deloitte Touche Tohmatsu. September 8, 2011. SEC complaint.
  28. SEC v. Oracle, August 16, 2012. SEC complaint [Prosecution can not say that Oracle settled the charges.]
  29. Peter Madoff. June 29, 2012. SEC complaint. [Prosecution can not indicate at trial that Peter pleaded guilty.]
  30. Rita Crundwell Dixon, Illinois.
  31. SEC v. Kwame M. Kilpatrick. May 9, 2012. SEC complaint.

Students tend to prefer the high profile disputes since they can find information about the disputes on the Internet.

Suggestions for Students

  • Decide upon your attorney, fact witness(es), and expert witness(es).

  • The other side should be told and allowed to depose all witnesses.

  • Each person should prepare a written document like "Street Law Mock Trial Preparation after the mock trial."

  • Your report may be quite different than the Street Law firm.

  • In general, there should be at least one fact witness (e.g., John Q. Auditor, Jane M. Doe, and Bubba Adder), one expert witness, and plaintiff or defendant.
*The author is KPMG Endowed Professor at Louisiana State University.


Welcome to a New Editor

Dr. Tanweer Hasan at Roosevelt University has become an Editor of the journal with this issue, and Dr. Larry Crumbley is now the Senior Editor. The journal is now jointly sponsored by L.S.U. and Roosevelt University.

The Walter E. Heller College of Business Administration offers a Master of Science in Accounting Forensics, which requires seven core courses and three elective courses. To view the program, go to http://legacy.roosevelt.edu/business/msaf.htm


1st Annual Forensic and Investigative Accounting Section Research Conference
May 7-8, 2010, Baton Rouge LA
Support Provided by Louisiana State University’s Department of Accounting

The 2010 AAA Forensic and Investigative Accounting (FIA) Section Midyear Conference will be held in Baton Rouge LA at The Lod Cook Conference Center and Hotel, 3848 W. Lakeshore Drive, 1-866.610.COOK, 225.383.2665.

The conference will begin Friday afternoon, May 7, at 1:00 and conclude Saturday, May 8 at noon, and feature former Controller of HealthSouth, Aaron Beam. Mr. Beam spent some time in prison for participating in “cooking the books.” He released his book The Wagon to Disaster, on November 1, 2009. www.aaronbeam.net. The Conference will contain plenary sessions, panels, concurrent sessions, and other events through Sunday afternoon.

Conference details can be found at http://aaahq.org/meetings/2010FIA_program.htm


Fraud & Forensic Accounting Conference

The LSU Department of Accounting will host the 2010 Fraud and Forensic Accounting Conference on Monday, July 19 and Tuesday, July 20, 2010 at the Baton Rouge Marriott Hotel, located at 5500 Hilton Avenue. The conference will feature a mix of nationally known fraud speakers, experienced practitioners and regulators. Participants who attend can earn up to 16 hours of continuing professional education credit for attending the conference, which has a tentative registration fee of $250. Conference details can be found and online registration can be completed at http://www.bus.lsu.edu/fraud/FF2010.asp.


Advertise in the JFIA

Would you like to advertise in this journal? Full page ad is $300. Half page ad is $150. Contact Larry Crumbley (dcrumbl@lsu.edu). Checks to be made out to Journal of Forensic and Investigative Accounting and sent to Larry Crumbley at 3106A Patrick Taylor Hall, Dept. of Accounting, L.S.U., Baton Rouge, LA 70803.


Books Received

Fair Value Measurement: Practical Guidance and Implementation
Mark L. Zyla, 2010, 443 pp.
John Wiley
Hoboken, N.J.
 
Welcome to the new world of accounting! While financial statement preparation once focused on historical cost information, accounting now involves a judgment as to the fair value of assets and liabilities. This book demystifies this topic, offering a nuts–and–bolts guide dedicated to equipping corporate management, valuation specialists, and auditors of the most recent developments in preparing financial statements using fair value measurements. This straightforward book covers the best practices on measuring fair value in a business combination and how to subsequently test the value of these assets for impairment.

Mark Zyla clearly shows his experience in this subject, filtering complicated insider concepts into easy–to–understand information on the valuation specialist′s function, the many new FASB pronouncements involving fair value, and the accounting and auditing requirements for fair value reporting. The author instantly familiarizes the reader on the ins and outs of fair value financial disclosure, with coverage of:

  • The history behind fair value accounting and the impact of the current economic crisis.
  • Fair value measurements in business combinations and subsequent testing for impairment.
  • The nature of intangible assets.
  • The cost approach.
  • The market approach.
  • The income approach.
  • Advanced valuation methods for measuring the fair value of intangible assets.
  • Measuring the remaining useful life of intangible assets in financial reporting.
  • Fair value measurements under IFRSs.
  • Disclosures in fair value measurements.
Scientific Examination of Documents: Methods and Techniques
David Ellen, 3rd Edition, 2006, 234 pp.
CRC Press
6000 Broken Sound Parkway NW
Suite 300
Boca Raton, FL 33487-2742
 
It takes the proper application of the appropriate methods to either confirm or disprove the authenticity of a handwriting sample that appears on a document. The conclusion may mean substantiating a person’s intent and preventing a fraud. Revised and expanded to reflect the most recent innovations in the field of forensic document examination, this third edition explains the various methods used to scrutinize documents in question.

This essential, cutting-edge book begins with an assessment of handwriting techniques, the accidental and deliberate modification of handwriting, and the proper collection of samples. It also reviews traditional and modern typewriting technologies, as well as the analysis of photocopies, incidental marks, the functions of photography in document examination, and courtroom applications.
The Big R: A Forensic Accounting Action Adventure
Larry Crumbley, Doug Ziegenfuss, John O’Shaughnessy, 2nd Edition
Carolina Academic Press
700 Kent Street
Durham, N.C. 27701
919-489-7486, 919-493-5668
Gperkins@cap-press.com
 
This novel is a supplementary book to be used near the end of a forensic accounting, an internal auditing (IA), an auditing, or fraud examination course. The novel could be used in a graduate investment class, also. This FA novel would be ideal for a MBA course or a finance course that has light coverage of accounting, or could be used in FA's in-house training programs. An external auditor interested in outsourcing or co-sourcing an internal auditing function should read this book.

This instructional novel mixes baseball, forensic auditing, serial killers, fraud, risks, chemical and biological agents, and scuba diving to get a better way of learning forensic auditing. A certified internal auditor, a forensic accountant, and a FBI agent work together to find serial killers striking at baseball parks. The killers are able to frame Milt Pappas, a former Chicago Cubs pitcher, as the person responsible for the terror. In 1972, Milt Pappas came within one out pitching a perfect game, but according to Pappas, the umpire called at least two strikes balls, resulting in the twenty-seventh batter walking to first base. That umpire was killed in the novel.

So put on your baseball cap and pull on your baseball spikes. Enjoy the thrills, excitement, and humor of 17 unique events in baseball history as told to you in an exciting historical fiction. The plot is breathtaking as serial killers strike with impunity. Watch a FBI agent, an internal auditor of the New York Yankees, and a forensic accountant stalk the killers as baseball is traumatized by grizzly murders in various baseball parks.
Criminal Interrogation and Confessions
Fred E. Inbau, et al., 4th Edition
Jones and Bartlett Publishers
40 Tall Pine Drive
Sudbury, MA 01776

The authors present techniques that are based on actual criminal cases and have been used successfully by thousands of criminal investigators. This practical, step-by-step text is built around basic psychological principles and examines interrogation as a nine-step process that is easily understood.

In this fourth edition you will find:

  • A new chapter addressing the timely issue of distinguishing between true and false confessions.
  • A new chapter presenting specific guidelines on how to offer effective court testimony with respect to interrogation and confessions.
  • Presentation of laboratory and field research conducted in the area of behavior symptom analysis.
  • Discussion and responses to defense experts’ criticisms of contemporary interrogation techniques.

Cyber Crime Investigator’s Field Guide
Bruce Middleton, 2nd Edition, 2005
Taylor & Francis Group
P.O. Box 409267
Atlanta, GA 30384-9267

Many excellent hardware and software products exist to protect our data communications systems, but security threats dictate that they must be further enhanced. Many laws implemented during the past 15 years have provided law enforcement with more teeth to take a bite out of cyber crime, but there is still a need for individuals who know how to investigate computer network security incidents. Organizations demand experts with both investigative talents and a technical knowledge of how cyberspace really works. This second edition provides the investigative framework that needs to be followed, along with information about how cyberspace works and the tools that reveal the who, what, when, where, why, and how in the investigation of cyber crime.

This volume offers a valuable Q&A by subject area, an extensive overview of recommended reference materials, and a detailed case study. Appendices highlight attack signatures, UNIX/Linux commands, Cisco PIX commands, port numbers targeted by trojan horses, and more.
Money Laundering: A Concise Guide for all Business
Doug Hopton, 2006
Gower Publishing Company
Suite 420
101 Cherry Street
Burlington, VT 05401-4405
 
Around the world, anti-money laundering regulations and legislation have become one of the weapons of choice of governments that are fighting global terrorism and criminality. Within the UK, the latest regulation, The Money Laundering Regulations 2003, have extended the range of businesses covered by the Proceeds of Crime Act to include solicitors, lawyers, estate agents and, in effect, all companies involved in consultancy or business services. The complexity of the new law and the lack of any case law asks more questions about the responsibilities of these companies and their liabilities.

Doug Hopton's highly practical guide explains the basis of International Law, regulations and standards in this area and how they effect businesses, and provides down-to-earth advice on the basic rules of good business management: know your client, know your business (and your client's business), which will help companies understand what procedures to establish, and how and when to report suspicious activity. The author explains the basis of money laundering and how it works, along with the development of the law and regulations around the world, and how other countries' laws can have an effect on companies in the UK.
Novel and Conventional Methods of Audit, Investigation and Fraud Detection
Chetan Dalal, 2008
Commerce Clearing House
Support@cchindia.co.in
 
This author offers an insightful and descriptive account of the frauds, accounting irregularities and methodologies to detect them by using a combination of novel and conventional audit approaches.

The methodologies are clearly and vividly described with extensive case studies and examples. The objective of this book is to provide a practical approach for investigation not only to auditors but for any person entrusted with the task of investigating a white collar crime. The book intends to provide greater awareness of the existence of possible frauds and an insight into structured as well as uncommon methods of fraud detection. It attempts to bring together in one place case studies of certain typical frauds that have been researched and adapted from real life situations.

The key features of the book include
  • Use of figures, drawings and anecdotes to illustrate concepts.
  • Illustration of the interplay between fraud detection and audits.
  • Case studies of industry-specific (telecom, banks, insurance, entertainment, etc) risks.
  • Model documents and samples to illustrate cases of forgery and manipulation.
  • Model and sample of investigation report.
  • Scientific as well as judgment-based approach to fraud investigation and audits.
  • Use of advanced and more sophisticated audit techniques - such as CAAT, data mining, etc, and fraud detection in a computerized environment.
  • Examples of use of handwriting and signature analysis in cases of forgery.
The Economics of Information: Lying and Cheating in Markets and Organizations
Ian Molho, 1997
Blackwell Publishers
350 Main Street
Malden, MA 02148
Information is a key issue in decision making in economics and business. Being ‘in the know’ confers strategic advantages to people, allowing them to lie and/or cheat on their uninformed opponents. However, it is possible that all sides end up worse off in such situations, compared with the likely outcome under full information.

This text is designed to take students through the key issues to give an understanding of the impact of imperfect and asymmetric information in an economic context. At each stage Molho analyses and explains the key points using clear models that set the outcome under imperfect information against that under full information. The book is divided into four major sections covering:
  • Adverse selection.
  • Signalling.
  • Moral hazard.
  • Mechanical design under imperfect information.
Each section also covers experimental studies that test the predictions of theory. This text is aimed mainly at undergraduate students and gives an accessible introduction to this crucial area of economic theory.
The Investigative Reporter’s Handbook: A Guide to Documents, Databases, and Techniques
Brant Houston, 5th Edition, 2009, 608 pp., $55.95
Bedford/ St. Martin
75 Arlington Street
Boston, MA 02116
Forensic accountants can learn from investigative reporters and vice versa. A forensic accountant is a detective that understands accounting. An investigative reporter is a detective that understands research and communication.

Published with Investigative Reporters and Editors, Inc. (IRE), this handbook is the best-selling classroom and newsroom classic. Useful as a textbook in advanced journalism courses and as a reference for professional journalists, this book shows students how to use fundamental news reporting and writing skills like gathering sources, tracking information, and interviewing to pursue investigative stories in a variety of beats -- from the government and education to healthcare, the environment and real estate.

In addition to discussing the latest techniques and challenges in the profession, the fifth edition is now thoroughly streamlined, making it easier to locate the resources that investigative reporters need to get the story. Good research tool for a forensic accountant.

Investigative Journalism
Hugh de Burgh, 2nd Edition, 2008
Routledge
270 Madison Avenue
New York, N.Y. 10016

Investigative journalism has helped bring down governments, imprison politicians, trigger legislation, reveal miscarriages of justice and shame corporations. Even today, when much of the media colludes with power and when viciousness and sensationalism are staples of formerly high-minded media, investigative journalists can stand up for the powerless, the exploited, the truth.

The author provides an unrivalled introduction to this vital part of our social life: its origins, the men and women who established its norms and its achievements in the last decades. Two chapters describe the relationships with the law, bringing us up to date, and others deal with the professional techniques, the sociology and the teaching of investigative journalism. A further new chapter examines the influence of the blogosphere on investigative journalism.

The case studies of the first edition have been supplemented by new chapters: the investigators and methods which revealed the subcontracting of the torture of Iraqi prisoners; how the murder of Stephen Lawrence was treated in the Daily Mail; the tabloids and their investigations; BBC Panorama.
Watchdog Journalism: The Art of Investigative Reporting
Stephen J. Berry, 2009
Oxford University Press
198 Madison Avenue
New York, N.Y. 10016
 

This book takes readers into the world of Pulitzer Prize reporting. Drawing from intriguing interviews and archival research, author Stephen J. Berry reveals the drama of the job and the passion of its practitioners as he narrates the back stories of six investigative projects that earned the craft's most coveted honor.

Rather than focusing solely on huge assignments that are out of reach for everyday journalists, the book explores stories that could emerge on the beat in "Anywhere, USA." Each chapter provides a fascinating case study that covers interviewing, working sources, ferreting out records, and dealing with partners and editors. This case-study approach details the genesis, development, and outcome of these stories, offering students a chance to see how journalists view their roles as public watchdogs and as professionals competing in an increasingly profit-centered environment. The text also discusses how crucial it is for journalists to follow a model of performance and ethical reporting standards in order to advance the role of journalism in our society.

Computer-Assisted Research
Nora Paul and Kathleen A. Hansen, 2007, 210 pp.
Investigative Reporters & Editors
138 Neff Annex
Missouri School of Journalism
Columbia, MO 65211
info@ire.org
Most commercial database services, ones to which you would have dialed out using a modem to a proprietary server in the past, now have a Web version. Because of this change, much of the references in this guide are to Internet/ Web resources. The section on commercial database services (most on the Web) will detail some of the changes that have happened in the marketplace of large data archives and the contents and uses of these types of services in reporting and research. But because changes in these services are ongoing and the pricing options they offer are vast and convoluted, this book does not go into much detail about those aspects of the services.

This guide focuses on the tools and resources of the Internet, for the most part, and try to make comparisons between Internet-accessible resources and the “traditional” information services of the past.
The Evolution of American Investigative Journalism
James L. Aucoin, 2007, 242 pp.
University of Missouri Press
Columbia, Missouri 65201
Beginning with America’s first newspaper, investigative reporting has provided journalism with its most significant achievements and challenging controversies. Yet it was an ill-defined practice until the 1960s when it emerged as a potent voice in newspapers and on television news programs. James L. Aucoin provides readers with the first comprehensive history of investigative journalism, including a thorough account of the founding and achievements of the group called Investigative Reporters and Editors (IRE).
HealthSouth: The Wagon to Disaster
Aaron Beam and Chris Warner, 2009, 208 pp.
Wagon Publishing
Fairhope, AL 36532
ISBN: 0-9796284-8-2
Suppose your boss, saddled with the realization that the Street expectations cannot realistically be met, asks you to creatively “fix the numbers.” It’s the toughest decision you’ll ever make, and one where the easiest way out could be the most difficult, given the circumstances.

Caught squarely between greed and fear, Aaron Beam did the unthinkable.

Beam takes the reader from HealthSouth’s humble beginnings, through its meteoric rise to its disastrous revelation, subsequent trial and his three-month incarceration in a federal prison. Moreover, he reveals the nature of the fraud and the true personality of the driving force behind HealthSouth – Richard Marin Scrushy. Scrushy was one of the most enigmatic, nefarious characters of the State of Alabama has ever produced – a hard-charging, unscrupulous visionary whose caustic, Machiavellian approach ensured HealthSouth’s success, and oddly, his predictable fall as the company’s benevolent dictator.
Anatomy of a Fraud: From Detection to Prosecution
Stephen Pedneaut, 2010, 194, $49.95
John Wiley & Sons
Hoboken, N.J.

Most fraud cases, especially thefts and embezzlements, never make it into the public eye. Those that do grab the media's attention merely report the end result of weeks, months, and even years of investigative procedures. For experienced and inexperienced fraud professionals alike, there is little available to keep abreast of the latest fraud tactics.

Providing unparalleled insights into what takes place during a fraud investigation, this book is a valuable resource for a fraud investigator, auditor, or if you simply suspect fraud may be occurring in your organization and aren't sure what to do. This book is a fascinating, insider look at a fraud investigation, designed to help you better understand fraud detection, investigation, and prevention—from the inside out.

No detail is too small here, with consideration given to sometimes-overlooked details, including:
  • How does a case come to light in the first place?
  • Who are the individuals behind the scene putting the case together, sifting through ledgers, cancelled checks, and other records that comprise a mountain of evidence?
  • Who handles all the information, and where is evidence stored?
  • Who are the witnesses, and how can you know if the suspect acted alone or with the assistance of an accomplice?
  • If computer forensics is involved, how can you extract the most evidence from the suspects' computers?
Auditing and Assurance Services
K.L. Hooks
JohnWiley & Sons, 2011, 926 pp.
111 River Street
Hoboken, N.J. 07030-5774
Provides an up-to-date and comprehensive coverage of the integrated audit. The author presents auditing from the perspective of an integrated audit complying with the requirements of SOX and PCAOB. Excellent chapters on “Audit Planning and Risk Assessment” and “Understanding Internal Controls over Financial Reporting and Auditing Design Effectiveness.” Contains seven pages on forensic auditing and five pages on fraud.