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 3: No. 1, January-June, 2011

Table of Contents

Creative Accounting, Fraud and International Accounting Scandals Michael Jones, editor, 2011, 550 pp John Wiley & Sons wiley.com	From the South Sea Bubble to Enron and Parmalat, business scandals have a long and varied history which continues into the present day. As accounting is central to the success or failure of any business, so creative accounting has always played a key role in these scandals, reflecting the extremes of how numbers can be manipulated to deceive or even defraud. This monograph explores the role of accounting, particularly creative accounting and fraud in business scandals from around the world. It features a collection of 13 chapters by international authors, which detail accounting fraud and scandals in both developed and developing economies including Australia, China, Germany, Greece, India, Italy, Japan, Netherlands, Spain, Sweden, UK, and US. To enhance the international perspective even further, a series of case studies, contributed by accounting experts, is also included. This unique, global perspective on accounting scandals provides the background for discussion on the role of powerful individuals, the motives and methods of management who are complicit in these scandals and the failures of internal control and external auditing, as well as the long term impact of business scandals on the regulatory environment. One of the few books on this subject, its accessible treatment of this relevant topic is fascinating reading for a wide audience. It also provides a highly useful reference for professional accountants and business people worldwide and students taking courses in forensic accounting and fraud, as well as providing more general background for most accounting courses.
Crime and Corruption in Organizations R.J. Burke, E.C. Tomlinson, C.L. Cooper, 2011, 361 pp Gower Publishing Limited Wey Court East Union Road Farnham, Survey GU9 7PT England	Although increasing attention has been paid to it, there are no signs that crime and corruption in organizations is decreasing, so if you’re a manager or government policy maker, and your mandate is to reduce crime and corruption, where do you start? The international authors of this book fill a critical need to address such a prevalent and costly topic with a detailed analysis of the risks associated with crime and corruption in organizations. They examine the causes and consequences, and the choices we face in our efforts to eradicate these social maladies. They focus on the risks to individuals and organizations surrounding criminal and corrupt acts, with an emphasis to the psychological, behavioral and organizational factors supporting such behaviors. Finally, they explore the phenomenon of crime and corruption across a diverse array of organizational settings (ranging from public to private, for-profit to non-profit) and occupational categories (for example, police officers, physicians, accountants, and academicians). The constant barrage of scandals publicized by the media demands ‘front burner’ attention dedicated to stemming this tide. Accordingly, this book turns to prominent researchers employing their talents to produce more ethical organizations. The result is the most up-to-date thinking on both classic (for example, cognitive moral development) and novel (for example, moral attentiveness) approaches to crime and corruption, as well as scientifically-grounded approaches to reducing illicit behavior in organizations.
A New Framework for Investigating and Managing Business Fraud The Guide to Investigative Business Fraud Ernst & Young, 2009, 324 pp. AICPA New York, NY 10036-8775	This book provides a clearly defined framework for approaching a fraud investigation. This comprehensive resource was developed by the fraud investigation team at Ernst & Young. The chapters are written by subject-matter experts and may be read individually as reference guides for specific topics or together as an overview of a fraud investigation. This book will enable you to examine the principles and techniques that guide the experts through a fraud investigation and answer these questions: How do experts examine and work a fraud case? How do they reason and make decision at critical times during an investigation? How do they evaluate a case and interact with colleagues? How do they handle preventative antifraud programs? Feature of this book include: Fraud experts share their veteran, practical knowledge Tools and techniques address new fraud schemes and challenges A threaded case study shows how fraud investigation principles can be applied in practice. Two-color interior highlights concepts keys to understanding how business fraud works.
The Monster Michael W. Hudson, 2010, 266 pp. Henry Holt & Company 175 Fifth Avenue New York, N.Y. 10010	The mortgage mess is back into the news with Ben Bernanke saying that federal regulators are looking intensively at bank forclosure practices. The New York Times in a November, 2010 editorial said that the regulators are behind the curve, which is exactly what this author points out “how a gang of predatory lenders and Wall Street Bankers fleeced America and spawed a global crisis.” More than 2 million home owners are in danger of losing their houses as a result of predatory lending. This book is a best practice manual or roadmap for fraudsters in the mortgage and banking industry. Every forensic accountant or valuation expert should read this book to develop the skeptical attitude needed today. Michael Hudson provides a history of the rise and fall of the subprime mortgage industry through stories of both Ameriquest Mortgage and Lehman Brothers. The sales force at Ameriquest watched the movie Boiler Room as a training film to learn how to pitch overpriced deals to home owners. On page one Mark Grover places two sheets of paper against the window and used the light streaming through to trace a signature from one page to the other. Glover’s co-workers used scissors, tape, Wite-out, and a photocopier to fabricate W-2s. They would “paste the name of a low-earning borrower onto a W-2 belonging to higher-earning borrower, and like magic, a bad loan prospect looked much better. Their office break room, dubbed the “Art Department,” had all the tools they needed to manufacture and manipulate official documents. But they needed pigeons or home owners to con. So the greedy salesmen memorized a detailed sales Track (short for A Loan Officer’s Track To Run On). They were taught to meet the borrower at least three times, by leaving at least twice and reintroduce themselves each time they returned. Does this sound like an automobile dealership? The loan officer wanted to be a friend and a problem solver. Step 8 in the Track was the Mortgage Savings Presentation (e.g., called the monster) which is the genesis of the book’s title. They tried to persuade reasonably educated borrowers that by paying higher fees and interest the borrower actually saved money – which, of course, was entirely misleading. I enjoyed the so-called “Whoop’s Techniques.” If a borrower had an annual income of $ 56,000, for example, the loan officer instead reports it as $ 66,000. So if someone in underwriting caught the discrepancy, the loan officer could explain that it was a typo – a simple error. There were little internal controls because Hudson writes that when consumer complaints came in, the regulators generally erred on the side of shielding the institution. During this time period, the loan terms could include 12 to 20 points. Loan officers would not give the customers the federal truth – in lending disclosure form. Gloria and John obtained a loan from FAMCO on their two-flat apartment building to pay-off some credit-card debts. They found out too late that FAMCO had rolled a $ 19,500 origination fee into their $ 118,000 loan. When Mr. O read through his loan paperwork the loan carried an adjustable rate that started at 14.5%, never went down, but could climb as high as 20.5%. The cash he was told he would get was gone. “No problem. You have three days to rescind. Go ahead and sign and I’ll fix it.” Mr. O could not get anyone on the phone for the next three days. So million of people received adjustable rate loans, and these loans were then securitized. Apparently, you could securitize almost anything. The individual mortgages were bundled together into a mortgage pool which is held in trust as collateral for a mortgage-back security. These securities were then sold to participants in a secondary market. Many of the loans were to less-than-stellar credit. For a short history of the subprime meltdown, see “The Fuel that Fed Subprime Meltdown,” Investopdeia. Throughout the book and especially on page 163, Hudson illustrates the fraud triangle - motive, opportunity, and rationalization. There were no controls. Loan officers would look for “rubber stamp” appraisers. When Roland Arnall tried to stop this “you dial a guy until you find a guy,” one top executive suggested penalizing offenders as follows: employees who were involved with fraud on five or more loans would be fired; employees involved in fraud on fewer than five loans would get a warning and keep their jobs. These loan officers were making huge salaries with little chance of being caught, so they rationalized their unethical and possibly illegal behavior. The one major criticism I have is that the author makes little mention of the bad guys in this disaster: Fannie Mae, Freddie Mac, Bill Clinton, and other Democrat politicians who pushed for these risky loans to be made, and the prime culpable – the borrower. Early in the book he only says “the subprime market did not cause the U.S. and global financial meltdown by itself. Other varieties of home loans and a host of arcane financial innovations – such as collateralized debt obligations and credit default swaps – also came into play.”
The Anatomy of Fraud and Corruption: Organizational Causes and Remedies T. Brytting, R. Minogue, V. Morino, 2011, 268 pp. Ashgate Publishing Company Suite 420 101 Cherry Street Burlington, VT 05401-4405	The authors’ main focus is not to support fraud investigators, but primarily this book has three other target groups. Firstly, ‘Bystanders’: those who witness, suspect or feel what is going on. The authors think you are the key people when it comes to detecting fraud and corruption. Unfortunately, you might also be fraudsters in spe if you don’t watch out for warning signs. Their aim is to increase our awareness of the risks and our knowledge to deal with them. Secondly, ‘Designers of Organization’: both organizational culture and structure are crucial ingredients in the complex process that eventually leads to fraud and corruption. Their ambition is to make readers understand how corruptive organizational processes work so that we can ensure our organization is resistant to fraud and corruption. Finally, ‘Trainers’: those who need to train employees to be more aware and to recognize the warning signs in order to put fraud and corruption under control. The book supplies ideas and tools for these targets.
The Business Interruption Book; Coverage, Claims, and Recovery Remedies D.T. Torpey et al., 2004, 380 pp. National Underwriter Company 5081 Olympia Blvd Erlanger, KY, 41018 www.nuco.com	The authors provide a road map that business and risk professionals need both before and during the challenges of a business interruption loss and claim. Moving from the theoretical to the practical, the authors share their personal knowledge of what it takes to successfully establish coverage and handle losses and resulting claims. The book takes the reader across the spectrum of standards to customized coverage provisions, outlining the path to a comprehensive understanding of their intricacies. The section of manuscripting coverage language explains the major differences among the options, couched in the framework of practical possibilities. Chapters then reveal the authors’ knowledge of the numbers side of the equation: how to establish insurable business interruption values, how to document and file a claim, and how to manage the claim process. No such book would be complete without a discussion of the legal issues that impact the process. This one goes beyond a mere discussion of the legalities to explain how the system works and the steps that can be taken to successfully resolve differences of opinion that are sure to arise when negotiating business interruption coverage and claims. What makes the book unique is its offering of step-by-step insight into the claim process. Claim scenarios provide the reader with the tools to actually work through specific situations, offering practical insight into a process that is both complex and uncertain. This book unlocks that black box, providing insight that will serve the reader well when establishing appropriate coverage, working through a claim, and recovering from loss situations.