Corporate Fraud and Internal Control, + Software Demo

RICHARD E. CASCARINO, CRMA, CFE, CIA, CISM, MBA, is a principal of Richard Cascarino & Associates. He has over thirty years' experience in audit training and consultancy and is a regular speaker at Institute of Internal Auditors (IIA) and Information Systems Audit and Control Association (ISACA) events throughout the United States, Africa, Europe, and the Middle East on fraud prevention, risk management, corporate governance, IT security, and internal auditing. He is a past president of the Institute of Internal Auditors (South Africa) and was the founding Regional Director of the Southern African Region of the Institute of Internal Auditors Inc. Cascarino is also a member of the Board of Regents for Higher Education at the Association of Certified Fraud Examiners.

• Preface xiChapter 1: Nature of Fraud 1Fraud and Irregularities: Definitions and Concepts 2Cost of Fraud 10Notes 15Chapter 2: Elements of the Crimes of Theft and Fraud 17Document Fraud 20Corroborating Documents 22Procurement Fraud 22Bribery and Corruption 26Industrial Espionage 28Check Fraud and Money Laundering 30Notes 32Chapter 3: Frauds Against the Individual 33Online Auction Fraud 34Consumer Frauds 35Telephone Frauds 37Charity Frauds 38Misrepresentation of Material Facts 39Concealment of Material Facts 40Advance fees (4-1-9) Frauds 41“Middleman” Frauds 42Bait and Switch 43Larceny 44Extortion 45Counterfeit Goods and Intellectual Property 45Affinity Frauds 46Pyramid Schemes 47Ponzi Schemes 48Career Opportunities 49Cash Recovery Frauds 51Chapter 4: Frauds Against the Organization 53Bankruptcy Fraud 54Check Fraud 54Obtaining Fraudulent Loans 54Unsolicited Orders 57Embezzlement 58Bribery 60Corruption 60Conflicts of Interest 61Breach of Fiduciary Duty 62Theft of Trade Secrets 63False Claims 65False Conveyancing 69Tunneling 70Conspiracy 72Lapping 72Kiting 73Fraudulent Affiliations 74Counterfeit Money 74Benefit Frauds 75Insurance Fraud 76Payment Card Frauds 80Pension Frauds 81Tax Fraud 83Insider Trading and Market Abuse 84Click Fraud 84Counterfeit Goods and Intellectual Property 86Procurement Fraud 87Notes 88Chapter 5: Fighting Corruption 91Bribery in Contracts 93Red Flags at Enron and WorldCom 104Nepotism and Favoritism 104Abuse of Authority 108Developing an Overall Anticorruption Culture 109Notes 110Chapter 6: Role of Ethics in Fighting Fraud 113How Moral Decisions Are Made 114Nature and Role of Ethics 115Managing Ethical Risk 121Reporting of Fraud 124Notes 128Chapter 7: Controlling Fraud 129Corporate Governance and Fraud Prevention 130Audit Committee’s Role in Fighting Fraud 136Internal Control and the Prevention of Fraud 143Fighting Shrinkage 156Internal Audit Role 157Notes 166Chapter 8: Fraud Risk Management 169Establishing the Corporate Fraud Risk Profile 170Cascarino Cube 175Roles of the Internal, External, and Forensic Auditor 178Whistleblowing in Detecting Fraud 183Note 186Chapter 9: Investigating Fraud 187Red Flags and Indicators of Fraud 188Corporate Fraud Indicators 193Conducting an Investigation 203Tools and Techniques 207Use of the Polygraph 217Documenting the Investigative Process 219Evidence Analysis 219Investigative Errors 219After the Event 221Establishing an Investigations Function 221Tracing and Recovering Assets 222Notes 226Chapter 10: Computer Fraud and Countermeasures 227Mainframe Architectures 230Mainframe Communications 233Control of Servers 234WAN Communications 236Workstation Security 236Mobile Computing and the Internet 238Cloud Computing 241Computer and Information Fraud 243Monitoring Tools 247Preventing E-Commerce Fraud 249E-commerce Control Opportunities 254E-payments 255Internal Control Best Practices 255Newer Fraud Schemes 256Protecting Digital Assets 257Foiling the Hackers 259Investigating Computer Fraud 260Computer Law 271Note 273Chapter 11: Legal Issues Surrounding Fraud 275Impact of a Constitution 277Fraud and the Laws of Evidence 277Asset Recovery 279Labor Legislation and Fraud 282Note 284Chapter 12: Industry-Related Fraud Opportunities 285Banking Fraud 286Money Laundering 304Health Care Fraud 307Insurance Fraud 313Tax Fraud 319Social Security Fraud 325Fraud after Death 327Construction Fraud 328Notes 332Appendix A: Audit Committee Charter 335Appendix B: Corporate Fraud Policy 339Appendix C: Whistleblowing Policy 343Appendix D: Fraud Prevention Checklist 347Appendix E: Fraud Risk Questionnaire Sample 351Appendix F: Fraud Risk Analysis 357Appendix G: Fraud CAATs 361Glossary 371About the Author 377About the Web Site 379Index 381