The Fraud Audit – Responding to the Risk of Fraud in Core Business Systems

Essential guidance for creation of an effective fraud audit program in core business systems The Association of Certified Fraud Examiners has reported that U.S. businesses lose up to $4 billion annually due to fraud and abuse. Discover fraud within your business before yours becomes another business fraud statistic. The Fraud Audit provides a proven fraud methodology that allows auditors to discover fraud versus investigating it. Explains how to create a fraud audit program Shows auditors how to locate fraud through the use of data mining Focuses on a proven methodology that has actually detected fraudulent transactions Take a look inside for essential guidance for fraud discovery within specific corporate F&A functions, such as disbursement, procurement, payroll, revenue misstatement, inventory, journal entries, and management override.

Table of Contents:
Preface xi Chapter 1: What Is a Fraud Audit? 1 Why Respond to Fraud Risk? 3 The Fraud Paradigm 4 Fraud Auditing 5 Fraud Defined 8 The Fraud Triangle 8 Responses to the Risk of Fraud 12 Summary 13 Chapter 2: Professional Standards 15 Overview 16 Fraud Audit Standards 18 Summary 25 Chapter 3: Fraud Scenarios 27 Key Definitions and Terms 28 Fraud Risk Structure 30 Classifying Fraud 32 Identifying Fraud Scenarios 41 Fraud Audit Considerations 46 Summary 51 Chapter 4: Brainstorming: The Implementation of Professional Standards 53 What Is Brainstorming? 54 When to Brainstorm 56 Summary 66 Chapter 5: Assessment of Fraud Likelihood 69 Preparing a Fraud Risk Assessment 69 Summary 81 Chapter 6: Building the Fraud Audit Program 83 Traditional Audit versus the Fraud Audit 84 Responding to the Risk of Fraud 84 A Fraud Audit Program 85 Testing Procedures 89 Fraud Concealment Effect on the Audit Response 97 Audit Evidence Issues 103 Fraud Scenario Examples 105 Summary 110 Chapter 7: Data Mining for Fraud 111 The Art and Science of Data Mining 112 Strategies for Data Mining 129 Limitations of Data Mining 131 Summary 132 Chapter 8: Fraud Audit Procedures 133 Basis of Fraud Audit Procedures 133 Levels of Fraud Audit Procedures 135 Design of Fraud Audit Procedures 138 Summary 145 Chapter 9: Document Analysis 147 Document Analysis and the Fraud Audit 148 Levels of Document Examination 148 Document Red Flags 150 Brainstorming Sessions and Document Red Flags 155 The Fraud Audit Program and Document Red Flags 156 Summary 156 Chapter 10: Disbursement Fraud 159 Fraud Risk Structure 159 Audit Approaches 166 Summary 178 Chapter 11: Procurement Fraud 179 Fraud Risk Structure 181 Audit Procedures 195 Summary 202 Chapter 12: Payroll Fraud 205 Fraud Risk Structure 206 Audit Procedures 212 Summary 222 Chapter 13: Revenue Misstatement 223 Fraud Risk Structure 224 Audit Approach 231 Summary 236 Chapter 14: Inventory Fraud 237 Fraud Risk Structure 238 Audit Procedures 243 Summary 249 Chapter 15: Journal Entry Fraud 251 Fraud Risk Structure 252 Audit Procedures 261 Summary 266 Chapter 16: Program Management Fraud 269 Fraud Risk Structure 270 Audit Approach 277 Summary 282 Chapter 17: Quantifying Fraud 283 Conveying the Impact to Management 284 Role of Evidence in Calculating a Fraud Loss 287 Impact on the Fraud Audit 289 Options for Management 292 Case Studies 293 Summary 296 Appendixes 297 Appendix A 298 Appendix B 311 Appendix C 325 Appendix D 339 Appendix E 347 Appendix F 360 Appendix G 363 About the Author 365 Index 367

About the Author :
LEONARD W. VONA, CPA, CFE, is CEO of Fraud Auditing, Inc., and a world-renowned authority in fraud investigation. He has provided expert witness testimony in federal and state courts; consulted with corporations around the world; and is the author of Fraud Risk Assessment: Building a Fraud Audit Program, published by Wiley. A financial investigator with more than thirty years of diversified auditing and forensic accounting experience, including a distinguished eighteen-year private industry career, he regularly speaks at audit conferences and developed the Fraud Training Curriculum for the MIS Training Institute, an internationally recognized audit training organization.

Review :
'Provides tools that can be used by any business.' - Finance & Management Faculty, Sept 2011