White Papers, Guides & Manuals

AntiFraud white paper: Emerging role of internal audit in mitigating fraud and reputation risks

Significant legal, regulatory and standards-setting actions are combining to pressure all players in the financial-reporting process to step up their efforts to combat corporate fraud and misconduct.

For internal audit, this environment poses both opportunities and challenges. Corporate auditors who move quickly to develop antifraud action plans –– such as PricewaterhouseCoopers’ 10-Step Antifraud Action Plan –– will find ample ways to provide added value to their organisations. Conversely, internal audit directors who fail to address rising stakeholder expectations jeopardise their relevance and imperil their job security. (Read more...) Link currently unavailable

Fraud Manual on Employee Embezzlement

This fraud manual represents Joe's personal experiences dealing with fraud in state agencies and local governments in the State of Washington. The manual describes a host of common fraud schemes perpetrated by trusted employees within the organization, as well as many important concepts about fraud. While these fraud schemes come from the public sector, the same schemes also occur in the private sector. So, there is plenty of information for everyone. The material is provided with the compliments of the author with the hope that readers will use the information to both deter and detect employee fraud in the workplace. (Read more...)

Assessing Technology, Methods, and Information for Committing and Combating Cyber Crime

The report notes that computer crime, in general, results from situations in which offenders capitalize on perceived opportunities to invade computer systems to achieve criminal ends or use computers as instruments of crime, confident that law enforcement officials do not have the means or knowledge to prevent or detect such criminal acts. This report presents up-to-date information on computer crime commission and investigation to help the reader understand how offenders use technology to commit their crimes (i.e., the most popular and effective methods); what enforcers must know to effectively detect/investigate these offenses; and in which areas offenders are still exceeding the skills of law enforcement. The tools being used by offenders are logically grouped and categorized by function (e.g., scanning tools, wardialing programs, and password crackers).

The investigative tools described address the investigative needs, such as evidence source identification, evidence preservation, evidence extraction, and evidence analysis. These tools are grouped into the general categories of evidence collection and preservation tools, evidence extraction tools, evidence examination tools, evidence organization tools, network forensic tools, attack analysis tools, multipurpose forensic tools and toolkits, and trusted time stamping. These tools are further separated by function into subcategories. The body of this report presents general descriptions of the investigative tools, accompanied by directions on where more specific information on the tools can be found. (Read more...)

Gifts, benefits or just plain bribes? Guidelines for public sector agencies and officials

The ICAC has produced this corruption prevention publication to guide public officials who may be offered gifts, benefits or bribes in the course of their official duties. It highlights the main issues that public officials should take into account in deciding whether to accept a gift or benefit. The publication is also intended to assist public sector agencies in the development of their gifts and benefits policies. Some of the main issues that should be considered when implementing such policies are discussed. (Read more...)

Standard Practises for Investigative and Forensic Accounting Engagements

NOVEMBER 2006: Standard practices for investigative and forensic accounting (IFA) engagements have been prepared by the IFA Standards Committee (Committee) of the Alliance for Excellence in Investigative and Forensic Accounting (IFA Alliance), and have been approved by the Board of the IFA Alliance. The role of the Committee is to set, maintain and update standard practices for conducting IFA engagements. (Read more...)

Managing the Risk of Fraud - A Guide for Managers

Risk, in the context of managing fraud risk, is the vulnerability or exposure an organisation has towards fraud and irregularity. It combines the probability of fraud occurring and the corresponding impact measured in monetary terms. Preventive controls and the creation of the right type of corporate culture will tend to reduce the likelihood of fraud occurring while detective controls and effective contingency planning can reduce the size of any losses.

Everybody in an organisation contributes to the management of fraud risk. This starts at the top where senior management set the tone of the organisation and promote an anti-fraud culture throughout the organisation. Operational staff design and implement and operate the control actions required to minimise risk. The personnel function ensures that the right staff are recruited. Accommodation services ensure physical security and IT services promote computer and data security. The role of internal audit is to deliver an opinion to the Accounting Officer on the whole of an organisation’s risk management, control and governance. In relation to fraud this will include the examination of the adequacy of arrangements for managing the risk of fraud and ensuring that the organisation actively promotes an anti-fraud culture. (Read more...)

Management Antifraud Programs and Controls - Guidance to Help Prevent and Deter Fraud

Some organizations have significantly lower levels of misappropriation of assets and are less susceptible to fraudulent financial reporting than other organizations because these organizations take proactive steps to prevent or deter fraud. It is only those organizations that seriously consider fraud risks and take proactive steps to create the right kind of climate to reduce its occurrence that have success in preventing fraud. This document identifies the key participants in this antifraud effort, including the board of directors, management, internal and independent auditors, and certified fraud examiners. (Read more...)

Investigative Uses of Technology: Devices, Tools, and Techniques

October 2007: This NIJ special report discusses techniques and resources for investigating technology-related crime. It explains technology-related tools and devices that an investigator may encounter or that may assist an investigation, and legal issues affecting the use of high technology. Devices not only can aid an investigation; they can facilitate crime. For example, criminals can use cell phones to trigger explosives and credit cards and other customer cards to engage in fraud, theft, and identity theft. For each device described, the report provides an overview of their functions and usefulness to investigators. Devices can be multifunctional (e.g., cell phones can perform camera functions). As more functions converge into a single device, investigators need to be aware that relevant information can be stored in seemingly mundane or commonplace objects or devices. (Read more...)

Investigations Involving the Internet and Computer Networks

This NIJ Special Report is intended as a resource for individuals responsible for investigations involving the use of the Internet and other computer networks. Any crime could involve devices that communicate through the Internet or through a network. Criminals may use the Internet for numerous reasons, including trading/sharing information (e.g., documents, photographs), concealing their identity, and gathering information on victims. The report is among a series of guides on investigating electronic crime. (Read more...)

Digital Evidence in the Courtroom: A Guide for Law Enforcement and Prosecutors

Now essential to modern life, computers have also become increasingly important to criminals, who steal information, commit fraud, and stalk victims online. Even if a crime was not committed online, law enforcement may discover critical evidence from an offenders' digital media. For this evidence to be admissible, however, police must demonstrate proper collection and handling. In the courtroom, prosecutors must overcome the twin barriers of skepticism and lack of technical understanding. To help navigate this complex process, NIJ's technical working group of national experts prepared this special report. Chapters 1 and 2 inform crime scene investigators and other handlers about legal requirements for the handling of digital evidence. Chapters 3 and 4 provide guidelines for successful prosecution. The last chapter is a working application—using digital evidence to convict in a child pornography case. Appendixes provide useful resources and forms. (Read more...)

Electronic Crime Scene Investigation: A Guide for First Responders

Computers and other electronic devices are being used increasingly to commit, enable, or support crimes against persons, organizations, or property. This NIJ Guide (NCJ 187736) is intended for use by law enforcement and other responders who have the responsibility for protecting an electronic crime scene and for the recognition, collection, and preservation of electronic evidence. The document is not all-inclusive. Rather, it deals with the most common situations encountered with electronic evidence. (Read more...)

Forensic Examination of Digital Evidence: A Guide for Law Enforcement

This guide is intended for use by members of the law enforcement community who are responsible for the examination of digital evidence. The guide, published as an NIJ Special Report, is the second in a series of guides on investigating electronic crime (see also Electronic Crime Scene Investigation: A Guide for Law Enforcement). It deals with common situations encountered during the processing and handling of digital evidence and can be used to help agencies develop their own policies and procedures. (Read more...)

Crime Scene Investigation: A Guide for Law Enforcement

The guide is presented in five major sections, with sub-sections as noted: (1) Arriving at the Scene: Initial Response/Prioritization of Efforts (receipt of information, safety procedures, emergency care, secure and control persons at the scene, boundaries, turn over control of the scene and brief investigator/s in charge, document actions and observations); (2) Preliminary Documentation and Evaluation of the Scene (scene assessment, “walk-through” and initial documentation); (3) Processing the Scene (team composition, contamination control, documentation and prioritize, collect, preserve, inventory, package, transport, and submit evidence); (4) Completing and Recording the Crime Scene Investigation (establish debriefing team, perform final survey, document the scene); and (5) Crime Scene Equipment (initial responding officer/s, investigator/evidence technician, evidence collection kits). (Read more...)

Guidance on Monitoring Internal Control Systems

Internal control systems exist to help organizations meet their goals and objectives. They enable management to deal with changes in internal and external environments. They also promote efficiency, reduce the risk of loss, and help ensure financial statement reliability and compliance with laws and regulations.

Internal control is, therefore, critical to the success of any organization. When it is effective, management and the board have reasonable assurance2 regarding achievement of an organization’s goals and objectives. When it is not effective, neither management nor the board has such assurance. It follows, then, that organizations need a mechanism for assessing the quality of their internal control systems’ performance over time. That mechanism is monitoring.  (Read more...)

Report of the National Commission on Fraudulent Financial Reporting

1987: Prevention and earlier detection of fraudulent financial reporting must start with the entity that prepares financial reports. Thus the first focus of the Commission's recommendations is the public company, including (1) the tone set by top management, (2) the internal accounting and audit functions, (3) the audit committee, (4) management and audit committee reports, (5) the practice of seeking second opinions from independent public accountants, and (6) quarterly reporting. The independent public accountant's role, while secondary to that of management and the board of directors, also is crucial. This section of the report covers responsibility for detection and improved detection capabilities, audit quality, communications, and changes to the standards-setting process for auditing. The Commission's recommendations for increased deterrence also involve new SEC sanctions, greater criminal prosecution, improved regulation of the public accounting profession, adequate SEC resources, improved federal regulation of financial institutions, and improved oversight by state boards of accountancy. To encourage educational initiatives, the Commission also recommends changes in the business and accounting curricula as well as in professional certification examinations and continuing professional education. (Read more...)

Internal Control over Financial Reporting — Guidance for Smaller Public Companies

2006: This small business guidance takes the concepts of the 1992 Internal Control – Integrated Framework and demonstrates their applicability for achieving financial reporting objectives of smaller publicly traded companies. (Read more...)

Enterprise Risk Management — Integrated Framework

The framework defines essential enterprise risk management components, discusses key ERM principles and concepts, suggests a common ERM language, and provides clear direction and guidance for enterprise risk management. Engaged by COSO to lead the study, PricewaterhouseCoopers was assisted by an advisory council composed of representatives from the five COSO organizations. (Read more...)

Assessing the Role of Control Overrides in Financial Statement Fraud. Study conducted by Dr. Robert Tillman and Michael Indergaard (Read more...)

Corruption in the Procurement Process/Outsourcing Government Functions: Issues, Case Studies, Implications

Assessing How Procurement Fraud Suborns Officials Study conducted by Dr. Nikos Passas (Read more...)

Red flagging as an indicator of financial statement fraud:

The perspective of investors and lenders

There is increasing international concern about the escalation of fraud and, in particular, financial statement fraud. Detecting financial statement fraud and proving such fraud remains an elusive goal. Red flagging is an early warning system that has been used by auditors to determine the probability of financial statement fraud. (Read more...)

A Case Study of the Role of the Forensic Accountant in a Legal Dispute

With increasing frequency, forensic accountants are called upon to play important roles in resolving legal disputes ranging from civil actions such as breaches of fiduciary duty to Racketeer Influenced Corrupt Organizations (RICO) Act criminal violations involving gambling, arson for profit, extortion, securities fraud, and mail fraud. In any litigation, the forensic accountant’s role is to examine the financial issues relevant to the case, summarize and explain those issues to interested parties (e.g. the judge, attorneys and plaintiffs/defendants), and offer expert testimony in court, if necessary. (Read more...)

Recognition of Revenue and the Auditor’s Responsibility for Detecting Financial Statement Fraud

Financial reporting frauds and earnings manipulation have attracted high profile attention recently. There have been several cases by businesses of what appears to be financial statement fraud, which have been undetected by the auditors.

In this thesis, the main purpose is to identify some of the reasons why auditors have not detected financial statement fraud and to suggest possible solutions for improving the audit process in these areas. In order to achieve this target, some cases of the fraudulent financial statements of revenue recognition will be analysed. (Read more...)

Fraud: Meeting the Challenge through External Audit

Fraud matters to all external auditors. In any audited entity there is always a risk that its financial statements may be affected by material fraud. The ICAEW has identified the loss of confidence due to the high profile corporate failures in the United States as the single most important issue facing the UK accountancy profession. The restoration of public confidence in the profession remains high on the ICAEW’s agenda. Developing further guidance for members on fraud has been a priority since then and this publication is a first step. It continues the focus on improving the effectiveness of audit begun with the Faculty’s Audit Quality publication issued in November 2002. (Read more...)

Fraud Control Improvement Kit

Studies globally of fraud consistently show that it is not reducing as a key risk issue. The incidence of fraud within the Australian economy is increasing, as is the average financial loss associated with fraudulent conduct. No organisation can assume that its safeguards are adequate.

We recognise that organisations need a simple and effective way to review and monitor how effectively they are implementing fraud control strategies. This kit has been developed for precisely that purpose. Its development reflects an extended period of consultation, focus-group review and pilot-testing to ensure that that the kit is simple to use, practical and flexible. The kit assists organisations to meet their fraud control obligations in a cost-effective manner, tailored to their situation and based on risk. (Read more...)

Anti-Corruption Tool Kit

JANUARY 2002: Since 1994 the world has witnessed an unprecedented increase in the efforts of governments and international agencies to raise awareness about the negative effects of corruption. International organisations, governments, and the private sector have come to realise that corruption is a serious obstacle to effective government, economic growth, and national and international stability. For these reasons, there is an increased interest and need for international and national anti-corruption legislation, policies and measures.

The purpose of this anti-corruption tool kit is to help U.N. Member States and the public to understand the insidious nature of corruption, the potential damaging effect it can have on the welfare of entire nations and suggest measures used successfully by other countries in their efforts to uncover and deter corruption and build integrity. (Read more...) (3.11 MB)

Fighting Fraud: Guidelines for state and local government

November 2002: Fraud threatens the ability of agencies and councils to carry out their functions. It is increasingly important that they properly respond to the threat of fraud. 

These guidelines look at ways responding to fraud through risk assessment and management, prevention and detection strategies, thorough investigation and appropriate follow up action. 

Those responsible for the efficient and effective management of all government organisations should read the guidelines and examine their own fraud risk management arrangements. (Read more...)

Do-it-yourself Corruption Resistance Guide

November 2002: The ICAC aims to build corruption resistance among all public sector agencies. So, as part of the ICAC’s Corruption Resistance Review program (CRR), we have produced a Do-it-yourself Corruption Resistance Guide (DIY Corruption Resistance Guide).

Agencies can use the guide:

1. to assess how well they are building corruption resistance across their functions and locations;

2. to identify any gaps and the steps that need to be taken to close them; and

3. as a benchmarking tool to measure progress over time. (Download Guide)

Responding to Fraud: (An ICAC discussion paper)

APRIL 2002: The ICAC’s job is to expose corruption and to build corruption resistance. This means that we need to help agencies and councils to deal with fraud.

The best way to deal with the threat of fraud is effective prevention and strong detection measures. The best way to respond to suspicion of fraud is to investigate it thoroughly. The best way to respond to firm evidence of fraud is to ensure that it does not occur again and to attempt to prevent the culprit from getting away with it or doing it again.  These are the issues covered in our discussion paper, Responding to Fraud. (Download Guide)

Organisational Integrity: The first four steps

APRIL 2001: No leader of a public sector agency or local council wants to face a corruption scandal. Building organisational integrity is an effective way to avoid this happening.

This quick guide tells you what organisational integrity is, how it can benefit your organisation, and how you can take four steps to achieve it. (Read more...)

Practical guide to corruption prevention

1996: This guide is for all public sector and local government staff, but primarily for those responsible for coordinating, developing and/or implementing corruption prevention measures in their organisation.

You may work in a large organisation with an established corruption prevention infrastructure or in a smaller organisation where corruption prevention is just one responsibility. This guide will help you understand the important issues, develop appropriate policies, implement effective corruption prevention strategies, and motivate both senior and other staff in your organisation. (Read more...)

Fraud Risk Management - A Guide to Good Practice

2001: Fraud costs organisations millions of pounds each year. Periodically, the latest major fraud hits the headlines as other organisations sit back and watch, telling themselves that ‘it couldn’t happen here.’ But the reality is that fraud can be committed anywhere. While there are only a small number of major frauds, huge sums are lost as a result of the large number of small frauds. Surveys have shown that the majority of companies have experienced fraud at some level, and that many do not have the formal systems and procedures in place to deter and detect it. It is in assisting companies in establishing such systems that this guide should prove very valuable.

This guide has been prepared by CIMA’s Fraud and Risk Management Working Group, which was established to look at ways of helping management accountants to be more effective in countering fraud and managing risk in their organisations. (Download Guide)

All types of fraudsters weigh up the potential gains against the risk of getting caught and the sanctions they may face. Government departments and agencies need to make fraud as unattractive as they can .Not acting against fraud can undermine the reputation, integrity and professionalism of the organisation and perceptions about the quality of the services it provides leading to a loss in public confidence. (Read more...)

Ethics Handbook - Building Ethical Leaders

2006: The purpose of this handbook is not to teach you how to be ethical. You have already developed and formulated most of your values and morals through your prior experiences.

The purpose of this handbook is to:

• Increase your awareness of ethical dilemmas,

• Provide you with guidance on how to recognize common ethical dilemmas,

• Present tools from which issues can be evaluated and decisions made, and

• Provide the basis from which action can be taken based on those decisions.

(Read more...)

Managing the Risks of Business Ethics and Compliance

2006: The risks of an ethical misconduct disaster have never been greater due to the complexity of the global business environment. Increasing regulation and enforcement as well as stakeholder scrutiny can create an unexpected organizational crisis. In this paper we will provide a foundation for understanding organizational ethical decision making and provide two examples of companies that found themselves dealing with an organizational ethical disaster. (Read more...)