Financial Statement Fraud: Prevention and Detection

Financial Statement Fraud: Prevention and Detection, Second Edition is a valuable reference guide for fraud examiners, audit committees, management, and regulators; and for one other important cog in this wheel: the investors who stand to lose everything."
—Joseph Wells, founder and Chairman, Association of Certified Fraud Examiners
Exceptionally well researched and fully revised, Financial Statement Fraud, Second Edition provides thorough coverage of the nature and extent of financial reporting fraud. Authors and accounting experts Zabihollah Rezaee and Richard Riley describe the most successful methods for preventing, detecting, and controlling incidents of financial reporting fraud and offer reliable guidance from standard–setting organizations such as the PCAOB, AICPA, and the SEC. Real–life case studies of companies guilty of such fraud—and a discussion of the consequences—help illustrate important concepts.
Thoroughly updated for today′s marketplace, Financial Statement Fraud, Second Edition contains sample reports, examples, and documents that promote a realistic understanding of financial statement fraud and the investigation of fraudulent financial reporting allegations centered on the elements of fraud: the act, the concealment, and the conversion or benefit to the perpetrator.
Whether you are a manager, board of director, executive, or auditor, the Second Edition updates you on all the important issues regarding financial statement fraud, including:Auditing standards issued by the PCAOB, technological advances, and globalizationSOX– and SEC–related implementation rulesThe movement toward IFRS and IAAS and the use of the XBRL reporting platformThe trend toward reducing the complexity of the financial reporting processCorporate governance reforms in the post–SOX eraAntifraud policies, practices, and education for all players in the financial reporting process
With practical tools and techniques for carrying out antifraud responsibilities, Financial Statement Fraud, Second Edition is the only resource you will need to identify early warning signs of financial misconduct and a reliable, practical guide to preventing it.

Spis treści:
Foreword.
Preface.
Acknowledgements.
Part One: Financial reporting and Financial Statement fraud.
1 Financial Statement Fraud Defined.
Will History Repeat Itself?
A Closer Look.
Definition of Financial Statement Fraud.
Nature of Financial Statement Fraud.
High–Impact Fraud Cases.
Cost of Financial Statement Fraud.
Fraud Studies and Regulatory Responses.
Antifraud Programs.
Occurrence, Prevention, and Detection.
Lessons Learned and Applications for Practice.
Notes.
2 Financial Reporting Structure.
Introduction.
Financial Reporting System.
Importance of Financial Information.
Annual Financial Reporting Requirements.
High–Quality Financial Reports.
Six–Legged Stool of the Financial Reporting Process.
Corporate Financial Reports.
Corporate Reporting Challenges.
Financial Restatements.
Fair Value.
Stock Options Accounting.
XBRL– Generated Financial Reports.
Antifraud Applications for Practice.
Notes.
Part Two: Finaicla Statement Fraud Profile, Taxonomy, and Schemes.
3 Cooking the Books Equals Fraud.
Introduction.
Why Does Financial Statement Fraud Occur?
Profile of Financial Statement Fraud.
Waste Management, Inc.: Financial Statement Fraud Analysis.
Antifraud Applications for Practice.
Notes.
4 Realization, Prevention, and Detection.
Introduction.
Realization.
The 3Cs Model.
Financial Statement Fraud Prevention.
Financial Statement Fraud Detection.
Correction Procedures.
Prevention, Detection, and Correction Strategies.
Antifraud Applications for Practice.
Notes.
5 Taxonomy and Schemes.
Introduction.
Symptoms of Financial Statement Fraud.
Common Fraud Schemes.
Common Revenue Fraud Schemes.
Financial Statement Fraud Red Flags.
Whistle–blower Regulations.
Antifraud Applications for Practice.
Notes.
Part Three: Corporate Governance and Its role in Preventing and Detecting Financial Statement Fraud.
6 Role of Corporate Governance.
Introduction.
Definition of Corporate Governance.
Role of Corporate Governance.
Corporate Governance Structure.
Characteristics of Corporate Governance.
Corporate Governance Functions.
Global Corporate Governance. 
Anti–Fraud Applications for Practice.
Notes.
7 Board of Directors′ Oversight Responsibility.
Introduction.
The Role of the Board of Directors.
Composition of the Board of Directors.
Functions of the Board of Directors.
Attributes of Boards of Directors.
Antifraud Applications for Practice.
Protocol: A Plan for Reaction to Allegations of Misconduct.
Notes.
8 Audit Committees and Corporate Governance.
Introduction.
Audit Committee.
 Audit Committee Attributes.
Audit Committee Roles and Responsibilities.
Audit Committee Charters.
Chairperson of Audit Committees.
Audit Committee Report.
Audit Committees′ Roles in Preventing and Detecting Financial Statement Fraud.
Antifraud Applications for Practice.
Notes.
9 Management Responsibility.
Introduction.
Management Financial Reporting Responsibilities.
Management′s Role in Financial Statement Fraud Prevention and Protection.
Management Motives and Incentives.
Management Override of Internal Control.
Gamesmanship.
Risk Management.
Antifraud Applications for Practice.
Notes.
10 Role of the Internal Auditor.
Introduction.
Internal Auditors and Corporat e Governance.
Internal Auditors′ Responsibilities.
Internal Audit Fraud Standards.
Efficacy of Internal Audit in Financial Statement Fraud Prevention and Detection.
Cooperation between External and Internal Audit.
Internal Audits and the Audit Committee.
Internal Control.
Antifraud Applications for Practice.
Notes.
11 Role of External Auditors.
Introduction.
Independent Audit of Financial Statements.
Independent Auditor and Financial Statement Fraud.
Independent Audit and Internal Control.
The Report on Internal Controls.
Fraud Detection Audit Procedures.
Materiality Guidance.
Risk–Factors of Financial Statement Fraud.
Communication of Fraud.
Antifraud Applications for Practice.
Notes.
12 Governing Bodies.
Introduction.
Role of Regulation in Corporate Governance.
Sarbanes–Oxley Act Of 2002.
Securities and Exchange Commission.
SEC′s Regulation Fair Disclosure.
Financial Fraud Detection and Disclosure Act of 1992.
Private Securities Reform Act of 1995.
SEC and Financial Statement Fraud.
SEC Fraud Prevention Activities.
SEC Fraud Detection Activities.
SEC Fraud Enforcement Activities.
Role of the Financial Accounting Standards Board.
Antifraud Applications for Practice.
Notes.
Part Four: Digital (Computer) Approaches to Fraud and Forensic Accounting.
13 Fraud in a Digital Environment.
Introduction.
Digital Economy.
Electronic Commerce.
Changes in Business Environment.
Electronic Financial Reporting.
Antifraud Applications for Practice.
Notes.
14 Fraud Examination Practice, Education and Research.
Introduction.
The Interrelationship: Auditing, Fraud Examination and Forensic Accounting.
Forensic Accounting Practice.
Fraud Examination.
Certification in Financial Forensics.
Training Competent and Ethical Fraud Examinaers and Forensic Accountants.
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