Management Accountant's Guide to Fraud Discovery and Control.

• Author: Longfellow, Kathryn

This book brings into focus the pervasive arena in which fraud exists in all phases of the business and governmental world. The authors have attempted to increase the sensitivity of the reader to the prevalence of fraud within the workplace.

One of the topics is the enlightenment of the reader as to the possibilities of fraud within an organization. Several examples of fraud are discussed. Fraud can occur with the assets on the balance sheet and it can occur prior to information hitting the balance sheet. The latter, the off-balance-sheet fraud, is the type that involves kickbacks. Other examples of fraud presented are those of double payments. Bidding, which ought to improve competition and honesty, has many possibilities for fraud, especially with the help of an insider.

The book attempts to set a scenario as a useful training manual for detection of fraud by utilizing a series of cases. The cases are structured for the reader to use the tools the authors have presented. The cases conclude with the authors' analysis of the fraudulent implications.

This book makes note of the fact that most independent auditors are not trained as fraud auditors; rather, they are trained to look for financial statement presentation and materiality aspects for an entity. Fraud is a specialty area for which no established standards have been developed. This book promotes the establishment of standards for fraud auditors.

Providing information regarding the nature of acceptable evidence to conclude that fraud is present, the book discusses how to use this evidence to identify the individuals involved with the fraudulent acts and how to review evidence. The authors also remind the reader that the person who is involved in one area of fraud in the company will probably be involved in other areas for personal gain at company expense.

Readers are reminded of the necessity of internal controls: they should not only be stated, but policies also should be written. The controls should be monitored, to insure that they are not circumvented, and reviewed for relevancy and cost-benefit basis.

Fraud and its detection should be a concern to all government officials. Because it is thought that the "bottom line" does not exist for the government, fraud surveillance is not always...