Preface: Maybe It’s Time We Get Back to the Basics xi
Acknowledgments xvii
PART I: THE ANTI-FRAUD ENVIRONMENT: THE BLUEPRINTS, THE FOUNDATION, THE GROUND FLOOR
Chapter 1: The Architect’s Blueprint: Establishing the Framework 3
The Elements of Anti-Fraud Program Design 3
Anti-Fraud Environment 4
Fraud Risk Assessment 4
Control Activities 5
Information: Program Documentation 6
Communication: The Company Fraud Training Program 6
Monitoring and Routine Maintenance 7
Chapter 2: Foundational Policies: The Fraud Policy 9
Foundational Policies 10
The Fraud Policy: The Essential Elements of an Effective Fraud Policy 10
Case Presentation 17
Chapter 3: Foundational Policies: The Fraud Reporting Policy 19
The Essential Elements of an Effective Fraud Reporting Policy 20
Chapter 4: Foundational Policies: The Expense Reimbursement Policy 29
Case: “No Questions Asked” 29
Case: “It Will Never Be Missed” 30
Case: Larry the Chief Financial Officer 31
The Elements of an Effective Expense Reimbursement Policy 32
Appendix 4A: Expense Report Form 39
Appendix 4B: Supplemental Business Meal and Entertainment Charges Form 40
Chapter 5: The Ground Floor: The Fraud Risk Assessment Process 41
Ground Rules for Fraud Risk Assessment 42
An Example of Risk Assessment 43
Procedural Steps for Performing a Fraud Risk Assessment 44
Cash in Bank 48
Case: The Trail Is Gone 50
Case: Friends in Low Places 51
Asset Misappropriation 52
Corruption 53
Financial Statement Fraud 53
PART II: ANTI-FRAUD CONTROL ACTIVITIES: RAISING THE WALLS
Chapter 6: Control Activities: The Absolutes 57
Critical Principles of Control Activity Design 57
Foundational Control Activities 59
Case: The Mail Drop in Las Vegas 64
Appendix 6A: Conflict of Interest Form 67
Appendix 6B: New Vendor Establishment Form 68
Chapter 7: Control Activities: The Segregation of Duties Dilemma 69
But I Only Have Two Employees 69
Prevention versus Detection Controls 70
The Necessary Review Processes 72
Chapter 8: Control Activities: General Processes 75
Two Operational Questions 75
Common Control Activities 81
Case: The Cell Phone Reimbursement 91
Chapter 9: Control Activities: Specific Control Areas 95
Financial Statement Line Item Control Activities 95
PART III: COMPLETING THE ANTI-FRAUD PROGRAM: THE CEILING, THE ROOF, AND ROUTINE MAINTENANCE
Chapter 10: The Ceiling: Documenting the Anti-Fraud Program 103
Information 103
Documentation—Keeping It Simple 104
The Elements of High-Quality Documentation 104
Chapter 11: The Ceiling: The Company Fraud Training Program 111
The Elements of Effective Communication 112
The Company Fraud Training Program 114
Chapter 12: The Roof: Monitoring and Routine Maintenance 119
Monitoring and Routine Maintenance Defined 120
The Monitoring and Routine Maintenance Structure 120
Chapter 13: The Sample Anti-Fraud Program 129
Appendix 13A: Fraud Risk Assessment Framework Form 137
Appendix 13B: Control Activities Form 138
Appendix 13C: Documentation of Control Activities 139
Appendix 13D: Compliance Audit Programs and Related Compliance Audit Working Papers 154
Appendix A: The Fraud Policy 171
Appendix B: The Fraud Reporting Policy 175
Appendix C: The Expense Reimbursement Policy 179
Appendix D: Forms 185
About the Author 193
Index 195
