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• eBook-Kapitel aus dem Buch Accounting Fraud

  Fraud Theories

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Fraud Case Analysis: Lessons Learned 276 3.3 Fraud Theories 3.3.1 The Fraud Triangle Although it is common knowledge today that people… …may commit fraud, it is often not understood why they do it. Donald R. Cressey, one of the pioneers in fraud re- search, came to the conclusion that… …fraud is most likely to occur when three critical elements come together: incentive/pressure, opportunity, and attitude/rationaliz- ation. In the case of… …accounting fraud, for example, the incentive/pressure might be the need to make earnings look better in order to meet debt covenants. The oppor- tunity might… …financial hump”. Cressey developed a three-pronged framework, commonly known as the fraud triangle, which is a very useful tool for fraud-fighters seeking to… …under- stand and manage fraud risks. The fraud triangle is shown in Exhibit 6 (see, e.g., Montgomery/Beasley/Menelaides/Palmrose 2002, p. 63; Wells 2007… …, p. 7). Fraud Opportunity Attitude/Rationalization � Financial stability or profitability threatened by economic, industry or entity operating… …Exhibit 6: The Fraud Triangle Fraud Case Analysis: Lessons Learned 277 According to Cressey, each of these three elements is necessary in order… …for a person to actually commit a fraud. The absence of any one of them would not allow a person to perpetrate a fraud. However, the three… …elements in the fraud triangle are also interrelated. The greater the perceived opportunity or the more intense the perceived incentive/pressure, the…

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• eBook-Kapitel aus dem Buch Accounting Fraud

  Chapter 4: Conclusion and Outlook

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …to frequent events, and that there is no scandal arising from infrequent but morally acceptable events. The cases of accounting fraud described in… …led away in handcuffs under indictment for fraud was shocking indeed, and society was outraged at the criminal acts. Most of the scandals occurred… …characterized the scenario in Europe and in Asia, showing that probably no corporate governance system in the world is able to prevent accounting fraud… …. Unfortunately, fraud will continue to hit the headlines of newspapers as well as the bottom lines of companies. Despite the best efforts of those who are respon-… …sible for fighting fraud, one inevitable reality remains: “fraud happens”. It is a given that economic crime will always be with us. Eliminating fraud is… …probability, the malfeasance is detected. Other factors contributing to accounting fraud may include unrealistic performance standards that fail to take into… …course, unethical individuals. According to Michael R. Young, a well-known American fraud and litigation ex- pert, the principal characteristics of… …accounting fraud can be summarized as follows (see Young 2004, pp. 11–13): 1. It generally doesn’t origin from conscious dishonesty. It doesn’t start… …fraud starts with little alterations of results (typically in the form of borrowing from future quarters). It doesn’t start with a grand plan or… …. 5. The fraud grows over time. As the fraud grows deeper, the perpetrators end up taking positions that are truly indefensible and clearly violate…

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• eBook-Kapitel aus dem Buch Accounting Fraud

  A Practice Aid for Company Executives: The Ethics Barometer

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …organizations etc.). C.16 All employees have attended fraud awareness trainings. Appendix: Practice Aids 294 C.17 The average duration of those… …fraud awareness sessions is adequate. C.18 The company has established its compliance policy by means of a long- term integrated plan. It regularly…
• eBook-Kapitel aus dem Buch Accounting Fraud

  A Practice Aid for Auditors: Fraud Interviews - An Inquiry Guide

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Appendix: Practice Aids 297 Appendix II A Practice Aid for Auditors: Fraud Interviews – An Inquiry Guide Of… …course, some cases of accounting fraud described in this book were so complex and well-concealed that no auditor would have been able to uncover them… …. These cases were well beyond the scope of a traditional audit. Nevertheless, auditors have to be more aggressive in order to detect fraud. They have to… …team have to be motivated to think about how and where fraud might occur. They have to conduct the audit with a mindset that recognizes the possibility… …that fraud could be present, regardless of any past experience with the audit client and regardless of the belief about manage- ment’s honesty and… …integrity. Eventually, they must not be reluctant to conduct so-called fraud interviews and ask sensitive questions. This inquiry guide is a… …practice aid designed to help the audit team to plan and tailor these fraud interviews as required by the international auditing standards. It in- cludes… …– As you are probably aware, CPAs today are required to assess the risk of fraud in the audit of every company, not just yours. Therefore, we need to… …begin. – When we talk about fraud in business, we are talking about a whole range of fraudulent activities. However, we are not talking about taking a… …pen or making a few photocopies for private use. Do you believe fraud is a problem for business and society in general? – We know that fraud…

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• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  International Professional Practices Framework - Overview of the current guidance of the Institute of Internal Auditors

  T. Flemming Ruud, Philipp Friebe, Daniela Schmitz, Shqiponja Isufi

  …activity must take into account the potential for the occurrence of fraud and how the organization manages fraud risks. Furthermore, Standard 2120.C3 now…
• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Contribution by Internal Audit to IT Compliance

  Thomas Lohre
• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Continuous Auditing: Myth and Reality

  Adrian Garrido

  …system of daily Alerts related to credit, operational, fraud and compliance risks. These alerts are investigated by a specialized team that interacts…
• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  The Financial Sector: Risks, Controls and Assurance after the Financial Crisis

  Daniel Nelson

  …priorities of the or- ganization. Some might say that “back to basics” should also include an increased emphasis on testing and focus on fraud weaknesses that…
• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Doing More with Less

  Neil Baker

  …changing economic climate. A third of organisa- tions in the survey say the downturn is affecting the focus of their work, with the risk of fraud… …work on procurement fraud; for example, trying to spot fraudsters who submit fictional invoices in the hope they’ll be paid. It is also checking the…
• eBook-Kapitel aus dem Buch Global Management Challenges for Internal Auditors

  Audit Marketing

  Dr. Hannes Schuh

  …. in particular concerning o quantitative and qualitative audit methods o internal control systems o risk management o corporate governance o fraud…