Investigation of Accouting Fraud
Unit 8 Essay
Malcolm Johnson
Fraud Investigation
CJ125
Prof. Ayers
9/23/2012
Fraud Examination and auditing are very much related, but is not the same thing. Because most occupational frauds are financial crimes, there is necessarily a certain degree of auditing involved. A fraud examination involves a lot more than just a review of financial records. Other than a review of financial information a fraud investigation involves interviews, statement analysis, and also public record searches, and also forensic documentation examination. There are also major differences between the two procedures around the scope, objectives, and underlying presumptions. Two things that make these examinations different are the presumptions and timing of the two. In the case of an audit the presumption is an auditor is supposed to approach an audit with professional skeptism. While a fraud examination the investigator approaches looking for resolution by determining enough proof to support or refute the alleged fraud took place. The other difference involves the timing. An audit is a recurring examination. Meaning it takes place on a regular basis. A fraud examination is a non-recurring examination and is only conducted with sufficient evidence presented. Three aspects of a fraud investigation are analyzing the available data, creating a hypothesis, and also testing the hypothesis. When analyzing the data a fraud investigator would take a look at the purchasing procedures of the particular company, and look for the possibility of fraud based on the information provided from the source. Then the investigator will have to create a hypothesis. When creating a hypothesis the investigator would develop this based on his information. They would then create a worse-case scenario. It can be created from a specific allegation. Such as bribery, kickbacks, or embezzlement. Once an investigation develops this scenario based on their information they have to test it.
Malcolm Johnson
Fraud Investigation
CJ125
Prof. Ayers
9/23/2012
Fraud Examination and auditing are very much related, but is not the same thing. Because most occupational frauds are financial crimes, there is necessarily a certain degree of auditing involved. A fraud examination involves a lot more than just a review of financial records. Other than a review of financial information a fraud investigation involves interviews, statement analysis, and also public record searches, and also forensic documentation examination. There are also major differences between the two procedures around the scope, objectives, and underlying presumptions. Two things that make these examinations different are the presumptions and timing of the two. In the case of an audit the presumption is an auditor is supposed to approach an audit with professional skeptism. While a fraud examination the investigator approaches looking for resolution by determining enough proof to support or refute the alleged fraud took place. The other difference involves the timing. An audit is a recurring examination. Meaning it takes place on a regular basis. A fraud examination is a non-recurring examination and is only conducted with sufficient evidence presented. Three aspects of a fraud investigation are analyzing the available data, creating a hypothesis, and also testing the hypothesis. When analyzing the data a fraud investigator would take a look at the purchasing procedures of the particular company, and look for the possibility of fraud based on the information provided from the source. Then the investigator will have to create a hypothesis. When creating a hypothesis the investigator would develop this based on his information. They would then create a worse-case scenario. It can be created from a specific allegation. Such as bribery, kickbacks, or embezzlement. Once an investigation develops this scenario based on their information they have to test it.