In an interesting interview with the Risk & Compliance Journal, David Hoffman, forensic accountant and managing director at Acuitas, Inc. discusses the status of the lawsuits that resulted from the bank failures that occurred in the years following the economic crisis of 2008. At the close of 2013, there were 81 lawsuits involving 127 different banks. Hoffman discusses his role as a forensic investigator in the proceedings, drawing similarities between the current situation and the S&L crisis of the 1980’s. He also shares his view of how current regulations impact his responsibilities within the investigative process and the part technology…
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In an opinion piece for The New York Times, M.I.T economics professor, Michael Greenstone, examines the parallels between Enron, the corporate accounting scandals of the early 2000’s and the sub-prime mortgage crisis/Great Recession of present day. Greenstone points out that the biggest similarity and ethical hurdle in both scenarios is the fact that auditors were hired and paid for by the very firms they were being asked to audit. Naturally, this created an enormous conflict of interest on the part of the auditors to present truthful findings, while at the same time, feeling the pressure to please their clients. Although…
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Forensic accountants are key in the division of marital property in divorce. Forensic analysts in marital litigation support must understand the nuances of jurisdiction. Going beyond the normal practice of tracing, this overview explores three additional approaches that are essential to reclassify property formerly thought of as separate to marital property.
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According to Bloomberg News, financial regulators have reported that new measures on the Dodd-Frank Act should be mostly complete by the end of 2013. The law, created in 2010, was designed to prevent a repeat of the 2008 worldwide credit crisis. Among the new rules are tougher leverage requirements for eight of the nation’s largest banks, a risk-based capital surcharge for systemically important banks and the Volcker rule to ban proprietary trading by banks. FDIC Chairman, Martin Gruenberg has stated that he’s seeking a Volcker rule that ensures the banks’ ability to perform underwriting “market-making” functions in less liquid markets.…
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Fraudsters Are SophisticatedThis article examines the technology associated with Wi-Fi, vulnerabilities to commit fraud and preventative measures that can be taken to avoid becoming a victim of fraud.
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Unreported Income Can Be Detected By Direct and Indirect Methods; Indirect Methods Examine Cash Inflows and Outflows. Here’s How. Joe Epps, CPA/CFF/ABV, CFE, CVA, explains how a forensic accountant goes about searching for unreported income—a commonly required practice in divorce and bankruptcy cases, contract disputes, and fraud investigations. The direct method is simply reviewing financial statements for the information they provide and taking it at face value. But there are also indirect methods: One indirect method of searching for unreported income is to compare all identifiable cash sources (cash inflows) and all identifiable cash uses (cash outflows). Find out more.
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External Attacks, Data Loss are Top Concerns Jeffrey Roman at Government Industry Security interviews Forensics expert Rob Lee who says its not new types of attacks that concern him. It’s the old ones that continue to impact organizations. How can organizations learn from past incidents and respond in 2013? The bulk of the cases he investigates are external breaches, not insider cases, says Lee, a seasoned forensics professional and curriculum lead and author for digital forensic and incident response training at the SANS Institute. When analyzing the incidents and reporting back to technical teams or executives, he’s often faced with the question, “How do…
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Forensic Accounting Revenue in the U.S. is Expected to Grow 6.8% Annually A recent market research report noted in The CPA Insider reports that demand for forensic accounting services will remain strong over the next five years in the United States as a result of increased financial regulations and continued demand for investigative services in the wake of the recession:
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Avoiding the “Why Me’s”: Easy-to-Implement Steps to Mitigate Fraud Risk Financial fraud can be devastating and fiscal, legal, and developmental repercussions can impede the operations of a business for years after an incident. Paul E. Zikmund takes us through his four-step process to actively deter fraud within an organization.
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An Unconventional Approach to Safeguarding Cash Billing schemes accounted for 23.9 percent of all payment-process fraud cases, and most of these cases go on for almost two years before they’re discovered. Here are two simple controls business owners can put in place to dramatically discourage fraud. The first is setting up a system for the owner to regularly review accounting statements each month at home.
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The AICPA’s 2011 Forensic and Valuation Services (FVS) Trend Survey finds growing demand for forensic accounting services. James Schiavone breaks it down:
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Learn How to Set up Prevention Systems, Identify Relevant Data Relationships, and Think Outside the Box There generally are three types of people who commit fraud: die-hard criminals, otherwise honest people who give in to temptation, and otherwise honest people under severe stress. Strong internal control programs can help two of these types from making a catastrophic mistake. Here’s how to protect revenue and discourage criminal behavior.
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PwC Global Economic Crime Report: Cybercrime a Growing Threat A new PwC report calls cybercrime one of the top four economic crimes – just after asset misappropriation, accounting fraud, and bribery/corruption, according to recent reporting in AccountingWeb. What is cyber crime? The PwC report, which you can read here, defines it this way: For our survey questionnaire, we defined cybercrime as: ‘an economic crime committed using computers and the internet. It includes distributing viruses, illegally downloading files, phishing and pharming, and stealing personal information like bank account details. It’s only a cybercrime if a computer, or computers, and the internet…
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A Rogue Employee Might be On Your Payroll, Too So writes Sarah E. Needleman at the Wall Street Journal Law Blog, where she points out that small businesses tend to be more vulnerable to fraud than large firms: If a business as established and well off as UBS can suffer at the hands of one bad apple, could the same can be true for any business, even a small firm? According to various media reports, an alleged trading scheme at the Swiss investment bank went undetected for three years before it was finally discovered last week that a 31-year-old trader was apparently…
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Calculation Engagement vs Valuation Engagement. In April, QuickRead featured some analysis of In Re: Marriage of Hagar in our Case Law—State section. At issue in Hagar was the difference between a Calculation Engagement and a Valuation Engagement. The Calculation Engagement the husband in the case presented was deemed unsuitable by a judge, in this particular case, because it the valuator admittedly didn’t “use judgment.” NACVA member Charlotte Reith, CPA, CVA, CFF, of The Reith Company in Pasadena, CA wrote in to say she thought our analysis “is giving calculation engagements a bad name and is misleading. A rule of thumb valuation [used in Hagar] is not a calculation of…