Profiling the fraudster : removing the mask to prevent and detect fraud PDF
Preview Profiling the fraudster : removing the mask to prevent and detect fraud
Profiling the Fraudster TheWileyCorporateF&Aseriesprovidesinformation,tools,andinsightstocorporate professionalsresponsibleforissuesaffectingtheprofitabilityoftheircompany,from accountingandfinancetointernalcontrolsandperformancemanagement. Foundedin1807,JohnWiley&Sonsistheoldestindependentpublishingcompanyinthe UnitedStates.WithofficesinNorthAmerica,Europe,Asia,andAustralia,Wileyisglobally committedtodevelopingandmarketingprintandelectronicproductsandservicesforour customers’professionalandpersonalknowledgeandunderstanding. Profiling the Fraudster Removing the Mask to Prevent and Detect Fraud SIMON PADGETT Coverimage:©iStock/com/TerryBridges Coverdesign:Wiley Copyright©2015byJohnWiley&Sons,Inc.Allrightsreserved. PublishedbyJohnWiley&Sons,Inc.,Hoboken,NewJersey. PublishedsimultaneouslyinCanada. Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,or transmittedinanyformorbyanymeans,electronic,mechanical,photocopying, recording,scanning,orotherwise,exceptaspermittedunderSection107or108ofthe 1976UnitedStatesCopyrightAct,withouteitherthepriorwrittenpermissionofthe Publisher,orauthorizationthroughpaymentoftheappropriateper-copyfeetothe CopyrightClearanceCenter,Inc.,222RosewoodDrive,Danvers,MA01923,(978) 750-8400,fax(978)646-8600,orontheWebatwww.copyright.com.Requeststo thePublisherforpermissionshouldbeaddressedtothePermissionsDepartment,John Wiley&Sons,Inc.,111RiverStreet,Hoboken,NJ07030,(201)748-6011,fax(201) 748-6008,oronlineathttp://www.wiley.com/go/permissions. LimitofLiability/DisclaimerofWarranty:Whilethepublisherandauthorhaveused theirbesteffortsinpreparingthisbook,theymakenorepresentationsorwarranties withrespecttotheaccuracyorcompletenessofthecontentsofthisbookand specificallydisclaimanyimpliedwarrantiesofmerchantabilityorfitnessfora particularpurpose.Nowarrantymaybecreatedorextendedbysalesrepresentatives orwrittensalesmaterials.Theadviceandstrategiescontainedhereinmaynotbe suitableforyoursituation.Youshouldconsultwithaprofessionalwhereappropriate. Neitherthepublishernorauthorshallbeliableforanylossofprofitoranyother commercialdamages,includingbutnotlimitedtospecial,incidental,consequential,or otherdamages. Forgeneralinformationonourotherproductsandservicesorfortechnicalsupport, pleasecontactourCustomerCareDepartmentwithintheUnitedStatesat(800) 762-2974,outsidetheUnitedStatesat(317)572-3993orfax(317)572-4002. Wileypublishesinavarietyofprintandelectronicformatsandbyprint-on-demand. Somematerialincludedwithstandardprintversionsofthisbookmaynotbeincluded ine-booksorinprint-on-demand.IfthisbookreferstomediasuchasaCDorDVDthat isnotincludedintheversionyoupurchased,youmaydownloadthismaterialat http://booksupport.wiley.com.FormoreinformationaboutWileyproducts,visit www.wiley.com. LibraryofCongressCataloging-in-PublicationData Padgett,Simon Profilingthefraudster:removingthemasktopreventanddetectfraud/ SimonPadgett. pagescm.–(WileycorporateF&Aseries) Includesbibliographicalreferencesandindex. ISBN978-1-118-87104-1(hardback) 1.Corporations–Corruptpractices.2.Whitecollarcrimes.3.Fraud. 4.Fraud–Prevention.5.Fraudinvestigation.I.Title. HV6768.P332014 658.473–dc23 2014034566 PrintedintheUnitedStatesofAmerica 10 9 8 7 6 5 4 3 2 1 Thisbookisdedicatedtoallthehonestpeopleintheworldwhofacetheuphill dailysurvivalchallengewhilewatchingothersstealtheirwaytoaluxury lifestyle.Peoplewithintegrityhaveshapedmylifeandthisbook. Contents Preface xiii Acknowledgments xix PARTI: OCCUPATIONAL FRAUD AND CORRUPTION Chapter1:IntroductiontoOccupationalFraudand CorruptionandRecentTrends 3 DeceptionthroughBreachingTrust 4 GlobalTrendsinOccupationalFraud 4 TheCostofOccupationalFraudandCorruption 6 TypesofOccupationalFraud 8 EarlyFraud 10 TheFightagainstFraud 12 ProfilingasaSolution 13 Chapter2:TypesofOccupationalFraudandCorruption 15 AMyriadofFraudSchemes 16 Cybercrime 17 Chapter3:WhatIsFraudandMoreSpecifically OccupationalFraud? 21 TheAssociationofCertifiedFraudExaminers’Definition 22 TheAmericanInstituteofCertifiedPublicAccountants’ Definition 23 StatementofAuditingStandardNo.99Definition 23 TheInstituteofInternalAuditorsDefinition 24 DurationofFraudSchemes 25 vii ◾ viii Contents Chapter4:Corruption 27 TheGeographyofCorruption 28 TheFightagainstCorruption 31 CorruptionandthePublicPurse 33 CulturalandLegalInfluencesonCorruption 34 Chapter5:NormativeCrimeAnalysisandInvestigative Psychology 37 FraudIsNotaNorm 37 InvestigativePsychology 40 Chapter6:TheFraudTriangleBecomestheFraud Diamond:AJourneythroughtheTheory 43 TheFraudTriangle 44 FraudRisk 45 TheTheoryShapingEarlyFraudProfiling 45 PARTII: PROFILING THE FRAUDSTER Chapter7:UsingProfilingintheFightagainstCrimeand OccupationalFraud 53 TheMindofAdolfHitler 53 DevelopmentofthePsychology 55 Modeling 57 ModelinginFraudDetection 59 Chapter8:CriminalandFraudOffenderProfiling 61 TheCriminalMind-Set 61 InvestigativePsychology 64 FraudOffenderProfiling 64 ProfilingChallenges 67 Chapter9:BehavioralWarningSignsorRedFlags 71 HowRedFlagsHelpUsDiscoverFraud 73 ManagementRedFlags 73 ChangesinEmployeeBehaviorRepresentingRedFlags 74 FraudstersLivingbeyondTheirMeansExhibitKeyRedFlags 74 RedFlagsintheAccountingSystem 76 BehavioralCharacteristicsasRedFlagstoFraud 78
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