Section I: Introduction
Chapter 1: The Forensic Accounting Profession 3
Learning Objectives 3
Introduction 3
Forensic Accounting Knowledge and Skills 7
Professional Opportunities in Forensic Accounting 9
Professional Organizations and Certifications 10
Organization of This Book 13
Summary 13
Review Questions 15
Short Answer Questions 16
Brief Cases 16
Internet Research Assignments 17
Chapter 2: Professional Ethics and Responsibilities 19
Learning Objectives 19
Introduction 19
Authoritative Guidance 20
Non-Authoritative Guidance 44
Summary 44
Review Questions 46
Short Answer Questions 47
Brief Cases 48
Cases 49
Internet Research Assignments 51
Section II: Fundamental Forensic Knowledge
Chapter 3: Civil and Criminal Procedure 55
Learning Objectives 55
Introduction 55
The American Court System 57
Steps in Civil Litigation (Rules of Civil Procedure) 59
Steps in a Criminal Proceeding 71
Summary 76
Review Questions 78
Short Answer Questions 80
Brief Cases 81
Cases 82
Internet Research Assignments 83
Chapter 4: Evidence 85
Learning Objectives 85
Introduction 85
Categories of Evidence 85
Testimonial, Physical, and Demonstrative Evidence 86
Federal Rules of Evidence 87
Relevance 87
Privilege(s) 88
Competency and Knowledge 97
Opinions Including Experts 97
Hearsay 98
Use of Originals 101
Documents 103
Witness Examination and Impeachment 104
Authentication 104
Burden of Proof 106
Presumptions 107
Summary 107
Review Questions 109
Short Answer Questions 113
Brief Cases 114
Cases 114
Internet Research Assignments 116
Chapter 5: Discovery 117
Learning Objectives 117
Introduction 117
Discovery Standards 118
Discovery Sequence 119
Discovery Abuse 120
ESI (Electronically Stored Information) 121
Interrogatories 122
Depositions 124
Requests for Document Production, ESI, and Tangible Things or Entering Onto Land 129
Requests for Physical or Mental Examinations 131
Requests for Admission 132
Ways to Fight Discovery Abuse 133
Recent Amendments to the FRCP 135
Summary 136
Review Questions 138
Short Answer Questions 139
Brief Cases 140
Cases 141
Internet Research Assignments 142
Chapter 6: Litigation Services 143
Learning Objectives 143
Introduction 143
Federal Rules Governing Expert Testimony 145
Disclosure of Expert Testimony 153
Alternative Dispute Resolution 160
Summary 168
Review Questions 170
Short Answer Questions 173
Brief Cases 174
Cases 174
Internet Research Assignments 179
Chapter 7: Engagement and Practice Management 181
Learning Objectives 181
Introduction 181
Forensic Accounting Services 181
Engagement Management 191
Practice Development 198
Summary 201
Review Questions 203
Short Answer Questions 204
Brief Cases 205
Cases 206
Internet Research Assignments 212
Section III: Specialized Forensic Knowledge
Chapter 8: Fraud Prevention, Detection, and Response 215
Learning Objectives 215
Introduction 215
Managing Fraud Risk 215
Fraud Prevention 218
Fraud Detection 219
Fraud Investigation and Response Protocols 224
Evidence Gathering 228
Summary 240
Review Questions 242
Short Answer Questions 244
Brief Cases 245
Cases 246
Internet Research Assignments 252
Chapter 9: Fraud Schemes and Applications 253
Learning Objectives 253
Introduction 253
Occupational Fraud 253
External and Individual Fraud 255
Occupational Fraud Schemes 255
Money Laundering Fraud Schemes 268
Organized Crime and Fraud 271
Summary 273
Review Questions 275
Short Answer Questions 276
Brief Cases 277
Cases 277
Internet Research Assignments 283
Chapter 10: Bankruptcy and Related Frauds 285
Learning Objectives 285
Introduction 285
Federal Rules of Bankruptcy Procedure 289
IRS Case Files: Examples of Bankruptcy Fraud Investigations 298
Bankruptcy Fraud Versus Divorce Fraud 299
Bankruptcy Fraud Versus Fraud in the Administration of Estates and Trusts 300
Legal Processes for Investigations 302
Investigations and Involvement From the United States Trustee Program 303
Summary 304
Review Questions 306
Short Answer Questions 307
Brief Cases 308
Cases 309
Internet Research Assignments 312
Chapter 11: Digital Forensics and Data Analytics 313
Learning Objectives 313
Introduction 313
Legal Issues 315
General Knowledge and Skills for Computer and Digital Forensics 317
Digital Forensics Labs 320
Regional Computer Forensic Laboratories 321
Private Investigations Versus Law Enforcement Investigations 321
Types of Investigations 322
Software Used by Digital Forensics Examiners 327
Specific Functions and Capabilities of Popular Computer Forensics Software Products 328
Solid State and Mechanical Storage Devices 332
Advanced Digital Forensics and Computer-Assisted Audit Tools and Techniques 334
CAAT Software 335
Network Forensics 335
Network Forensics Software 339
Conducting Computer Forensics Investigations 340
Law Enforcement Databases 343
Data Analytics and Big Data 344
Summary 347
Review Questions 349
Short Answer Questions 352
Brief Cases 352
Cases 353
Internet Research Assignments 356
Chapter 12: Matrimonial Forensics 357
Learning Objectives 357
Introduction 357
The Role of the Forensic Accountant 358
Accepting an Engagement 360
The Divorce Process 360
Discovery 362
The Character of Property and Its Division 365
Tax Consequences of Asset Distributions 366
Identification of Assets, Liabilities, and Income 368
Valuation and Quantification of Assets, Liabilities, and Income 369
Valuation of Other Assets 373
Alimony and Support 379
Fraud in Matrimonial Engagements 382
Summary 386
References 387
Review Questions 388
Short Answer Questions 389
Brief Cases 390
Cases 391
Internet Research Assignments 394
Chapter 13: Financial Statement Misrepresentations 395
Learning Objectives 395
Introduction 395
Financial Statement Misrepresentations Defined 396
Common Methods Used to Commit Financial Statement Fraud 398
Who Commits Financial Statement Fraud? 410
Red Flags and Risk Factors 414
Investigation Techniques 415
Prevention of Financial Statement Fraud: Best Practices 422
SEC Investigations 424
The Foreign Corrupt Practices Act 425
Summary 426
Review Questions 428
Short Answer Questions 429
Brief Cases 430
Cases 431
Internet Research Assignments 435
Chapter 14: Economic Damages 437
Learning Objectives 437
Introduction 437
General Knowledge for Damage Experts 438
Commercial Litigation 440
Individual Litigation 456
Summary 459
Review Questions 461
Short Answer Questions 463
Brief Cases 464
Cases 465
Internet Research Assignments 466
Chapter 15: Valuation Fundamentals 467
Learning Objectives 467
Introduction 467
General Knowledge 468
General Valuation Models 469
Three General Valuation Approaches 470
Valuation Adjustments 493
Summary 494
Review Questions 496
Short Answer Questions 498
Brief Cases 499
Cases 499
Internet Research Assignments 501
Chapter 16: Valuation Applications 503
Learning Objectives 503
Introduction 504
The Business Valuation Process 504
Applications of the General Valuation Approaches 505
Other Topics in Business Valuation 515
Valuing Pass-Through Tax Entities 516
Models, Approaches, and Methods 517
Standards of Value and Premises of Value 517
Effect of Industry and Economy on Value 519
Effect of Shareholder Agreements on Value 519
Valuation Date 520
Valuation and the Law 520
Business Valuation Standards of Practice 520
Authoritative Interpretations 521
Business Valuation Reports 522
Engagement Letter Terms in Valuation Projects 523
Summary 525
Review Questions 526
Short Answer Questions 528
Brief Cases 529
Cases 530
Internet Research Assignments 532
Appendix A: Fraud-Related Laws 533
Appendix B: Present Value 569
Glossary 575
Index 593
