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What Are the Key Differences Between Forensic Accounting and ...

What Are the Key Differences Between Forensic Accounting and ... | Forensic Auditing | Scoop.it

1. A very obvious and discrete key difference which one can identify between a traditional auditor VS a forensic accountant is that :

The former is someone who checks the math accuracy in the accounting department while the latter is someone whom are looking behind these financial numbers find out what’s not quite right.

2. The second differentiation is the “investigative intuition”.

Intuition refers to the gut instinct which one may have to guide you to the appropriate direction as of where your investigation should start from. This is not text book earned, but rather something which can be earned through massive experiences. Most of the time, no investigation intuition is found nor required in the traditional accounting scope.

What Are the Key Differences Between Forensic Accounting and Traditional Accounting?

3. Traditional auditing is a process of auditing others’ work to determine if they have followed the documented official policies, procedures and practices of the company. The determination is based on evidence. It is a matter of fact and not merely a matter of opinion. This kind of audits is required by financial intermediaries and the government depending on circumstances.

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Forensic Auditing
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The Rise of Forensic Accounting [Infographic]

The Rise of Forensic Accounting [Infographic] | Forensic Auditing | Scoop.it
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Former Spartanburg County employee pleads guilty to embezzlement charge - Spartanburg Herald Journal

Former Spartanburg County employee pleads guilty to embezzlement charge - Spartanburg Herald Journal | Forensic Auditing | Scoop.it

Former Spartanburg County employee pleads guilty to embezzlement charge.l During the hearing, Brower's attorney Steve Denton handed Ritner a check for $155,015.80 — the full amount taken plus reimbursement for the forensic accountant the county hired to investigate the theft.

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Johann Redelinghuys - Daily Maverick

Johann Redelinghuys - Daily Maverick | Forensic Auditing | Scoop.it

Matjila is accused of poor governance and a range of suspicious activities as the CEO of Kopano ke Matla, the investment arm of Cosatu. An independent forensic report by accounting firm SizweNtsalubaGobodo confirmed the findings of the Financial Services Board, which indicted that there had been a complete breakdown of governance under the leadership of Mr Matjila while he was in charge of Kopano. The R80-billion honey pot of Eskom is now the preserve of a man known to have defaulted on the trust of his Cosatu employers.

The trouble with the disappointingly frequent appointment of a CEO in an acting capacity in the various state-owned enterprises is not only to do with poor succession planning of the board. It is that through bungled selection and appointment processes acting CEOs inevitably end up getting the job by default.

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US State Department - Management Alert (Contract File Management Deficiencies)

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Crooks had no trouble getting construction contracts from Department of Veterans Affairs, report shows

Crooks had no trouble getting construction contracts from Department of Veterans Affairs, report shows | Forensic Auditing | Scoop.it

Crooked contractors, bribery and embezzlement are all subplots in a botched $153 million deal to build a Department of Veterans Affairs hospital near Pittsburgh, according to a report released Tuesday by the agency's inspector general.

Veterans Affairs contracting officers and lawyers improperly dismissed evidence that the firm selected to build the project, Westar Development Co., was controlled by a man who admitted to embezzling money from a previous employer. They also failed to spot connections between Westar and a money man in the deal who pleaded guilty to bribery and racketeering charges three months after the lease was awarded.

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Westar officials even claimed falsely that their project team would include a former VA executive as a consultant, an assertion that earned extra points from agency evaluators. That executive, William Montague, later pleaded guilty to accepting bribes and kickbacks while he worked at the veterans' agency in return for inside information about lucrative agency contracts that apparently were unrelated to the Pennsylvania facility.

Veterans Affairs officials did not check their own records to verify claims that Westar should received special consideration as a veteran-owned small business. They did not even verify Westar's claim that it had worked on 11 other federal buildings, including veterans' hospitals. In fact, Westar had never built anything before it got favored treatment from VA contracting officials to build and lease the medical center in Butler, Pa., according to the report.

The 20-year lease agreement that would cost taxpayers $152.7 million was awarded to Westar in May 2012. It was terminated in August 2013 after the inspector general confirmed the allegations initially made in a protest filed by an unsuccessful bidder. The follow-up report released Tuesday came at the request of agency officials who asked the inspector general to determine why the contract was so badly mishandled.

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The Four Hundred--IBM Builds Out With Software Stack Smarter Counter Fraud

Smart Counter Fraud is about deploying analytics software to try to root it out. IBM has a team of over 500 fraud consultants--meaning they know how to detect fraud rather than helping people commit it, of course--who are deploying many of the same technologies used by law enforcement and intelligence agencies to root out fraud. IBM says that such expertise is necessary because criminals are learning how to use cloud computing and vulnerabilities in social networks and mobile devices to commit crimes.

IBM's Smart Counter Fraud software stack is based on Cognos, i2, and SPSS analytics software as well as its Q1 Labs and Trusteer security software and its X-Force cybersecurity service. IBM says that it has hundreds of clients that it has helped to build counter fraud applications and it is leveraging its SoftLayer cloud as well to offer counter fraud as a service. Specifically, IBM will offer a subscription based service with four different levels: Hosting, Application Management, Behavior Modeling and Scoring, and Analytics and Referral Generation. IBM has created modules aimed at detecting medical fraud, insurance claim fraud, public tax fraud, and occupational fraud (with special emphasis on accounts payable, travel, and expense claim fraud). IBM has modules for the first three, called Fraud Asset Management System (FAMS), Loss Analysis and Warning System (LAWS), and Tax and Audit Compliance System (TACS).

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Money laundering and sausages: the making of EU laws

Money laundering and sausages: the making of EU laws | Forensic Auditing | Scoop.it

There’s an old saying that the legislative process is a lot like making sausages – it’s confusing, messy, and you don’t really want to know how it’s done.

The European institutions in Brussels, the butcher shop in this case, decide how laws are drafted, changed, and combined to reach a final outcome. My colleagues and I followed this process, as European and national legislators debated revisions to European anti-money laundering rules.

These revisions couldn’t come at a better time. For us, this legislative overhaul is a chance to implement necessary financial transparency reform, most notably the requirement that governments make public who actually owns companies, trusts, and other similar legal structures. These public registers would help clamp down on anonymous ‘shell companies’ that criminals, tax evaders, corrupt politicians and other money launderers use to hide where the money is actually going. 

As the world looks toward Ukraine to see how the military stand off will conclude, we’ve been following the region for a different reason. As the previous government was ousted, European countries began freezing assets belonging to former President Viktor Yanukovych and other members of the Ukrainian government.  Work by the Ukrainian Anti-corruption Action Centre and Global Witness has revealed how President Yanukovych used anonymous European companies to hide ownership of huge assets. The stronger oversight and enhanced scrutiny that would come with public disclosure of the real owners of companies and trusts would make this type of corruption much more difficult.

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The role of the forensic accountant - CFOworld

The role of the forensic accountant - CFOworld | Forensic Auditing | Scoop.it
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"With the uttermost respect to the accounting profession, technical IT skills (databases, IT security, data mining, architecture, etc) are well outside the domain expertise of your classic accountant," he says. " And so for firms that offer forensic services, the forensic IT component is serviced by IT specialists, and the forensic accounting component by forensic accounting specialists. The required skills sets could not be more different."

Kedzlie says the computer forensic specialist is all about the preservation and cataloguing of IT assets in the interests of a fraud investigation. This will invariably canvass emails, files and documents, images, and databases storing financial, billing and intellectual assets. Where computer forensic is about data preservation, collection and assembly, forensic accounting is about analysis and reporting.

"I had a lawyer in Court ask me whether my forensic work 'would be described as basically straight copying the data onto hard drives'. Aside from trying not to laugh at the proposition, it indeed showed the knowledge gap between the lay-person and the sophisticated technologies and techniques that make up the arsenal available to the computer forensic specialist.

"The computer forensic specialist preserves the IT assets in a forensically sound way. This needs to occur as soon as fraud is suspected or, better still, as a planned programme of continuous testing for fraud through testing of physical and IT controls and the running of test investigations."

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SOUTH AFRICA: Goldrich Faces Fraud Allegation as NUM Draws Aurora Parallel

SOUTH AFRICA: Goldrich Faces Fraud Allegation as NUM Draws Aurora Parallel | Forensic Auditing | Scoop.it

An auditor has alerted South Africa’s tax agency to alleged fraud at Goldrich Holdings (Pty) Ltd., a mine operator whose chairman is already being personally sued following the collapse of Aurora Empowerment Systems Ltd., a similar company.

Mahier Tayob, a forensic auditor working for Goldrich, alleged that fraudulent transactions and money laundering occurred at Goldrich, in an affidavit filed to the High Court of South Africa, Gauteng Division, Pretoria, and dated March 10. Goldrich Chairman Thulani Ngubane and Director Bonginkosi Mthethwa denied the allegations in telephone interviews.

Goldrich agreed to operate the 72-year-old Blyvooruitzicht gold mine, 100 kilometers (60 miles) southwest of Johannesburg, in January after it was put into liquidation last year. The fraud and money laundering allegations appeared in an affidavit filed by Tayob in response to an effort by Harvard Corporate Recovery Services, Blyvooruitzicht’s liquidator, to remove Goldrich from the mine because it hasn’t made the site secure and started mining, said Leigh Roering, a director at HCRS.

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FBI Investigates Private Prison Company's Oversight Of Idaho's 'Gladiator School' - Albany Tribune

FBI Investigates Private Prison Company's Oversight Of Idaho's 'Gladiator School' - Albany Tribune | Forensic Auditing | Scoop.it

FBI Investigates Private Prison Company's Oversight Of Idaho's 'Gladiator School' Albany Tribune ..

 

The audit, performed by forensic auditing firm KPMG, done for the Idaho Department of Corrections early this year found that CCA fell 26,000 hours short in 2012. CCA contested the results, as Owen has said the audit overstates the understaffing by over a third.

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Careers in Forensic Accounting It Takes a Sleuth - Insurance News Net (press release)

Careers in Forensic Accounting It Takes a Sleuth - Insurance News Net (press release) | Forensic Auditing | Scoop.it
Careers in Forensic Accounting It Takes a Sleuth
Insurance News Net (press release)
Think Bernie Madoff , the mastermind behind the largest Ponzi scheme in U.S. history. The New York financier swindled investors out of more than $65 billion dollars .
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EY: Fraud and Corruption Trends to watch this year

EY: Fraud and Corruption Trends to watch this year | Forensic Auditing | Scoop.it

Companies and their boards are struggling with increased regulatory burden and the risks associated with operating in emerging Asian markets, according to a recent report released by Ernst & Young's (EY's) Fraud Investigation & Dispute Services group.

The findings, culled from EY's first Asia-Pacific Fraud Survey 2013 titled "Building a more ethical business environment", shows that regulators are challenging corporate compliance and governance models as companies aim to mitigate risk while shareholders expect growth. The changing landscape for cross-border disputes, bribery and corruption and cyber-crime continues to test compliance and governance models, especially in new markets.

Chris Fordham, Asia-Pacific Managing Partner of EY FIDS, commented: "Our clients are continually looking for ways to improve their approach to anti-bribery and corruption risk in emerging Asian markets. However, we see related risks gaining traction with multinational and local companies, as well as industry specific risk issues that will persist into FY14. FIDS has identified six key themes where we expect our clients to focus in 2014."

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Inspector General reports irregularities

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CANADA: Livent auditor Deloitte ordered to pay $84.8-million for failing detect fraud

CANADA:  Livent auditor Deloitte ordered to pay $84.8-million for failing detect fraud | Forensic Auditing | Scoop.it

The Livent scandal has yet again made Canadian legal history, this time in the form of an $85.6-milllion lawsuit judgment that puts accounting firms and corporate auditors under the legal microscope.

Livent’s former auditor, Deloitte, has been ordered to pay damages to the theatre company’s creditors after an Ontario judge ruled the accounting firm failed to detect fraud at the company, even though there were plenty of warning signs that something fishy was going on in the 1990s.

“In my opinion, Deloitte should have remained firm in its resolve to sever its relationship with Livent at the end of August 1997 at the earliest,” writes judge Arthur Gans of the Ontario Superior Court of Justice in a 118-page ruling dated Friday. “The red flags were certainly aflutter by that time.”

The judgment is a very rare situation. For years creditors and investors have been looking for ways to sue corporate auditors. This decision shows one way it may be done.

Officials from Deloitte said Sunday they are still studying the decision. “Our final audit of Livent occurred close to 20 years ago. It was a difficult audit and senior Livent officials have been convicted of fraud. We need time to carefully consider the decision before deciding on our next step,” said Vital Adam, Deloitte spokesman.

Livent was a high flying theatre company in the 1990s, bringing popular shows like “Phantom of the Opera” and “Joseph and the Amazing Technicolor Dreamcoat” to stages across North America. Behind the curtain, however, the company was ultimately revealed to be a massive accounting fraud. Livent sought bankruptcy protection in the U.S. in 1998. Founders Garth Drabinsky and Myron Gottlieb were convicted of fraud in Ontario in 2009.

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Forensic auditors beef up teams - Business Standard

Forensic audits are no longer just about identifying dodgy entries in company books. Now, these also involve following suspects, investigations and other activities commonly associated with detectives, rather than professional accountants.

In line with this, there is an increased demand for people with such skill-sets, especially ex-law enforcement officials. Now, major accounting firms are trying to rope in former Central Bureau of Investigation (CBI) and Intelligence Bureau (IB) officials, in addition to police personnel. “We already have quite a few former senior police officials, CBI employees, IB officials and former regulators as team members,” said Rohit Mahajan, senior director and head (forensic services), Deloitte Touche Tohmatsu India.
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$6 Billion Goes Missing at State Department

$6 Billion Goes Missing at State Department | Forensic Auditing | Scoop.it

The State Department has no idea what happened to $6 billion used to pay its contractors.

In a special “management alert” made public Thursday, the State Department’s Inspector General Steve Linick warned “significant financial risk and a lack of internal control at the department has led to billions of unaccounted dollars over the last six years.

The alert was just the latest example of the federal government’s continued struggle with oversight over its outside contractors.

Related: Government Blatantly Wastes $30 Billion This Year

The lack of oversight “exposes the department to significant financial risk,” the auditor said. “It creates conditions conducive to fraud, as corrupt individuals may attempt to conceal evidence of illicit behavior by omitting key documents from the contract file. It impairs the ability of the Department to take effective and timely action to protect its interests, and, in tum, those of taxpayers.”

In the memo, the IG detailed “repeated examples of poor contract file administration.” For instance, a recent investigation of the closeout process for contracts supporting the mission in Iraq, showed that auditors couldn't find 33 of the 115 contract files totaling about $2.1 billion. Of the remaining 82 files, auditors said 48 contained insufficient documents required by federal law.

 

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Review of the Lease Awarded to Westar Development Company, LLC for the Butler, Pennsylvania Health Care Center

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Forensic Accounting – How To Uncover Fraud

Forensic Accounting for Non Accountants
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AIPCA Debuts Forensic Accounting Mentorship Program - Accounting Today

AIPCA Debuts Forensic Accounting Mentorship Program - Accounting Today | Forensic Auditing | Scoop.it
AIPCA Debuts Forensic Accounting Mentorship Program
Accounting Today
The American Institute of CPAs has begun offering a forensic accounting mentorship program.
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AICPA - Certified in Financial Forensics (CFF) Credential Overview

AICPA - Certified in Financial Forensics (CFF) Credential Overview | Forensic Auditing | Scoop.it


The American Institute of Certified Public Accountants (AICPA) established the Certified in Financial Forensics (CFF) credential in 2008 for CPAs who specialize in forensic accounting. The CFF credential is granted exclusively to CPAs who demonstrate considerable expertise in forensic accounting through their knowledge, skills, and experience. The CFF encompasses fundamental and specialized forensic accounting skills that CPA practitioners apply in a variety of service areas, including: bankruptcy and insolvency; computer forensic analysis; family law; valuations; fraud prevention, detection, and response; financial statement misrepresentation; and economic damages calculations.

The CFF credential program is designed to achieve the following objectives:  
Increase exposure for CPAs who have obtained the CFF credential;Enhance the quality of the forensic services CFFs provide;Ensure the continued competitiveness of CPAs versus other forensic accounting services providers through continuous access to a comprehensive community of resources and support;Increase practice development and career opportunities for CFFs;Promote members' services through Forensic and Valuation Services (FVS) website; andAchieve public recognition of the CPA/CFF as the preferred forensic accounting professional.
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Forensic audit confirms illegal acts uncovered by media

Forensic audit confirms illegal acts uncovered by media | Forensic Auditing | Scoop.it

 The Ford-Iroquois Public Health Department board reviewed a forensic auditor’s report Monday night that confirmed the agency’s management committed several illegal acts using taxpayers’ money, as first revealed through media investigations  last year.

Among the findings in the eight-page report prepared by Bellevue, Wash.-based CliftonLarsonAllen LLP were the violation of bid procurement laws, the misuse of grant money, inaccurate budgeting and the revision of policies by management without the board’s approval.

The board voted 7-0 in September to hire the certified public accounting firm to complete the forensic audit of the agency’s finances for fiscal year 2012. The cost was estimated at $50,000 to $60,000.

Iroquois County Board Chairman Rod Copas, who also serves on the board of health, said at the time that “huge discrepancies” had been discovered in the agency’s finances.

In the preceding months, independent investigations by the Paxton Record and Edgar County Watchdogs revealed that the health department disregarded its own procurement rules when it awarded a $127,000 contract to a company owned by the husband of a health department employee — and without the company submitting a public bid.

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Accounting Firm Gettry Marcus Discusses Four Phases of a Litigation Case That ... - PR Web (press release)

Accounting Firm Gettry Marcus Discusses Four Phases of a Litigation Case That ... - PR Web (press release) | Forensic Auditing | Scoop.it

Accounting Firm Gettry Marcus Discusses Four Phases of a Litigation Case....

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What is Forensic Auditing?

What is Forensic Auditing? | Forensic Auditing | Scoop.it

What is Forensic Auditing?

Auditing (in relation to financial institution) is nothing but to check the records of the any financial institution like bank or company, etc.Forensic Auditing is a special type of auditing in which the examination & evaluation of a financial institution is made in such a way that, it can be used as an evidence or proof in a court of law.It is done by an expert group. (Expert group can be any company or individual which has special knowledge of conducting such forensic audit)In simple words, Forensic Audit is an audit done by an expert group so as to provide it’s finding in the form of proof/evidence. It is basically a testimony with regard to the Audit provided by the expert group.

 

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A hiring boom for fraud fighters

A hiring boom for fraud fighters | Forensic Auditing | Scoop.it

As companies seek to protect themselves from the kinds of breaches that compromised 40 million Target TGT +0.26%  customers’ credit card numbers last November, fraud-prevention professionals are in high demand.

The overall U.S. employment picture may still be shaky, despite gains last month, but opportunities seem to abound for fraud investigators who can unearth, investigate and prevent wrongdoing like money laundering, bribery and identity theft.

“The thing that I have been getting a lot of queries about from clients and potential clients is protection of their data from misuse,” said Kathy Lavinder, founder and executive director of the Bethesda, Md.-based recruiting company Security and Investigative Placement Consultants, LLC. “You have to have the technical gurus, the people with technical expertise who can harden the networks and look at the information security from the inside out and the outside in.”

The Association of Certified Fraud Examiners topped 70,000 members this year, a 40% increase since 2008, when the financial crisis unraveled. The association credentials individuals who pass its fraud detection and prevention exam. Its members span law enforcement, accounting and medicine, and even include ministers who have taken it upon themselves to prevent stealing at their churches, said James Ratley, its president and CEO.

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Anti-Fraud Collaboration Case Study

Anti-Fraud Collaboration Case Study | Forensic Auditing | Scoop.it

The Anti-Fraud Collaboration continues to build awareness of financial fraud deterrence and detection with the release of a second, innovative case study for members of the financial reporting supply chain.  The Carolina Wilderness Outfitters Case Study explores a potential material fraud at a fictitious public company. The hypothetical examination is designed to facilitate a discussion of how and when to conduct an internal investigation when fraud is suspected in an organization. The case study also aims to raise awareness of the environments in which financial reporting fraud might flourish and to engage audit committee members, financial executives, and internal and external auditors in a discussion concerning mitigating risks. Carolina Wilderness Outfitters is the second in this series of case studies. The first, Hollate Manufacturing, focused on understanding the conditions that can generate and perpetuate fraud and misrepresentation in financial reporting. Published in March 2013, Hollate Manufacturing has been widely taught across the country. Both case studies are available free of charge on the Center for Audit Quality’s website, where instructors can also register to receive the discussion guide and access videos and other case-method resources. For more from the Anti-Fraud Collaboration, visit www.antifraudcollaboration.com.

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The Sherlock Holmes of Accounting: Howard Schilit Explains the Mystery of His Art

The Sherlock Holmes of Accounting: Howard Schilit Explains the Mystery of His Art | Forensic Auditing | Scoop.it
Because of his track record in detecting the manipulation of financial results, Howard Schilit, CFA, has been called the Sherlock Holmes of accounting. Whereas most forensic accountants come in

after the fact for the investigation and litigation, Schilit is the rare exception who comes in to detect accounting manipulationbefore it is widely discovered.

Currently, Schilit works as the CEO of Schilit Forensics, a New York–based forensic accounting consultancy, founded by him. Working for large institutional investors, Schilit has not only made accounting interesting but also made a highly profitable business out of it. Once an academic who taught accounting, Schilit is the lead author of Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports. To find out what it is this modern-day Sherlock Holmes does and how exactly he does it, we recently interviewed him. Here is an edited version of the interview.

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