Corporate Fraud: Case Studies in Detection and Prevention
Fraudulent financial reporting, corruption, and misappropriation are often investigated by the internal audit department. Because these types of crimes can be the source of large losses, security professionals would do well to familiarize themselves with how they are carried out and how they can be detected.
Corporate Fraud provides a clear window into that world. Author John D. O’Gara was the director of internal audit at a Fortune 500 company and has more than 30 years’ experience in the field. He has written a book that will serve both as a training manual for fraud investigators and a guide for security professionals interested in learning more about this field.
The book explores the two sides of the fraud coin: fraud on behalf of a company (involving financial reporting and bribery) and fraud against a company (corruption and misappropriation).
O’Gara describes the various types of fraud, explains how they work, and lists the indicators to look for. Fascinating case studies show how crimes were perpetrated and detected.
For example, the case study called “Sale at a Modest Profit” shows how a corporate manager sold an overseas corporate real estate asset at a fraction of its market value to a front company that he owned. The transaction showed a profit, so it didn’t attract immediate attention. A tip-off led to the scheme unraveling, and the defrauded company now takes the simple measure of having independent appraisals done on all property that will be sold.
Another case describes how a corporate real estate manager would, through confederates, buy properties that were destined to be purchased by his company as sites for gas stations. This fraud was discovered through data analysis; an auditor noticed that a high percentage of the properties purchased by the company had only been owned by the seller for a brief time, and that each seller had used the same real estate agent....
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