Forensic Accounting Test 3

Front 1

Reactive

Back 1

occur from notification that a crime has occurred. May result from insiders, investigators, or auditors

Front 2

Proactive

Back 2

investigator initiated investigation. In many money laundering schemes, the investigator may discover the financial crime accidentally.

sometimes a general suspicion could lead to probing and discovery of an illegal financial activity..

Front 3

case evaluation

Back 3

this stage requires an investigator to sort through superfluous information and extract essential elements of a case/allegations

Front 4

Criminal systems

Back 4

end goal of prosecution is imprisonment of the offender, fines, or both

prosecutor is the attorney for society

Front 5

civil system

Back 5

end goal of prosecution is to repair the damage to the victim

civil attorney represents the individual

Front 6

solvability factors

Back 6

these are the characteristics of an incident that help to predict how successful an investigation will be

Front 7

weighted solvability factors

Back 7

weighted system recognizes that not all factors are equal in determining solvability. weights are determined based on the statistical research and anecdotal expereince

Front 8

un-weighted solvabiltiy factors

Back 8

do not assign any particular importance to individual factors

each factor is relativly important as the next

most un-weighted solvability schemes are based on anecdotal

Front 9

Why plan?

Back 9

To maintain focus: focus your efforts in line with the goals of the investigation

Control growth: proper management of evidence, manage unforseeable changes

Promote adaptability: circumstances surrounding the investigation may change and the plan must have some built-in adaptability

Front 10

3 commonalities when developing an investigation plan

Back 10

1. competence: conduct a thorough analysis of the potential issues involved so a determination can be made as to what additional skill sets and resources are needed to obtain the information that is sought.

2. corroboration: no information should be taken at face value. all facts must be reviewed and verified.

3. common sense: do the allegations, witness accounts, and evidence make sense?

Front 11

investigative plan

Back 11

1. verify the occurence

2. alleged violation

3. identify elements of the allegation

4. identify the targets of the investigation

5. assign the appropriate investigator

6. collect facts/conduct interviews

7. review the information and verify

8. documentation

Front 12

financial planning

Back 12

allows for better consideration of resources, techniques, within a specific budget

Front 13

personnel planning

Back 13

identify key personnel requirements-may need to consider the use of outside experts such as technology experts, law enforcement, security, experts

Front 14

technology planning

Back 14

what technologies do you need to invest in?

consideration of advances in technology

may need to address compatibility issues

Front 15

flow of investigation process

Back 15

background, understand the case, intelligence gathering, investigative due diligence, intelligence gathering

Front 16

background

Back 16

goal is to build knowledge for the case. two reasons for conducting background work in financial crimes

a myriad of fraudulent schemes exist

businesses are evolving constantly

Front 17

understand the case

Back 17

become familiar with the business structure, business processes

are there any deviations in operations?

document your progress using visual aids such as flow charts, organizational charts ets.

investigate the industry: look at industry standards regulations

Front 18

intelligence gathering

Back 18

often unrecognized is the element of the human mind and individual behavior

fraud diamond: rationalization, opportunity, motivation, capability

Front 19

6 traits in the personality of a fraudster: positioning

Back 19

ones position or function within the organization

Front 20

6 traits in the personality of a fraudster: intelligence and creativity

Back 20

one must be smart enough to exploit the weakness in internal controls

Front 21

6 traits in the personality of a fraudster:

ego

Back 21

one must have a strong ego and great confidence that he will not be detected

Front 22

6 traits in the personality of a fraudster:coercion

Back 22

coerce others to commit or conceal fraud

Front 23

6 traits in the personality of a fraudster:deceit

Back 23

successful fraud requires effective and consistent lies

Front 24

6 traits in the personality of a fraudster:stress

Back 24

the individual must be able to control his stress as committing the fraudulent act and keeping it concealed can be extremely stressful

Front 25

investigative due diligence

Back 25

comprises of information intelligence insight and access

it explores issues beyond the information found in ledger books and contract caluses

focuses on in-depth background investigation, vulnerability assessment, corporate personality, and business intelligence gathering

(business and media database research, public records searches, direct contact with government, industry, personal, and confidential sources)

Front 26

surveillance

Back 26

provide information readily visible, but iwthout a paper trail

conduct covert surveillance of the suspect, suspects associates, and the victim

Front 27

database searches

Back 27

private databases: databases to which access is restricted

include both government sources and commercial sources

public databases- no restrictions, includes property tax assessment records, civil and criminal histories

Front 28

trash collection

Back 28

discarded reeipts offer proof of purchases, discarded packaging information

no expectation of privacy in discarded items

Front 29

types of evidence

Back 29

testimonial evidence- actual witness testimony in open court

documentary evidence- obtained during investigation

demonstrative evidence- graphs

real evidence- physical, tangible

Front 30

best evidence

Back 30

the original peice of evidence untampered and unchanged

Front 31

process of proof

Back 31

evidence- inference-proof/conclusion

the ability to prove a case depends on both evidence and how well the strength of the inferences is

Front 32

inference

Back 32

the persuasive effect of evidence

inference relies on logic

Front 33

relevance

Back 33

evidence is relevant if it tends to either prove or disprove an issue in contention

Front 34

deductive argument

Back 34

a form of argument that works from general statement to a specific conclusion; top down logic

1. major premise

2. minor premise

3. conclusion

( all mammals are animals

all dogs are mammals

all dogs are animals

)

Front 35

inductive argument

Back 35

drawing conclusion from evidence, bottom up logic

less precise than deductive logic

several observations are combined to reach a conclusion

Front 36

hasty generalization

Back 36

conclusion not logically justified by unbiased or sufficient evidence

Front 37

fallacy or exclusion

Back 37

exclusion of evidence from consideration

Front 38

explicit inferences

Back 38

inferences made by the investigator based on explicit evidence

"sandra stole money, she was caught on tape"

Front 39

implicit inferenes

Back 39

not directly states, but what is expressed in understood

hidden inferences are implied

the investigator hints at the evidence and it is up to the judge to discover the inference

Front 40

why use analysis tools?

Back 40

visualization of complex relationships

identify people who are powerful and influential

study behavior of illegal networks

improve the ease with which the investigations are conducted

Front 41

matrices

Back 41

collection of rows and columns

used to model relationships between different types of objects

square matrix-represent a single object under study

rectangular matrix- represents a relationship between more than one type of object

the difference between a square and a rectangle matrix is the ability to relate unmatched items

matrices lack visual representation and therefore are often used by analysts as preliminary steps in the analysis process

Front 42

link diagram

Back 42

relationships between objects in a link diagram are represented through nodes

the lines connecting nodes are referred to as edges

easy to construct, easy to interpret

circles represent people, lines represent relationships

rectangles or squares can be used to represent organizations

Front 43

social network analysis

Back 43

used to investigate social structures in a network through the use of graph theories

Front 44

density

Back 44

the proportion of direct ties relative to the total number possible, the close the ratio to 1, the denser the network

Front 45

connectivity

Back 45

the ability of each actor within a network to reach other actors

Front 46

closeness

Back 46

a measure of distance between nodes, members of an organization, nodes that are a great distance from each other are more vulnerable to disruption

Front 47

degree

Back 47

total number of ties one actor has within the organization

Front 48

betweenness

Back 48

the number of relationships that lie between other actors and a particular actor