Fraud Prevention and Detection: Warning Signs and the Red Flag System, 1st Edition (Hardback) book cover

Fraud Prevention and Detection

Warning Signs and the Red Flag System, 1st Edition

By Rodney T. Stamler, Hans J. Marschdorf, Mario Possamai

CRC Press

316 pages | 12 B/W Illus.

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Description

Lessons can be learned from major fraud cases. Whether the victim is a company, public agency, nonprofit, foundation, or charity, there is a high likelihood that many of these frauds could have been prevented or detected sooner if early Red Flag warning signs had been identified and acted upon. Fraud Prevention and Detection: Warning Signs and the Red Flag System will enable officers and directors, internal and external stakeholders, as well as outside analysts to protect themselves and their organizations against fraud by effectively detecting, analyzing, and acting on early Red Flag warning signs. Based on an empirically tested strategy, the Red Flag System reflects the authors’ more than 100 years combined experience in the investigation of fraud in high-profile, global cases in North America, Africa, Europe, and the Far East.

Readers of this book will:

  • Acquire a general awareness of the nature, characteristics, and dynamics of fraud
  • Understand the process for determining whether a fraud has been committed
  • Develop an understanding of enterprise risk management approaches for fraud risk management, compliance risk management, and managing the risk of fraudulent financial reporting—including an understanding of the limitations inherent in these approaches
  • Learn how to find Red Flag indicators of fraud or suspicious transactions in financial statements, budgets, and contracts
  • Know how to ensure that, once a Red Flag has been identified, appropriate action is taken

Fraud can lead to significant financial loss as well as bad press and publicity with significant reputational impact for officers, directors, corporations, and their stakeholders. This book’s no-nonsense approach empowers those charged with protecting organizations to stop these frauds before the organization’s livelihood is jeopardized or to mitigate damage when fraud has occurred.

Reviews

"Fraud mitigation, timely detection, and thorough investigation are crucial elements for asset and brand protection. This book seeks to provide a foundation to recognize fraud during its incipient stages and identify actions to stop it. The authors have collectively leveraged their extensive international investigative experience into an exceptional resource…Any corporate leader or investigator should strongly consider adding this book to their library."

ASIS Dynamics, March/April 2015

Table of Contents

An Introduction to the Red Flag System

Fraud 101: A Primer

The Dynamics and Root Causes of Fraud

The Red Flag System

Financial Statement Fraud

Red Flags for Financial Statement Fraud

Procurement Fraud

Procurement Fraud Methods and Red Flags

Bribery and Corruption

Fraud and Money Laundering

High-Risk Corporate Activities and Market Manipulation

Pyramid Schemes

Fraud and the Absence of Good Governance

The Board of Directors and Its Responsibility to Safeguard

the Organization

Enterprise Risk Management, Fraud Risk Management, and Compliance Risk Management

The Board of Directors—First Line of Defense against Fraud and Corruption

Screening, Scrutinizing, and Investigating Red Flags

Appendix A: Summary of Red Flags

Appendix B: Glossary

Index

About the Authors

Rodney T. Stamler is a former assistant commissioner of the Royal Canadian Mounted Police (RCMP). His major cases included chasing the hidden assets of the late Romanian dictator Nicolae Ceausescu in the early 1990s; investigating the $1 billion Bre-X mining scandal in Indonesia, the world’s largest gold mining fraud; and investigating a massive, multinational procurement fraud at a Fortune 100 multibillion-dollar corporation. He served as a special advisor to the United Nations in the development of the international convention against laundering the proceeds of illicit drug trafficking. He is often called to provide advice and counsel on corporate governance matters.

Hans J. Marschdorf is a leading international forensic accountant who has conducted financial investigations for the past 23 years around the world, ranging from multinational corruption and procurement fraud investigations to money laundering investigations, investigations of elaborate Ponzi schemes, and frauds involving structured financial products. His experience includes a position as pan-European leader of a forensic services practice in a Big 4 professional services firm. He now practices as a financial crime investigator from Greater Toronto, Ontario.

Mario Possamai is a senior fraud professional at a major Canadian financial institution and has managed complex fraud, asset recovery, and corruption investigations in North America, Europe, and Africa for more than two decades. A member of the Bre-X investigative team in Indonesia, he also provided forensic financial consulting services to the director of public prosecutions in a southern African country in the mid-1990s; was an expert witness for the Department of Justice in Canada on money laundering; and was senior advisor to Superior Court Justice Archie Campbell, who headed the judicial inquiry into the SARS outbreak in 2003.

Subject Categories

BISAC Subject Codes/Headings:
BUS041000
BUSINESS & ECONOMICS / Management
LAW041000
LAW / Forensic Science
SOC004000
SOCIAL SCIENCE / Criminology