Jones International University
Dr. Ana Machuca
December 27, 2012
Detection and Investigation
When doing an investigation whether you are a forensic accountant or law enforcement you must be able to answer these questions. Who, why, where, when, how, and why did they do what they are accused of. Only until you have these questions answered can you say your job is done. Before a forensic accounting investigation can be started there must be a reason with corroborating evidence. Even if there are a few red flags and investigation must dig deeper to make sure there is enough evidence before charges can be filed.
There are three characteristics that define fraud; they are perceived pressure, opportunity and rationalization. “Perceived pressure is necessary to supplement internal control weakness and other opportunities to enable fraud,” (Kranacher, Riley and Wells, 2011, pg. 204, Para. 2) “Opportunity refers to a position of trust within an organization and the skill set to carry out the fraud.” (Kranacher, et al, 2011, pg. 204, Para. 1) “Rationalization is a manufactured, somewhat arbitrary justification for otherwise unethical or illegal behavior. (Kranacher, et al, 2011, pg. 204 Para. 4)
Several reasons a person becomes a fraudster are money, ideology, coercion and ego also known as M. I. C. E. Money and ego is based on the greed and power that some people want but if they cannot get it legally they will try getting it illegally. Coercion is caused by someone who uses a person faults or weaknesses to help them do something illegal. Ideology is a characteristic of terrorist. They believe that they are the only ones that are right and everyone else is wrong.
The elements of fraud consist of Act, Concealment and Conversion. The Act of a fraud is what they person did that was illegal. Concealment is what the person did to hide what they did and Conversion is what the person got out of the illegal act. It is hard or a person to get out of the illegal act once the forensic accountant or law enforcement has proof that they did it.
Before a person can be blamed for something illegal the forensic accountant or law enforcement must have evidence. This evidence is anything that can be “perceived by the five senses, and any proof, such as testimony of witnesses, records, documents, facts, data, and tangible objects, legally presented at trial to prove a contention and to induce a belief in the minds of the jury.” (Kranacher, et al, 2011, pg. 206, Para. 4) There are three types of evidence the first is the testimony of a witness. The next is real such as pictures, documents, data, and the murder weapon. The last is demonstrative such as power point presentations or maps.
There are several sources of the act, concealment and conversion. Documents are a real record that can be used in a trial because they “cannot forget, cannot be cross-examined, cannot commit perjury, and assuming the anti-fraud professional correctly interprets the meaning of their documents content tell the same story…