Guide to Forensic Accounting Investigation
Thomas W. Golden, Steven L. Skalak, and Mona M. Clayton
by John Wiley & Sons (February 2006); ISBN 0-471-46907-6;
546 pages (hardcover); $135
by Toby J.F. Bishop
2006 - For years, writing the definitive book on forensic
accounting or fraud has been impossible because of the difficulties
of meeting the needs of different constituencies in one
book. Tom Golden and his colleagues at PricewaterhouseCoopers
chose to write specifically about forensic accounting investigation,
creating the opportunity for a work of greater focus.
contributing writers have produced an extensive work that
covers many different aspects of the field of forensic accounting
investigation. The book includes material on money laundering
and other dimensions of forensic accounting. This marathon
read requires stamina, but the effort is rewarded with insights
in many different areas. For readers with less time or more-focused
interests, the book is best treated as a smorgasbord from
which a few items can be plucked.
28 chapters cover different topics that largely stand alone.
A reader using the book as a reference tool can scan the
table of contents to find a particular topic. The early
chapters mostly provide an introduction to fraud and compare
the role of financial statement auditors with that of forensic
accounting investigators. The authors provide an analogy
of police patrol officers versus detectives. This analogy
may understate the fraud-detection skills of better-trained
auditors, even as it suggests that because the police rely
extensively on expert detectives, so too can auditors.
the most interesting of the early chapters, chapter 3, “Psychology
of the Fraudster,” compares three groups: “calculating
criminals,” “situation-dependent criminals,”
and “power brokers.” Auditors would benefit
from more exposure to the bizarre thinking of corporate
criminals because it often departs widely from the straightforward
logic used by many auditors.
8 sets out potential red flags and fraud-detection techniques,
while chapters 10 and 11 review the range of financial statement
fraud schemes. This material is valuable reading for both
internal and independent auditors.
12 is the first of several chapters that generally follow
the sequence of a typical investigation. It discusses when
and why to call in forensic accounting investigators. Chapter
13 examines how such experts can best team with internal
and independent auditors. In the post–Sarbanes-Oxley
world, forensic accountants are being called in sooner,
as wise auditors look for assistance in arriving at the
of the most useful parts of this book for business managers
is chapter 14, “Potential Missteps: Considerations
When Fraud Is Suspected.” Confronting suspects immediately,
accusing them, and firing them right away can lead to the
destruction of vital evidence, the loss of cooperation from
potential cooperating witnesses or suspects, and even lawsuits
alleging defamation or wrongful termination.
15 to 21 examine different investigative techniques, including:
dealing with tips; background investigations; interviews;
analyzing financial statements; data mining; and documenting
evidence. Each of these is worthy of a book on its own,
so the discussions are necessarily brief but cover many
22 and 23 discuss supporting a criminal prosecution and
producing investigation reports. The book identifies pitfalls
to avoid as well as good practices to follow.
final chapters cover a variety of subjects. These include
working with attorneys, conducting global investigations,
money laundering, and forensic accounting other than investigations.
The inclusion of the latter may seem at odds with the title
of the book, and the brevity with which other types of forensic
accounting work are covered may frustrate readers who are
interested in those subjects.
book concludes with a discussion of the future of forensic
accounting investigation. The authors explore how the discipline
is evolving with new tools and techniques and blossoming
educational programs. The authors foresee significant growth
in the manipulation of nonfinancial operating data, which
can be as important to investors as financial data. Forensic
accountants will not be short of work in the years ahead.
A Guide to Forensic Accounting Investigation is
not light reading, the determined student of this field
will find much of value inside. The $135 list price is steep,
but members of the Association of Certified Fraud Examiners
can buy it there for $99.
J.F. Bishop, CFE, CPA, FCA, is a Chicago-based partner
of Deloitte Financial Advisory Services LLP. He is the former
president and CEO of the Association of Certified Fraud Examiners