FORENSIC ACCOUNTING & FRAUD

Financial fraud costs organizations billions annually. These topics cover detection, prevention, and
investigation of financial crimes.

TOPIC 197
Fraud Examination Fundamentals
Fraud examination is the specialized discipline of detecting, investigating, and resolving allegations of fraud in
organizations of all types. This foundational topic introduces the fraud landscape, the examiner’s role, and the
systematic process used to investigate suspected wrongdoing.

Definition of fraud and the fraud triangle
Categories of occupational fraud: asset misappropriation, corruption, financial statement fraud
ACFE Report to the Nations: fraud statistics and trends
The fraud examination process overview
Role of the Certified Fraud Examiner (CFE)
Legal standards: civil vs. criminal fraud
Documenting fraud evidence and chain of custody
Fraud’s impact on organizations and communities

TOPIC 198
Embezzlement Detection and Investigation
Embezzlement is the most common form of occupational fraud and can devastate small businesses, nonprofits, and
churches that lack robust internal controls. This topic equips financial professionals and organizational leaders to
recognize, investigate, and respond to embezzlement.

Common embezzlement schemes in small organizations
Red flags and behavioral indicators of embezzlement
Analyzing bank records and financial statements for anomalies
Cash larceny vs. skimming schemes
Payroll and expense reimbursement fraud
Investigative interview techniques
Working with law enforcement on embezzlement cases
Recovering losses: civil suits, criminal restitution, and insurance claims

TOPIC 199
Financial Statement Fraud: Detection and Prevention
Financial statement fraud involves the intentional misrepresentation of an organization’s financial condition to
deceive investors, creditors, or regulators, and it causes more financial damage per incident than any other fraud
type. This topic provides forensic accountants and auditors with the tools to detect and prevent it.

Types of financial statement fraud: revenue inflation, expense concealment, asset overstatement
Motivations behind financial statement manipulation
Earnings management vs. fraudulent reporting
Analytical procedures for detecting anomalies
Beneish M-Score and other quantitative fraud detection models
Role of external auditors in detecting financial statement fraud
High-profile financial statement fraud cases and lessons
Strengthening controls to prevent financial statement manipulation

TOPIC 200
Church and Nonprofit Fraud: Prevention and Detection
Churches and nonprofits face elevated fraud risk due to high-trust environments, weak internal controls, and
reliance on volunteers. This topic addresses the unique fraud vulnerabilities of faith-based organizations and
provides practical prevention strategies grounded in accountability and transparency.

Why churches and nonprofits are particularly vulnerable to fraud
Most common fraud schemes in faith-based organizations
Case studies of church fraud (with lessons learned)
The role of trust in enabling fraud
Internal controls specifically designed for churches and nonprofits
Background checks and screening volunteers and staff
Fraud risk assessment for faith-based organizations
Responding to fraud in a way that upholds ministry values

TOPIC 201
Asset Misappropriation: Schemes and Safeguards
Asset misappropriation — theft of an organization’s resources by its own employees — accounts for the vast
majority of all occupational fraud cases. This topic surveys the most common schemes and the controls that
prevent and detect them.

Cash misappropriation: larceny, skimming, fraudulent disbursements
Check tampering and forgery schemes
Inventory and non-cash asset theft
Fictitious vendor and ghost employee schemes
Expense report fraud and reimbursement abuse
Point-of-sale fraud in retail and service businesses
Data analytics for detecting misappropriation
Preventive controls and deterrence strategies

TOPIC 202
Corruption Schemes: Bribery, Kickbacks, and Conflicts of Interest
Corruption schemes involving bribery, kickbacks, and conflicts of interest can permeate organizations at all levels,
from small businesses to government contractors. This topic examines how corruption schemes operate and how
robust policies, controls, and culture can deter them.

Defining corruption in the occupational fraud context
Bribery schemes: commercial and governmental
Kickback arrangements with vendors and contractors
Bid rigging and procurement fraud
Conflicts of interest and undisclosed financial relationships
Foreign Corrupt Practices Act (FCPA) compliance
Detecting corruption through data analytics
Anti-corruption policies, training, and culture

TOPIC 203
Digital Forensics in Accounting Investigations
Modern fraud investigations increasingly depend on digital evidence, from financial database analysis to email
forensics and cryptocurrency tracing. This topic introduces the digital forensic tools and techniques used by
forensic accountants in today’s technology-driven fraud landscape.

What is digital forensics in the accounting context
Preserving and collecting electronic evidence
Analyzing financial data with forensic tools (IDEA, ACL, Benford’s Law)
Email and communication forensics
Cryptocurrency transaction tracing
Social media and open-source intelligence (OSINT)
Admissibility of digital evidence in court
Building a digital forensics capability in a CPA firm

TOPIC 204
Fraud Prevention Programs: Building an Anti-Fraud Culture
Prevention is far less costly than detection and response, and organizations with strong anti-fraud cultures
experience significantly fewer and smaller fraud losses. This topic provides a blueprint for building a
comprehensive fraud prevention program applicable to businesses, nonprofits, and faith-based organizations.

Elements of an effective fraud prevention program
Tone at the top and ethical culture as fraud deterrents
Ethics codes, hotlines, and anonymous reporting mechanisms
Fraud risk assessments: identification and prioritization
Employee fraud awareness training
Vendor due diligence and third-party risk management
Technology-based monitoring and continuous auditing
Measuring fraud prevention program effectiveness

TOPIC 205
Whistleblower Protections and Reporting Channels
Whistleblowers are among the most effective fraud detection tools available, but they will only come forward when
they feel protected from retaliation. This topic surveys the legal protections available to whistleblowers and how
organizations can build cultures that encourage reporting of wrongdoing.

Overview of federal whistleblower protection laws (SOX, Dodd-Frank, False Claims Act)
IRS whistleblower program and reward structure
SEC whistleblower program for securities violations
Internal reporting channels: hotlines, ombudsman, open-door policies
Retaliation: what it looks like and how it is prohibited
Anonymity and confidentiality in whistleblower reports
Nonprofit and church whistleblower policies
Encouraging a speak-up culture in organizations

TOPIC 206
Litigation Support and Expert Witness Services for CPAs
CPAs with forensic and litigation support skills serve as invaluable advisors and expert witnesses in legal disputes
involving financial matters, from commercial litigation to divorce proceedings to fraud cases. This topic prepares
accounting professionals for the demanding and highly specialized role of litigation support specialist.