A fraud investigation plan for a false accounting and theft case

Abstract

Purpose The purpose of this paper is to formulate and propose a fraud investigation plan that forensic accountants can use to investigate financial frauds. In particular, the paper sets out the structure and rationale of the fraud investigation plan that both forensic accountants and fraud examiners can use in their investigation of false accounting and theft charges. Design/methodology/approach The paper uses the material facts from the Polly Peck International fraud as a prototype case upon which to build an investigation plan and detail potential areas of investigation to establish evidence for a criminal trial. Findings The findings revealed that the case can be used to provide insights on evidence gathering techniques and test particular models of fraud detection. The concealment and conversion evidence gathering techniques provide fodder on how to gather and triangulate both direct and circumstantial evidence that can be used to avoid mistrials in courts. Practical implications The case is of interest to practitioners and forensic and fraud examination students who would like to build on their existing knowledge and obtain insights into the steps to follow to conduct an investigation and gather evidence to build a case. The paper makes specific recommendations to enhance the effectiveness and efficiency of investigations. Originality/value The paper is among one of the few to propose a fraud investigation plan designed to investigate cases involving false accounting and theft charges. More importantly, the paper uses a real case to illustrate how to examine documentation/data and how such documentation will be analysed in a trial.

An embezzler test for norms, standards and regulations

“…We do not test whether a particular norm, standard or regulation has been, or will be abused for embezzlement motives, but rather whether the norm, standard or Test for norms, standards and regulations regulation can facilitate the abuse of trust without being subject to detection or an applicable sanction. Several examples of abuse can be cited, such as creative accounting (Gupta and Kumar, 2020;Lokanan, 2019), using actual economic norms for the diversion of funds through the payment of non-legitimate bonus and dividends obtained out of inflated profits (Crutchley et al, 2007;Ndzi, 2019;Oppenheimer, 2011;Young, 2020), or abusive tax avoidance through cost inflation to reduce taxable income, or the transfer of assets to countries with lower tax regimes with the adoption of abusive transfer prices (Autenne et al, 2018;Beer et al, 2021;Bridges, 1997;Peacock, 1997;Quentin, 2016;Riedel, 2018). To be clear, we are not claiming that all these abuses are related to specific standards, norms or regulations, but rather, we are evaluating whether specific standards, norms and regulations can facilitate the occurrence of embezzlement.…”

High-Speed Railway Opening and Corporate Fraud

“…Current research on corporate fraud focuses on the fraud triangle theory [27][28][29]. The fraud triangle theory divides the main factors affecting corporate fraud into three aspects: incentive, opportunity, and rationalization.…”