Fraud 101: Techniques and Strategies for Detection, Second Edition

By Adrian A. Barnie, CPP, CFE

***** Fraud 101: Techniques and Strategies for Detection, Second Edition. By Howard Silverstone and Howard R. Davia; published by John Wiley and Sons, (Web); 238 pages; $49.95.

Novice writers are often urged to start by reading Strunk and White’s The Elements of Style. They soon learn that the book will serve them in good stead for the rest of their writing lives. While it may be excessive to compare any book to such a classic, Fraud 101 has at least similar potential within its own field. It is an excellent introduction for new fraud investigators and one that bears periodic review to keep fundamental principles fresh in one’s mind.

Howard Silverstone has updated the first edition of this book, written by the now-deceased Howard R. Davia, to include discussion of Enron, WorldCom, and other fraud fiascos. These and other case studies are instructive and fascinating.

For the basics, one of the best chapters categorizes fraud into three primary types. One is duplicate-payment fraud, defined as the issuance of two or more identical checks to pay the same debt for a service. Second is multiple-payee fraud, which is similar, but the checks are not identical. The third type is shell fraud, the payment of alleged debts for fictitious projects or services. For each type, detailed analysis and case studies are provided.

Another interesting chapter covers evidence collection, explaining two types of evidence in fraud investigations: indicative and validating. Indicative evidence means that the auditor or investigator finds indications that fraud may have occurred without specific indication that it actually has happened. Validating evidence is anything that supports or confirms the indicative evidence.

Though this section is very good, it is frustrating in that there is little guidance in regards to methods an investigator can use to gather indicative evidence. Instead, the text endorses the use of experience and intuition, which, of course, new investigators lack.

That is one of the few shortcomings, however. Aimed at both internal and external auditors, the book would be most valuable to security managers who need to gain insight into auditing philosophy and for investigators who need to learn actual auditing processes.

Reviewer: Adrian A. Barnie, CPP, CFE (Certified Fraud Examiner), is manager of investigations for The Intelligence Group International, a division of Corporate Screening Services, Inc., in Cleveland, Ohio. He is a member of ASIS International.




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