Digital Commons Network^™

Improving Forensic Software Tool Performance In Detecting Fraud For Financial Statements, Brian Cusack, Tau’Aho Ahokov

Australian Digital Forensics Conference

The use of computer forensics is important for forensic accounting practice because most accounting information is in digital forms today. The access to evidence is increasingly more complex and in far greater volumes than in previous decades. The effective and efficient means of detecting fraud are required for the public to maintain their confidence in the reliability of accounting audit and the reputation of accounting firms. The software tools used by forensic accounting can be called into question. Many appear inadequate when faced with the complexity of fraud and there needs to be the development of automated and specialist problem-solving …

Related Parties: Audit Risk When 63 Entities Act As One, Alyssa Lieb

Williams Honors College, Honors Research Projects

This paper delves into the fraud committed by Adelphia Communications for fiscal year 2001. Former Adelphia owner, the Rigas family’s background is scrutinized in an effort to understand how an environment fostering the ideals of financial statement fraud was created. The fraud itself is analyzed to uncover the potential warning signs that were available to then auditor, Deloitte. The audit process is outlined to determine where audit risk was greatest, and how audit guidelines in place at the time may have been ineffective in helping auditors to mitigate such risks. Audit guidelines in place at the time are then compared …

Extraterritorial Criminal Enforcement Of Securities Fraud Regulations After United States V. Vilar, Edgardo Rotman

University of Miami Law Review

In August 2013, the Court of Appeals for the Second Circuit in the case of United States v. Vilar denied extraterritorial application of the criminal law antifraud provisions contained in the Securities Exchange Act. The specific object of this paper is to criticize this decision and negate its premises.

After delving in depth into the notion of extraterritoriality, the paper offers a dynamic interpretation of the 1922 Supreme Court’s decision in United States v. Bowman, which is still the governing precedent on extraterritorial application of criminal laws. Furthermore, the paper criticizes the application of the 2010 Supreme Court’s decision …

Expanding The Ponzi Scheme Presumption, David R. Hague

Faculty Articles

Ponzi schemes and other investment frauds inevitably end up in bankruptcy or receivership, leaving behind numerous victims—many of whom invested their life savings in the scheme without any knowledge of its fraudulent nature. Although trustees and receivers can sometimes recover some of the fraudulently acquired funds from the assets of the perpetrators, in most cases, those assets fall woefully short of the victims’ losses. This leads to fraudulent transfer lawsuits (claw-back actions) against those who are suspected to have profited from the wrongdoing.

A transfer is fraudulent if it was made with the actual intent to defraud, but actual fraud …

Conditions Associated With Increased Risk Of Fraud: A Model For Publicly Traded Restaurant Companies, Elizabeth Yost

Electronic Theses and Dissertations

The central focus of this dissertation study is to understand the impact of the Sarbanes-Oxley Act and the factors that contribute to increased risk of fraud in order to determine why fraud may occur despite the imposed regulation of the Sarbanes-Oxley Act. The main premise of the study tests the application of the fraud triangle framework constructs to publicly traded restaurant companies during the time period of 2002-2014, using proxy variables defined through literature. Essentially, the study seeks to identify the factors that may provide the optimal criteria to engage in fraudulent or opportunistic behavior. The fraud triangle theoretical framework …

Yates V. United States: A Case Study In Overcriminalization, Stephen F. Smith

Journal Articles

In Yates v. United States, the Supreme Court will decide whether tossing undersized fish overboard can be prosecuted under the Sarbanes–Oxley Act of 2002, a law aimed at preventing massive frauds of the sort that led to the collapse of Enron and sent shock waves throughout the economy. Although the legal issue is narrow, the case has far-reaching significance. The Yates prosecution is a case study in the dangers posed by “overcriminalization”: the existence of multitudinous, often overlapping criminal laws that are so poorly defined that they sweep within their ambit conduct far afield from their intended target.

The …

Medicare Fraud In The United States: Can It Ever Be Stopped?, Chelsea Hill, Alex Hunter, Leslie Johnson, Alberto Coustasse

Management Faculty Research

The majority of the United States health care fraud has been focused on the major public program, Medicare. The yearly financial loss from Medicare fraud has been estimated at about $54 billion. The purpose of this research study was to explore the current state of Medicare fraud in the United States, identify current policies and laws that foster Medicare fraud, and determine the financial impact of Medicare fraud. The methodology for this study was a literature review. Research was conducted using a scholarly online database search and government Web sites. The number of individuals charged with criminal fraud increased from …

Corporate Revenue Miscalculations & The Impact On Stakeholders, Karen Cascini, Alan L. Delfavero, Ryan Bezner

WCBT Faculty Publications

Corporate earnings restatements are regarded as one of the most significant issues in accounting today. While there are various factors that can influence profitability, revenue is the key contributor to a business’ net income. During the 2000s, a multitude of domestic and multinational corporations faced significant issues with their revenue recognition practices. Although the investing public might regard any revenue restatement as laden with possible fraud, this is not always the case. Multinational firms face dual accounting systems, such as U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). Currently, similarities and differences between the accounting systems …

Can Using The Internal Audit Function As A Training Ground For Management Deter Internal Auditor Fraud Reporting?, Christopher K. Eller

Theses and Dissertations

This study examines the effects of using the internal audit function as a training ground for management and fraud magnitude on internal auditor fraud reporting decisions. Using a 2x2 between-participants experiment, the current study manipulates the use of the internal audit function as a management training ground (used as a training ground vs. not used as a training ground) and fraud magnitude (large fraud, defined as 30 percent of net income vs. small fraud, defined as one percent of net income). The results indicate that internal auditors may be less likely to report a fraud to their superior when the …

“In Counterfeit Passion”: Cross-Dressing, Transgression, And Fraud In Shakespeare And Middleton, Anastasia S. Bierman

Department of English: Dissertations, Theses, and Student Research

This thesis examines the way women cross-dressing as men functions as a crime in Thomas Middleton and Thomas Dekker’s The Roaring Girl and William Shakespeare’s As You Like It and Twelfth Night. While many modern scholars have discussed cross-dressing in these plays, many look to the end of the plays as the foundation for their analysis rather than the play as a whole. Because of this oversight, scholars deem the characters in the plays not transgressive, when, in fact, cross-dressing is transgressive. They ignore the way cross-dressing is often presented in writing in the Renaissance, i.e. as a type …

Texts, Lies, And Identity Theft: Prosecuting Complex Financial Fraud With Minnesota's Racketeering Statute, Thomas G. Sinas

William Mitchell Law Review

No abstract provided.

Texas Annual Survey: Securities Regulation, George Lee Flint Jr

Faculty Articles

The Fifth Circuit’s determination of a passive investor’s equity interest in a limited liability company as “securities” brings this class of investors under the protection of the Texas Securities Act (“TSA”). The TSA recognizes vicarious liability theories of aiding and abetting liability and control person liability, which hold secondary parties accountable for their actions. During the Survey period, several cases found secondary parties with positions of control or who met the elements of common law fraud culpable. In Fernea v. Merrill Lynch Pierce Fenner & Smith, Inc., the court found that a business could be liable for an employee’s actions …

The Law Of Ponzi Payouts, Spencer A. Winters

Michigan Law Review

When a Ponzi scheme collapses, there will typically be net winners and net losers. The bankruptcy trustee will often seek to force the net winners - those who received more money back from the Ponzi scheme than they invested - to disgorge their profits. Courts diverge on whether they should compel disgorgement in this instance. This Note argues that under prevailing fraudulent transfer law, net winners in a Ponzi scheme need not disgorge their profits. This is because the investor's dollar-for-dollar discharge of a preexisting debt constitutes the transfer of value in exchange for the payout. There are two exceptions …

Accounting And Auditing Enforcement Releases: Cash Flow Evidence Associated With Revenue Recognition Fraud, Irana Scott

Electronic Theses and Dissertations Archive

In an attempt to predict financial statement fraud, prior accounting research has considered the characteristics of firms that manipulate their financial statements. The aforementioned studies have included various fraud types and often focus on accruals manipulations of the financial statements. In contrast, this study concentrates on a specific type of fraud, revenue manipulations, and the effect of this fraud type on the firm's cash flows. This is an important issue as fraud (and related cash flow) is directly related to the firm's ability to remain viable. This three-paper dissertation contributes to existing literature by separating revenue manipulations from other types …

Detecting Fraud: Utilizing New Technology To Advance The Audit Profession, Gabriella Stanton

Honors Theses and Capstones

No abstract provided.

The Arbitrage Of Truth: Combating Dissembling Disclosure, Derivatives, And The Ethic Of Technical Compliance, William H. Widen

University of Miami Law Review

No abstract provided.

Another Madoff Masquerade?: Questioning “Securities Fraud” In The Crime And Its Cleanup, J. Scott Colesanti

Saint Louis University Law Journal

No abstract provided.

Shareholder Litigation After The Meltdown, Daniel J. Morrissey

West Virginia Law Review

No abstract provided.

Further Perspectives On Corporate Wrongdoing, In Pari Delicto, And Auditor Malpractice, Deborah A. Demott

Faculty Scholarship

No abstract provided.

Risk Factors For Fraud In Elderly Americans, Antonia M. Jensen

Regis University Student Publications (comprehensive collection)

Americans over age 65 comprise approximately one eighth of our population, but about one third of scam victims. The risk of fraud in this population is of particular concern because it is increasing and the damage is greater; losses have been reported in billions of dollars, and elders typically cannot return to the work force to recoup their losses, which can amount to their life savings and even their independence. This project details the results of an unobtrusive research project consisting of a content analysis of more current literature to identify and examine risk factors of elder fraud.

Finding Equilibrium: Exploring Due Process Violations In The Whistleblower Provisions Of The Fraud Enforecement And Recovery Act Of 2009, Laura Hough

William & Mary Bill of Rights Journal

No abstract provided.

Investors And Employees As Relief Defendants In Investment Fraud Receiverships: Promoting Efficiency By Following The Plain Meaning Of "Legitimate Claim Or Ownership Interest", Jared A. Wilkerson

W&M Law Student Publications

Relief defendants are nominal, innocent parties who hold funds traceable to the receivership but have no legitimate claim or ownership interest in them. These nominal parties, as opposed to full or primary defendants, have no cause of action asserted against them, and if they show no legitimate claim to the funds traced to the receivership, the funds are disgorged — generally at summary judgment. This seemingly simple relief defendant tool is used by receivers and regulatory agencies to quickly recover receivership funds for ultimate distribution to creditors. Recently, however, conflict has arisen in federal courts concerning the meaning of “legitimate …

The Evolutionary Biology Of Fungi And Fraud, Wendy Gerwick Couture

Articles

In this Article, the authors-a law professor and a biologist-offer a fresh perspective on the use of broad federal fraud statutes to combat fraud by drawing a comparison with the use of multi-site fungicides to combat plant disease. Multi-site fungicides are effective at preventing the evolution of resistant strains of fungi, but they are subject to increased regulatory scrutiny amid concerns about off-target toxicity. Similarly, broad fraud statutes serve as a stopgap to prevent the evolution of new types of fraud, but they are widely criticized as unduly vague and as interfering with the operation of specific fraud statutes. Biologists' …

Breaking Past The Parallax: Finding The True Place Of Lawyers In Securities Fraud, Marianne C. Adams

Fordham Urban Law Journal

Lawyers often play an integral part in business transactions and securities offerings. This puts lawyers on the sidelines of not only great business successes, but also, every so often, tremendous failures. Because they are viewed by many as gatekeepers, and in that role provide a degree of assurance (with their reputational capital) that gross illegalities will not occur, a series of questions arise in the minds of many when illegalities do happen on attorneys’ watch. This Note analyzes the legal standards that are in play and those that should be imposed when lawyers aid or abet a fraud. Part I …

The Multienforcer Approach To Securities Fraud Deterrence: A Critical Analysis, Amanda M. Rose

Vanderbilt Law School Faculty Publications

Participants in the U.S. capital markets can be sued for securities fraud by a mishmash of enforcers, including the SEC, class action plaintiffs, and state regulators. Does this multi-enforcer approach make sense from a deterrence perspective? This Article suggests that the answer is probably no. Although in theory there are conditions under which a multi-enforcer approach would promote optimal deterrence, it is unclear at best that those conditions exist in the United States. And further empirical research, while warranted, is unlikely to resolve the issue definitively. The status quo tends to persevere in the face of this sort of irreducible …

Reforming The United States' Economic Model After The Failure Of Unfettered Financial Capitalism, Richard B. Freeman

Chicago-Kent Law Review

This Article is based on the 2009 Kenneth M. Piper Lecture at the Chicago-Kent College of Law. The 2008–2009 financial meltdown and ensuing economic developments have shown three things about modern capitalism: First, that unfettered financial markets remain the Achilles heel of capitalism with the capability of destroying economic stability and bringing misery to all. Second, that high-powered incentives paid to "talent" in finance are a fundamental cause of the excessive risk-taking, chicanery, and financial fraud that contributes to instability. Without a new compensation system that rewards banking and finance for contributing to sustainable economic progress rather than for economic …

Hedge Fund Fraud And The Public Good, Lydie N.C. Pierre-Louis

Fordham Journal of Corporate & Financial Law

The current financial crisis resonates with every American, regardless of their connection to the securities markets. Many struggle to understand how and why the American financial and securities markets collapsed last year. In essence, why did the regulators fail to prevent the collapse? Government officials continue to analyze the relationship between the structural collapse of the markets and regulators' limited jurisdiction over a class of entities whose transactions substantially impact the markets: hedge funds. Congress can no longer deny hedge funds' detrimental impact on the financial and securities markets. The impetus for financial re-regulation has arrived. It is incumbent upon …

Testimony Before The Financial Crisis Inquiry Commission, Miami, Florida September 21, 2010, William K. Black

Faculty Works

"Control frauds" are seemingly legitimate entities controlled by persons that use them as a fraud "weapon." (The person that controls the firm is typically the CEO, so that term is used in this testimony.) A single control fraud can cause greater losses than all other forms of property crime combined. Neo-classical economic theory, methodology, and praxis combine to optimize criminogenic environments that hyper-inflate financial bubbles and produce recurrent, intensifying financial crises. A criminogenic environment is one that creates such perverse incentives that it leads to widespread crime. Financial control frauds’ "weapon of choice" is accounting. Neoclassical theory, which dominates law …

How Trust Is Abused In Free Markets: Enron’S 'Crooked 'E’', William K. Black

Faculty Works

A market can have a lemon's problem when one party to the transaction has far superior information to the other and defects are not obvious. The classic bad car, the "lemon" led to the name for this theory. A lemon's market is inefficient. Both consumers and reputable sellers of high quality goods are harmed by the consumer's inability to distinguish superior goods. Frauds, who sell poor quality goods by misrepresenting quality are the only winners. Markets beset by lemon's problems may be improved by government intervention, which can aid both consumers and honest sellers.

In his article "How Trust is …

Qualitative Information In Annual Reports & The Detection Of Corporate Fraud : A Natural Language Processing Perspective, Sunita Goel

Legacy Theses & Dissertations (2009 - 2024)

High profile cases of fraudulent financial reporting such as those that occurred at Enron and WorldCom have shaken public confidence in the U.S. financial reporting process and have raised serious concerns about the roles of auditors, regulators, and analysts in financial reporting. In order to address these concerns and restore public confidence, the Sarbanes-Oxley Act (SOX) of 2002 was enacted. However, SOX has not lived up to its promise. Numerous cases of fraudulent financial reporting have surfaced in the post-SOX era. So far, the major thrust of research has been on examining fraud that has already been discovered. This dissertation …