How to Uncover Corporate Fraud: Employing Ratio Red Flag Analysis to Detect and Attack Fraud

All companies are at risk for financial fraud. In fact, most companies lose 5% of revenue to fraud, according to the 2014 ACFE Report to the Nation on Occupational Fraud and Abuse. What’s a company to do? Many develop anti-fraud programs—but with mixed results. This brief book, How to Uncover Corporate Fraud, offers a better way. As author and antifraud expert Alexis Bell shows, the ultimate goal of an effective anti-fraud program is to mitigate risk to the organization due to fraud through a combination of preventative, detective, and deterrent controls. Bell helps you understand and use those controls to identify fraud and catch it before it damages a company seriously.

In particular, she shows how ratio analysis, performed on specific financial relationships to better highlight the red flags, is a prime means to avoid both losing money and becoming a victim of fraudulent financial reporting. These "ratio red flags" provide indicators that are meaningful at varying levels. Retailers, for example, will learn to detect fraud at both a store level, chain level, and companywide level.

Bell’s fraud analysis approach:

• Incorporates the balance sheet and income statement, along with other financial documents, for a complete analysis

• Provides indicators of fraud currently occurring for broad categories of criminal activity as well as specific fraud schemes

• Spotlights indicators that could later cause reporting problems without intervention

• Includes an initial assessment that can then transition into a continuous monitoring process as part of an ongoing anti-fraud program

Whether you are a forensic accountant unsure where to start an investigation, an internal auditor interested in due diligence for fraud, an analyst charged with identifying aggressive accounting tactics, or an external consultant interested in adding value for your clients, How to Uncover Corporate Fraud will give you an effective tool for your anti-fraud process—and save you a lot of stress and heartache down the road.