fraud examination, 3e chapter 9: conversion investigation methods copyright © 2009 south-western, a...
TRANSCRIPT
Fraud Examination, 3E
Chapter 9: Conversion Investigation Methods
COPYRIGHT © 2009 South-Western, a part of Cengage Learning
Learning Objectives• Explain why finding out how perpetrators
convert and spend their stolen funds is important.
• Understand how federal, state, and local public records can assist in following the financial “tracks” of suspected perpetrators.
• Access information via the Internet to assist in the investigation of a suspected fraud perpetrator.
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Learning Objectives• Perform net worth calculations on
suspected fraud perpetrators and understand how net worth calculations are effective in court and in obtaining confessions.
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Conversion SearchesPerformed for two reasons: (1)to determine the extent of embezzlement (2)to gather evidence that can be used in
interrogations to obtain a confession
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Conversion SearchesInformation can be gleaned from:(1)federal, state, and local agencies and
other organizations (2)private sources of information(3)online sources of information(4)using the net worth method of analyzing
spending information
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Conversion Searches
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Public Records
Internet SearchesOnline DatabasesPrivate SourcesGovernment
FederalStateLocal
Utility RecordsPrevious AcquaintancesTrash CoverCredit AgenciesFinancial Institutions
SubscriptionPer-search FeeFree
GoogleAltaVistaEtc.
Private Sources of Information • Utility records (gas, electric, water,
garbage, and sewer• Private Acquaintances • “Trashing”• Shredded documents • Original files on computers
**Be sure you have the legal rights to gather and use the information
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Online DatabasesExamples:• Accurint• AutoTrackXP• Black Book Online• ChoicePoint• EBSCO Publishing• PublicData• Public Record Finder• SEC’s EDGAR Database• Web Detective8
The Net Worth MethodAssets – Liabilities = Net Worth
Net Worth – Prior Year’s Net Worth = Net Worth Increase
Net Worth Increase + Living Expenses = Income
Income – Funds from Known Sources = Funds from Unknown Sources9
The Net Worth MethodHelen Week’s Example (from Chapter 2)
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Financial Data for Helen Weeks
End Year 1 End Year 2 End Year 3
Total assets $206,000 $212,000 $246,000
Total liabilities $100,000 $ 50,000 $ —
Net worth $106,000 $162,000 $246,000
Net worth increase $ 56,000 $ 84,000
Plus total expenses 30,800 32,800
Total Income $ 86,800 $116,800
Less known income 40,000 42,000
Income from unknown sources $ 46,800 $ 74,800
[RM1]Comp: Right align numbers, align $, and use single and double rules as shown.