22 Nov

A Review of Expert Fraud Investigation: A Step-by-Step Guide

My second book, Expert Fraud Investigation: A Step-by-Step Guide, was recently reviewed by my colleague Michael Goldman for The Value Examiner, the magazine published for the National Association of Certified Valuation Analysts. It’s read by consultants who work in the areas of business and asset valuation, business fraud deterrence, detection, and investigation, litigation consulting, and financial forensics.

I thought Michael’s review was very kind. And for the record, he and I had never met until a few days ago, so I didn’t have a chance to influence his review in any way. I love reviews like this because they really help prospective buyers of the book get a better idea of whether the book has what they need.

Michael’s review…

I really like this book. I am a certified fraud examiner, and have been a sole practitioner practicing in this area since 1996. I read a few books and many articles on fraud every year. Most writings on this topic tend to fall into one of two categories: (a) a dry collection of one-size-fits-all checklists and flowcharts, which understates the importance of the investigator’s experience, intuition, skepticism, powers of deduction, curiosity, and creativity in fraud investigation; or (b) a very broad survey of the topic, lacking details and examples, that is too superficial to be practical.

Tracy Coenen avoids both of those traps. On page 43 she states that “each fraud investigation is different, and there is not necessarily a work program or outline that can be followed.” That is a major theme of her book.

In a logically structured presentation, Coenen walks through all of the major types of fraud and discusses the thought process that an investigator should use when trying to detect each of them. The discussions of each thought process is typically aided by five to 15 bullet points—not excessive lists by any means—that the investigator should make sure to consider.

She maintains an engaging, conversational tone throughout the book, with just enough detail and war stories to illustrate the procedures and techniques that she presents. You can feel the depth and breadth of her fraud investigation experience as you read this book.

Coenen is a forensic accountant and fraud investigator, and the principal of Sequence, Inc. (www.sequenceinc. com). She has investigated hundreds of frauds in a variety of industries, including cases of embezzlement, financial statement fraud, investment fraud, and insurance fraud. She has served as an expert witness in cases involving damage calculations, commercial contract disputes, shareholder disputes, and criminal defense. She is the author of Essentials of Corporate Fraud (Wiley, 2008), and writes the “Fraud Files”
for the Wisconsin Law Journal. She also writes the Fraud Files blog (www.sequence-inc.com/fraudfiles).

Chapter Summaries
Expert Fraud Investigation starts out with three chapters describing the beginning of the cycle: finding fraud, beginning the investigation, and managing the case. These are useful not only for the investigator; attorneys or corporate managers hiring a fraud investigator will also benefit from the delineation of the thought processes and approaches that the investigator should be taking.

Chapters four through six provide a general overview of how to conduct a fraud investigation: searching for fraud, sources of information, and investigative techniques. I was initially disappointed with the latter two of these chapters because they didn’t include the long, detailed lists of information sources that I always like to find. I eventually realized that most of the detailed lists I find in fraud books tend to be outdated by the time I get them because technology, the providers of information, and the regulations regarding what can or cannot be disclosed are constantly changing— so that they may be out of date by the time they are listed. What this book does is give a good overview and some discussion of the thought processes to use when approaching an information search.

Chapters seven through ten discuss specific types of fraud and specific investigative steps usually taken to detect them. They cover asset misappropriation schemes, financial statement frauds, corruption schemes, and external frauds such as Ponzi schemes and insurance fraud. The book then concludes with chapters on reporting and litigation, and other issues such as how to market a fraud investigation practice.

A key item that I look for in professional literature is war stories. As a sole practitioner, I soak up every chance I get to learn how others in my profession apply the theory, principles, and techniques that I am fairly familiar with to types of cases that I’m not so familiar with. If too many war stories dominate a book, they make it feel like a glorified profile of the author. Not enough war stories, though, can leave you wondering how what you just read applies in the real world.

Expert Fraud Investigation contains a nice mixture of brief war stories from the author’s own experience and brief summaries of famous cases that anyone interested in fraud may have heard something about. It makes for a comfortable read. comprehensively, but without redundancy or overkill: Coenen hits each idea once and moves on. I don’t consider this to be an innovative text or a landmark in the field, but it is probably a book I will pick up and read a few more times when I need a refresher in the bigger picture of fraud investigation.

This book is a good read for fraud investigators with all levels of experience, for judges and lawyers who deal with expert witnesses or consultants in fraud cases, and for corporate managers fearful that they may need a fraud investigation at their own company.

Michael Goldman, MBA, CPA, CVA, CFE, CFF, is principal of Michael Goldman and Associates, LLC, in Deerfield, IL, which focuses on matters relating to fraud, valuation, and insolvency. He is a member of the Editorial Board of The Value Examiner.

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