There are a number of forensic techniques and tools

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There are a number of forensic techniques and tools which may be used by forensic accountants. Some of these tools are: Game theory and strategic reasoning. Continuous monitoring.
45 Textbook Solutions © 2009 CCH. All Rights Reserved. Chapter 5 Timeline analysis. Link analysis. Invigilation. Genogram. Proof of cash. Entity charts. Full—and false—inclusion tests. ¶5124 Game Theory and Strategic Reasoning Game theory and strategic reasoning concepts may be used to detect fraud. Fraud Risk Assessment. Auditors who use long lists and checklists of fraud cues are generally inaccurate in their fraud risk assessments. Auditors should consider how management might manipulate perceptions of fraud cues. Audit Planning. Auditors should develop unpredictable audit strategies that do not follow procedures from prior audits or standard audit programs. Strategic reasoning should be used to conceive of what fraud could be perpetrated by management and how it would be concealed from the audit. Implementation of the Audit. Learning from experience and interactions with clients is critical to an auditor’s effective performance. Audit standards can improve learning by requiring activities such as documenting and communicating the nature of interactions with management. ¶5126 Continuous Monitoring Continuous monitoring (CM) can be used to detect fraud and abuse. Management hires an independent company to install and manage software that continuously analyzes every business transaction in order to detect improper activities and anomalies. Incidents can be sorted into errors, misuse, and fraud; suspicious transactions can be fl agged for follow-up. Although this practice is not widely used, it can save large companies money that would otherwise be spent hiring several internal auditors. ¶5128 Some Forensic Techniques and Tools Check spreads, deposit spreads, and credit card spreads may be used to track fraud. Check spreads show patterns of activities and can gather data for the net worth method. Deposit spreads deal with receipts into a checking account, show patterns of activities, and gather data for the net worth and expenditures methods. Credit card spreads may be used for legal and stolen credit cards to show where a target has been geographically over time. Timeline analysis (TA) examines the details from the beginning of a fraud event until the apprehension of the target and helps forensic accountants communicate the timing of case related events and summarize the investigation. Tracing schedules show the fl ow of funds from one source to another and can be helpful in money laundering cases. Link analysis (LA) is a subset of network analysis which shows associations between people and data. It provides crucial relationships between many objects of different types that are not apparent from isolated pieces of data.

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