14. Occupational
Fraud: Crossing the Line to Due Diligence
Presenter: Nazik Roufaiel, Cornell University
Description: The extent and
proliferation of white-collar crimes have created a vigorous challenge to all
accountants. Occupational fraud and abuse schemes have become a major financial
threat to our economy. In the 2002 Report to the Nation, conducted by the
Association of Fraud Examiners, it was estimated that $600 billion of the U.S.
Gross Domestic Product will be lost and wind up in perpetrators' pocket.
Accounting professionals have been victimized and facing a tough time of
increasing responsibility, accusation, scrutiny, and regulations, while the
quality of the service and revenue is decreasing. The best fighting technique
against fraudulent schemes is education. The success of the perpetrators
depends on the ignorance of the victim. Accordingly, to the perceptions of the
public and the law, such ignorance facilitates criminality and contributes to
the criminal scheme. The contributory negligence provision can be used as a
ground to mitigate negligence against the offender. Therefore, awareness of the
perpetrator's techniques is the only key to developing detection and prevention
mechanism.
This session demonstrates a
suggested way of teaching occupational fraud, either as a separate or
integrated part of an auditing course. It focuses on closing the gap between
reality and education by encouraging students to develop professional and
research mentality of skepticism and predication toward preventing, uncovering,
and resolving fraud schemes. The suggested method uses a multimedia-enhanced
classroom with abundance of resource available on the World Wide Web.
