Average Reviews:
(More customer reviews)The old accountants' adage, "If accountants don't measure it, it won't get managed" is especially true for the cost and risk of fraud and misconduct. There is no line item on the Income Statement or the Balance Sheet that directly measures fraud or identifies exposure to the risk of fraud. Hence, the costs (and risks) of fraud often don't get the managerial attention it deserves. Somewhere, perhaps buried in the cost of goods sold, other expenses, lays the cost of fraud - hidden from view, but nevertheless as real as production, marketing and administrative costs. Managers spend significant amount of time managing these other costs and revenues. Furthermore, MBA (and MPA) programs devote significant educational resources toward these other costs and revenues as well. I am pleased that managing the cost and risk of fraud is finally getting some attention.
Interdisciplinary Perspectives
About fifteen years ago, Joe Wells (founder of the Association of Certified Fraud Examiners) commented about how few books there were on white-collar crime. He said, "Not only can we get all of the white-collar crime books in the library (one small room), we can get a 10-year supply of National Geographic in here, too." Since that time there has been plethora of fraud- and white-collar crime-related books. Accountants have written books offering useful perspectives on managing the risk of fraud and misconduct. Sociologists and criminologists were among the first to write about white-collar crime. Lawyers also have useful perspectives, and law enforcement personnel, including former IRS agents, have contributed to our knowledge as well. Each of these books has made valuable contributions toward our understanding and has offered practical advice on managing fraud-related risks. However, arguably the best (and most interesting and useful) perspective of all is an interdisciplinary perspective. Such is the main feature of Managing the Risk of Fraud and Misconduct. Rich Girgenti and Tim Hedley, along with 50+ other contributors, have assembled a team of experts from a wide variety of backgrounds and disciplines. This book is not just a book written by accountants to assist managers to comply with accounting rules and regulations. It is written for managers who will be better managers if they question the inherent limitations of their own frame of reference by viewing, contrasting, and reconciling, the problem of fraud from the lenses of other specialized disciplines committed to fighting the growing problem of fraud in our society.
Written for Managers
Managing the Risk of Fraud and Misconduct is written for managers, from C-level on down. As such, technical jargon is avoided, and detailed examination of individual codes sections from statutes, rules, and regulations is included only to the extent necessary. This approach, combined with a consistent, efficient, easy to read writing style, leads to a thorough understanding of the subject without compromising its technical accuracy.
Managers know their employees and their business better than anyone. As such, they are the ones who are in the best position to develop and implement a pro-active anti-fraud program. Auditors, internal or external, are not in the best position to recognize fraud or to prevent fraud and misconduct from occurring. Hence, the responsibility to manage the risk of fraud lies with management. Managers are also the ones who will suffer the most from the consequences if the risks are not properly managed. What if, to use an extreme example, BP (or Halliburton or Transocean) had effective controls in place to prevent their employees from giving gifts (e.g., bottles of Johnnie Walker Black) to employees of Mineral Management Service, the federal agency that grants drilling permits and supervises oil-industry safety? Similarly, what Rupert Murdoch had effective controls in place to prevent misconduct at News Corporation? The point is simply that the potential costs associated with not having proper controls in place can far exceed the costs of managing the risks of fraud. Ignoring the risks of fraud is a train wreck (or environmental disaster) waiting to happen.
Comprehensive
There is a surprising amount of material covered in this 320-page book. The material could have led to two volumes or more. However, excellent editing and parsimonious wording has resulted in a book that covers all the essential information with references to other literature should the reader want to know more. The authors have covered all the essential information while sparing the reader from too many technicalities that may be better left to experts in the field. For example, the authors did not go into details of Repo 105 transactions made infamous by the bankruptcy examiner's report submitted in the Lehman Brothers Chapter 11 case. Nevertheless, a few more examples such as Repo 105 could have been used to illustrate the need for managers maintain an unequivocal support for ethical behavior. Certainly, if we want to prevent and detect misconduct, it is helpful to know exactly how those crimes and other wrongdoing are committed and concealed. I recommend Joseph Wells' Corporate Fraud Handbook for such information as a companion to the current book. However, managers don't ordinarily need to know these details anymore than we need to know the exact kind of firearms used in more violent crimes.
It must have been a hugely difficult task for these experts and their contributors to condense their knowledge and expertise into just one book. Oftentimes, these efforts can lead to oversimplification. However, that did not happen here. While it is written in an easy to read style, much of the material will take some time to ponder and think about how the material can be applied to a specific and unique organization. There is no one-size-fits-all, easy step-by-step program to follow. Rather, a general model is introduced in Part IV then explained in more depth in eight subsequent chapters: three on fraud prevention; two on fraud detection, and three chapters dealing with responding to fraud and misconduct. This material combines important informative we have known for some time with new and unique perspectives. I strongly recommend this book.
Concluding Remarks
I have spent the past decade reading and studying every fraud and fraud-related book I possibly can. The good news is that this has become increasingly difficult as fraud awareness is finally getting the attention it deserves - not just within the accounting community, but in the management literature as well. Also good news is that this comprehensive book can serve as a guide for managers with little need to go beyond. Thank you, Rich Girgenti and Tim Hedley, for making a valuable contribution to this literature.
Randall E. LaSalle, Ph.D., CPA, CFE
Click Here to see more reviews about: Managing the Risk of Fraud and Misconduct: Meeting the Challenges of a Global, Regulated and Digital Environment
Get 44% OFF
0 comments:
Post a Comment