Get practical insights on the psychology of white-collar criminals and how to outsmart them Understand how the psychologies of fraudsters and their victims interact as well as what makes auditors/investigators/regulators let down their guard. Learn about the psychology of fraud victims, including boards of directors and senior management, and what makes them want to believe fraudsters, and therefore making them particularly vulnerable to deception. Just as IT experts gave us computer forensics, we now have a uniquely qualified team immersed in psychology, sociology, psychiatry as well as accounting and auditing, introducing the emerging field of behavioral forensics to address the phenomenon of fraud. Ever wonder what makes a white-collar criminal tick? Why does she or he do what they do? For the first time ever, see the mind of the fraudster laid bare, including their sometimes twisted rationalizations; think like a crook to catch a crook! The A.B.C.'s of Behavioral Forensics takes you there, with expert advice from a diverse but highly specialized authoring team of professionals (three out of the four are Certified Fraud Examiners): a former accounting firm partner who has a PhD in psychology, a former FBI special agent who has been with investigative practices of two of the Big Four firms, an industrial psychiatrist who has worked closely with the C-level suite of large and small companies, and an accounting professor who has interviewed numerous convicted felons. Along with a fascinating exploration of what makes people fall for the common and not-so-common swindles, the book provides a sweeping characterization of the ecology of fraud using The A.B.C.'s of Behavioral Forensics paradigm: the bad Apple (rogue executive), the bad Bushel (groups that collude and behave like gangs), and the bad Crop (representing organization-wide or even societally-sanctioned cultures that are toxic and corrosive). The book will make you take a longer look when hiring new employees and offers a deeper more complex understanding of what happens in organizations and in their people. The A.B.C. model will also help those inside and outside organizations inoculate against fraud and make you reflect on instilling the core values of your organization among your people and create a culture of excellence and integrity that acts as a prophylactic against fraud. Ultimately, you will discover that, used wisely, behavioral methods trump solely economic incentives. With business fraud on the rise globally, The A.B.C.'s of Behavioral Forensics is the must-have book for investigators, auditors, the C-suite and risk management professionals, the boards of directors, regulators, and HR professionals. Examines the psychology of fraud in a practical way, relating it to aspects of fraud prevention, deterrence, detection, and remediation Helps you understand that trust violation the essence of fraud is a betrayal of behavioral assumptions about "e;trusted"e; people Explains how good people go bad and how otherwise honest people cross the line Underscores the importance of creating a culture of excellence and integrity that inoculates an organization from fraud risk (i.e., honest behavior pays, while dishonesty is frowned upon) Provides key takeaways on what to look for when hiring new employees and in your current employees, as well as creating and maintaining a culture of control consciousness Includes narrative accounts of interviews with convicted white-collar criminals, as well as interpretive insights and analysis of their rationalizations Furnishes ideas about how to enhance professional skepticism, how to resist fraudsters, how to see through their schemes, how to infuse internal controls with the people/behavioral element, and make them more effective in addressing behavioral/integrity risks Provides a solid foundation for training programs across the fraud risk management life cycle all the way from the discovery of fraud to its investigation as well as remediation (so the same fraud doesn't happen again) Enables auditors/investigators to engage in self-reflection and avoid cognitive and emotional biases and traps that lead to professional judgment errors (e.g., overconfidence, confirmation, self-deception, groupthink, halo effect, availability, speed-accuracy trade-off, etc.) Ever since the accounting scandals surrounding Enron and WorldCom surfaced, leading to the passage of the Sarbanes Oxley Act of 2002, as well as the continuing fall out from the Wall Street financial crisis precipitating the Dodd-Frank Act of 2010, fraud has been a leading concern for executives globally. If you thought you knew everything there was to know about financial fraud, think again. Get the real scoop with The A.B.C.'s of Behavioral Forensics.

Get practical insights on the psychology of white-collar criminals--and how to outsmart themUnderstand how the psychologies of fraudsters and their victims interact as well as what makes auditors/investigators/regulators let down their guard. Learn about the psychology of fraud victims, including boards of directors and senior management, and what makes them want to believe fraudsters, and therefore making them particularly vulnerable to deception. Just as IT experts gave us computer forensics, we now have a uniquely qualified team immersed in psychology, sociology, psychiatry as well as accounting and auditing, introducing the emerging field of behavioral forensics to address the phenomenon of fraud.Ever wonder what makes a white-collar criminal tick? Why does she or he do what they do? For the first time ever, see the mind of the fraudster laid bare, including their sometimes twisted rationalizations; think like a crook to catch a crook! The A.B.C.'s of Behavioral Forensics takes you there, with expert advice from a diverse but highly specialized authoring team of professionals (three out of the four are Certified Fraud Examiners): a former accounting firm partner who has a PhD in psychology, a former FBI special agent who has been with investigative practices of two of the Big Four firms, an industrial psychiatrist who has worked closely with the C-level suite of large and small companies, and an accounting professor who has interviewed numerous convicted felons. Along with a fascinating exploration of what makes people fall for the common and not-so-common swindles, the book provides a sweeping characterization of the ecology of fraud using The A.B.C.'s of Behavioral Forensics paradigm: the bad Apple (rogue executive), the bad Bushel (groups that collude and behave like gangs), and the bad Crop (representing organization-wide or even societally-sanctioned cultures that are toxic and corrosive). The book will make you take a longer look when hiring new employees and offers a deeper more complex understanding of what happens in organizations and in their people. The A.B.C. model will also help those inside and outside organizations inoculate against fraud and make you reflect on instilling the core values of your organization among your people and create a culture of excellence and integrity that acts as a prophylactic against fraud. Ultimately, you will discover that, used wisely, behavioral methods trump solely economic incentives. With business fraud on the rise globally, The A.B.C.'s of Behavioral Forensics is the must-have book for investigators, auditors, the C-suite and risk management professionals, the boards of directors, regulators, and HR professionals.* Examines the psychology of fraud in a practical way, relating it to aspects of fraud prevention, deterrence, detection, and remediation* Helps you understand that trust violation--the essence of fraud--is a betrayal of behavioral assumptions about "trusted" people* Explains how good people go bad and how otherwise honest people cross the line* Underscores the importance of creating a culture of excellence and integrity that inoculates an organization from fraud risk (i.e., honest behavior pays, while dishonesty is frowned upon)* Provides key takeaways on what to look for when hiring new employees and in your current employees, as well as creating and maintaining a culture of control consciousness* Includes narrative accounts of interviews with convicted white-collar criminals, as well as interpretive insights and analysis of their rationalizations* Furnishes ideas about how to enhance professional skepticism, how to resist fraudsters, how to see through their schemes, how to infuse internal controls with the people/behavioral element, and make them more effective in addressing behavioral/integrity risks* Provides a solid foundation for training programs across the fraud risk management life cycle all the way from the discovery of fraud to its investigation as well as remediation (so the same fraud doesn't happen again)* Enables auditors/investigators to engage in self-reflection and avoid cognitive and emotional biases and traps that lead to professional judgment errors (e.g., overconfidence, confirmation, self-deception, groupthink, halo effect, availability, speed-accuracy trade-off, etc.)Ever since the accounting scandals surrounding Enron and WorldCom surfaced, leading to the passage of the Sarbanes Oxley Act of 2002, as well as the continuing fall out from the Wall Street financial crisis precipitating the Dodd-Frank Act of 2010, fraud has been a leading concern for executives globally. If you thought you knew everything there was to know about financial fraud, think again. Get the real scoop with The A.B.C.'s of Behavioral Forensics.

Foreword xvPreface xviiAcknowledgments xxiiiIntroduction 1The Human Factor 2Trust Violation and Its Consequences 4This Book's Approach: The A.B.C.'s of Behavioral Forensics 4An Interdisciplinary Approach 6Part I When Fraud Is Committed 9Chapter 1 Fraud Is Everywhere 13The Pervasiveness of Fraud 14On Making (Up) the Numbers 16A Slippery Slope 19From Slippery Slope to Broken Windows 21Fraud Is a Human Act 23Conclusion 24Chapter 2 The Sins of Quantification and Other Mind-Set Impediments 27The Danger of Numbers 29Data Analysis Is Not Enough 31Hard Numbers versus Reality 33Conclusion 37Chapter 3 Beyond the Fraud Triangle: Toward an Outline of A.B.C. Theory 41The Relevance of Behavioral Approaches 41Understanding White-Collar Crime 43The Fraud Triangle and Other Theories of Causation 45A.B.C. Theory: A New Fraud Taxonomy 49Conclusion 53Part II The Foundations of Behavioral Forensics: Why Good People Do Bad Things 55Chapter 4 Beyond the Fraud Triangle and into the Mind: The Building Blocks of Behavioral Forensics-- Understanding How the Basics of Human Behavior Tie into Fraud 59Deception Is a Natural Phenomenon 59The Mind and the Fraud Triangle 60Emotions: The Power behind Psychological Defenses 67Affect's Two Ties to Fraud: Motivation and Communication 73Conclusion 76Chapter 5 "Said the Spider to the Fly . . .": The Predator-Prey Dance-- Putting Behavioral Science Fundamentals into Motion 81Emotions, Unconscious, Defenses--Oh My! 82Relationships: Where Fraud Is Set in Motion 82The Relationship as an End in Itself: Bernie Madoff 87Lance Armstrong and His Accomplices 91Where Is the Humility? 93The Power of Shame 94Good to Evil: How a Hardwired Emotion Is Ignored and Manipulated 99When Shame Is Maladaptive at Work 104False Pride: With the Threat of Shame Comes Hubris 107The Predator Bullies the Professionals 108The Role of Mental Illness 111Conclusion 116Chapter 6 The Accidental Fraudster (Bad Apple): When the Apple Turns and Honesty Reverses Course 121Committing the Crime 121Beyond Greed 122Exploiting a Weakness: A MotivationalTheory of the Accidental Fraudster (Bad Apple) 123New Insights in Behavioral Forensics 127Disregarding Risk: The Thrill of Being Close to, but Not in, Danger 133Why Now? Understanding Life-Span Issues in Fraud Reversals 137Lessons from Executives and Managers on the Couch 139Conclusion 139Chapter 7 The Bad Bushel and Beyond: Seeing the Larger Context of the C-Suite 143Luck and Effort Distinguish Senior Executives 144Life as an Executive: Excitement, Vigilance, and Caution 147Trouble in the C-Suite: Overwhelmed, Overpaid, and Overconfident--Narcissism and Beyond 148The Individual and the Group: Bad Bushels Arise 153The Science of Persuasion 158Conclusion 161Part III A Call to Action 165Chapter 8 Managing the Ecology of Fraud: What You Can Do on Monday Morning 171The Financial Markets: The Moral Foundations of Capitalism 172Helping Senior Executives to Stay on the Right Side of the Line 176Piercing the Rationalizations 177Emotional Manipulation 179On Lies and Misrepresentation 181The Operational Fraud Triangle 183What You Can Do Monday Morning 185Recognizing Tipping Points (of the Mind) 188Conclusion 191Chapter 9 The Future of Behavioral Forensics: Developing Psychological Awareness to Complement Financial Fraud Suspicions 195Fraud: A Global Scourge 196Fraud Is Not a Problem with an Easy Answer 197A Psychological Autopsy of Fraud 207The Future of Behavioral Forensics 209Afterword 213Appendix A The Psychology and Sociology of Fraud: Integrating the Behavioral Sciences Component into Fraudand Forensic Accounting Curricula 217Appendix B Chapter Supplements 231Bibliography 247About the Authors 255Index 261