Book on the frauds, not by or for them
| It highlights the difference between "audit" and "fraud detection", where one offers an opinion while the other seeks out evidence. It explains how "frauds are seldom detected with the help of strategically planned procedures ... they are discovered by chance." |
| In easy-to-read language, the book is as much an entertainer (for those who like who-done-its) as a serious read for auditors and investigators of corporate frauds. It conveys a very positive and non-cynical approach to irregularities and how to detect them "" at the same time, highlights the importance of differentiating between genuine errors and wilful misdeeds. |
| There are interesting parallels drawn from historical events and mythology. For example, the parallel drawn with the 'Trojan Horse' during the war with the city of Troy explains how fraudsters often attempt innocent acts of omission (called Trojan horses) to test the resilience of well-fortified systems, before actually committing the frauds. Then again, there is the 'Achilles Heel' fraud, explained through illustration of the personalities of Duryodhana, the Kaurava King, and Achilles, the Greek hero, two typical examples of invincible men who were overpowered on account of small vulnerabilities. Duryodhana had the vulnerable part covered by a small piece of cloth while his mother blessed him with immortality, so the covered part did not get the divine blessing; Achilles' heel remained dry while his mother dipped him in the holy waters to make him immortal. Similarly, as Chetan Dalal explains, companies can become vulnerable with small weaknesses in their systems if these go unnoticed. The author explains how frauds can be perpetuated and survive, like the hydra monster, who sprouted a new head every time his head was chopped off, in Greek mythology. |
| Emperor Akbar always relied upon Birbal to find solutions to all kinds of problems. Once Birbal argued that irrespective of the best controls, given an opportunity, a person could find a way of beating the system. The episode of how a goldsmith was kept confined under strict security and yet managed to steal some gold illustrates how managements often take pride in presuming controls and systems to be infallible. |
| Some examples covered in the book include the importance of recognising signals from an employee's unusual behaviour, for example, a person may be exceptionally mild or overtly aggressive; it explains the importance of managing cancelled cheques and of looking for inconsistencies in natural disasters, all with lucid examples. |
| There is an industry-specific listing of possible frauds, including insurance, banking (the one about how credit cards can be misused could be interesting even for an individual who is not connected with the corporate world), telecommunication, entertainment, hotels, restaurants, supermarkets and travel industries, among others. |
| A must-read for all persons in positions of responsibility, whether they are entrepreneurs or managers and irrespective of the areas of responsibility they hold, whether Accounting and Finance, Production, Purchase or Inventory controls, Marketing or Personnel departments. There are interesting examples of frauds that can occur in each of these divisions. A must read for those pursuing chartered accountancy and management students as well, to help them be better equipped for taking on positions of responsibility. |
| The author works for Crisil |
| Novel and Conventional Methods of Audit, Investigation and Fraud Detection |
| Chetan Dalal Wolters Kluwer (India) Pvt. Ltd; 574 pages |