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