PwC has released the second edition of “A Guide to Forensic Accounting Investigation,” providing a step-by-step approach to fraud prevention, investigation and deterrence.

The book includes coverage of the latest auditing standards from the Public Company Accounting Oversight Board, along with information on the Foreign Corrupt Practices Act, options fraud, fraud in China and its implications.

“High-level perpetrators cause the greatest damage to their organizations,” said Steven Skalak, a Beijing-based partner in PwC's Forensic Services practice, in a statement. “In fact, frauds committed by owners and executives were more than three times as costly as frauds committed by managers, and more than nine times as costly as employee frauds. In A Guide to Forensic Accounting Investigation, Second Edition, fraud preventers—that is Board Members, CFOs, Controllers, Auditors, and COOs—will find the necessary practical aids, case examples, and skills for identifying situations that call for extended fraud detection procedures."

The guide includes a number of statistics on fraud. For example, the typical organization loses 5 percent of its annual revenue to fraud, adding up to a potential total fraud loss of more than $2.9 trillion. The median loss caused by occupational fraud cases was $160,000. Nearly one-quarter of fraud involves losses of at least $1 million. Frauds lasted a median of 18 months before being detected.

Asset misappropriation schemes represent 90 percent of cases, though they were also the least costly type of fraud, causing a median loss of $135,000. Financial statement fraud schemes amount to less than 5 percent of frauds, but they are by far the most costly category, causing a median loss of over $4 million. Corruption schemes comprise just under one-third of cases and cause a median loss of $250,000.

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