Failing the sniff test: Researchers find new way to spot fraud

Companies that commit fraud can find innovative ways to fudge the numbers, making it hard to tell something is wrong by just looking at their financial statements. But research from North Carolina State University unveils a new warning system that sees through accounting tricks by evaluating things that are easily verifiable, such as the number of employees or the square footage that a company owns. If a company says that its profits are up, but these nonfinancial measures (NFMs) are down, that's a sign something is probably wrong.

"Some companies commit financial statement fraud, and a good portion of those overstate their revenue," says Dr. Joe Brazel, an assistant professor of accounting at NC State and co-author of the research. "They're able to do that because they can manipulate the accounting. But there are NFMs that can't be manipulated as easily." These NFMs include the number of employees, as well as industry-specific measures, such as the square footage of facilities in the manufacturing sector, the number of retail outlets in the retail sector or the number of hospital visits in the hospital industry.

Brazel explains that companies may fraudulently claim inflated revenues in order to meet market expectations and maintain, or improve, their stock price – as well as protecting company management from criticism.

But, Brazel says, "when these firms commit fraud, we found a huge gap between their reported revenue growth and related NFMs – their revenue was up, but the NFMs were either flat or declining. And when you looked at their competitors, you see revenue growth and NFMs closely correlated. So when you see that gap, it's a red flag – you need to take a closer look."
For example, Brazel says that researchers found a difference of approximately 4 percent between revenue growth and employee growth in companies that did not commit fraud. The difference between revenue growth and employee growth in fraudulent companies was 20 percent. "It's pretty obvious, when you look at it," Brazel says.

Furthermore, the NFM data are easy to find. Brazel explains that each company's NFMs and revenue numbers are disclosed in the same financial filings, which the company is required to submit each year to the U.S. Securities and Exchange Commission.

The researchers evaluated 220 companies when evaluating employee growth versus revenue growth – 110 companies that were known to have committed fraud between 1994 and 2002, and 110 that had not. Similarly, they looked at 100 companies when evaluating other NFMs, 50 fraudulent and 50 that had not committed fraud.

The researchers are now in the process of developing an online tool that will perform the NFM analysis, as well as conducting experimental studies with auditors to help detect fraud and with investors to help make wise investment decisions.

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The paper, "Using Nonfinancial Measures to Assess Fraud Risk," was co-authored by Brazel, Dr. Keith Jones of George Mason University and Dr. Mark Zimbelman of Brigham Young University. The work was funded by the Institute of Internal Auditors Research Foundation and the Financial Industry Regulatory Authority Investor Education Foundation, and will be published in the Journal of Accounting Research later this year.

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Very interesting article and useful for identifying every day cons too. He's in a suit, has a nice brief case and expensive looking watch, says the right things, but can't even pay his cab fare.
Hmmmm.....
Or he loves you so much, but can only see you Tuesdays between 6 and 7:30.
It doesn't take a genius, to do the math. The deficits show up, even if the appearance says perfect.

How does a homeless man have a cat?

I often have such deep questions on my mind as I walk to and from work. Once I had to look and look and look again till I accepted that a business man did indeed have an INFLATED hemorrhoid pillow around his arm along with his briefcase.

And there used to be a schizophrenic homeless woman in my neighborhood that had three or four dogs, a ferret and some mice in an aquarium beneath her grocery cart, you know where people put bags of kitty litter, potatoes or charcoal. She'd take over the street whenever she chose to move her encampment. So seeing homeless with pets does not surprise me.

But the man I saw recently did, because he used to have a dog. But now that dog, according to a co-worker, is now kept by another homeless guy a few blocks away. Now the guy I am familiar with, has a cat. The cat is calm, not feral in the least, not the sort of cat you'd think a homeless guy could get in the middle of major city no where near any area that house cats might freely roam.

Day after I have seen this man and his cat, but today his cat was gone. Or so I thought. As I crossed the street I saw the cat in a deluxe, but dirty, travelling carrier. Seems Mr. Homeless guy also has a girlfriend. How he got a girlfriend is in many respects more understandable, than how he got and kept a cat. But still, I found the discovery of his girlfriend intriguing. Then I walked on.

A few blocks later it dawned on me, I know how he got the cat and the girl. He stole the cat from the nearby train station hence the nice cat carrier and acquired the girl in much the same way.

For awhile there I pondered the absurdity of a homeless man with a fat, healthy cat, but never questioned it. My inability to connect this man with crime, despite his panhandling, showed me once again how psychopaths act out in plain sight, even use their crimes for pity - he had a "feed the kitty donation cup."

Lesson learned.

"When I realized that my selfish decision for love could result into some young girl getting killed, I could not be easy with that part,"-Rihanna

"I couldn't be held responsible for telling them, 'Go back.' Chris, even if Chris never hit me again, who's to say that their boyfriend won't," she said.

http://abcnews.go.com/Entertainment/wireStory?id=9006586

Ecstatic suicide

Arch Suicide Res 3(4):283 - 301 (2009)
John T Maltsberger
Suicide is not an epiphenomenon of depression; it occurs in conditions other than major depressive episodes. Some anguished, excited patients in the grips of ecdysial or apotheotic fantasies attempt suicide when reality testing fails, feeling it a thrill. When malignant narcissism colors severe borderline personality disorder such suicides may occur. Three illustrative cases are presented here and are then placed in the perspective of mass suicides and the ecstatic experiences of third century Christian martyrs. Elated, grandiose suicide material is to be found in the lives and writings of Yukio Mishima and Sylvia Plath, and in some perverse sexual fantasies. Some persons kill themselves not feeling depressed in the melancholic sense; they are delighted. Their suicides are acts of omnipotent, death-defying magic. Correct suicide risk assessment must take elation of mood and grandiose beliefs about the nature of death into account, because certain individuals are convinced that suicide is passage to glory. DOI: 10.1080/13811119708258280

NOTE:

Christian martyrs died for their faith in God , not because of their faith in themselves.

Narcissism and belief in the paranormal

Authors: Chris A Roe, Claire L Morgan


The present study was designed to assess whether the relationship between narcissistic personality and paranormal belief identified by Tobacyk and Mitchell earlier could be replicated with a general population and to see whether the effect could be found with a narrower definition of paranormal beliefs that focuses only on belief in psychic phenomena. 75 participants completed the Narcissistic Personality Inventory and two measures of paranormal belief, the Paranormal Belief Scale and the Australian Sheep-Goat Scale. There was no correlation between narcissism and Paranormal Belief Scale scores, but narcissism and Australian Sheep-Goat Scale scores were significantly positively correlated. Of the three subscales to the Australian Sheep-Goat measure, scores for narcissism correlated with belief in ESP and PK but not in Life after death. These relationships were interpreted in terms of need for control.

Psychological reports. 01/05/2002; 90(2):405-11.ISSN: 0033-2941

Adolescents think school bullying 'will keep on happening' and resign themselves to it

This release is available in Spanish.
Most of the adolescents think that bullying in the school context "has always happened and will continue happening", and present "a negative, pessimistic and resigned attitude" towards this social problem, which makes difficult the intervention and leaves few hopes for its eradication.
Those are the conclusions of a doctoral thesis carried out at the department of Evolutionary and Education Psychology of the University of Granada (Spain), which warns that, from the viewpoint of psycho-pedagogical action, "it is necessary to prove to the children that this type of behaviours do not have to go on forever, and that it is possible to do something to stop them" through more complete educative programmes.

This work, whose objective was to find out the representation of adolescents about the phenomenon of bullying, has been conducted by professor Mª Jesús Caurcel Cara, and supervised by professors Fernando Justicia Justicia (UGR), Ana Mª Tomás Almeida (Universidade do Minho, Portugal) and Mª del Carmen Pichardo Martínez (UGR)
To carry out this work, the authors conducted a survey on 1,237 children aged between 11 and 16 years old from Granada and Braga (Portugal), who completed a questionnaire in order to get to know their perception about 'bullying'. The researchers confirmed that, in school centres studied, there are conducts of victimization with an incidence rate of 7.3% of victims, 8.5% of abusers and 84.1% of audience 'children'.

Bullying, "something natural"
Mª Jesús Caurcel has ascertained that "bullying in getting more and more integrated in the daily routine of interaction among groups of peers, is considered as something natural and has certain social approval". Schoolchildren approve abusers' behaviour, and leave the victim isolated and unprotected.

The questionnaire applied to children revealed that, to describe the major figures of bullying, the participants use social stereotypes, characterizing their victims as passive persons, socially incompetent and who experiences unpleasant emotional states of anxiety, depression and insecurity; and the abuser as a strong, brave and extrovert person who experiences pleasant emotional states (a happy victimizer) which give him power and self-confidence, reinforce their status in the group and inhibit other social motivations to end up with the abuses.

Differences by sex
The research work carried out at the UGR has also proved that there are differences depending on sex on the social schoolchildren's perception of bullying. Girls condemn abuses in more critic way, respond with unpleasant emotions to them, reject this kind of situations and show more empathy to the victims, describing them with a wide set of positive characteristics, admitting their suffering and being able to share their emotional state.
On the other hand, boys highlighted in their categorizations the vulnerability and the moral responsibility of the victims and asserted, "they should feel guilty and ashamed".

Differences by age
As regards the differences found depending on the age of the participants in the study, the most accused differences were found among pre-adolescents aged between 11 and 12 years old and adolescents from15 years old. "The perception of the victims' vulnerability and the intensity of the rejection against abusers became accentuated as adolescents grew older, which is due to a higher internalization of the social rules by children", explains Caurcel.

The study carried out at the UGR has permitted to detect connections, regularities and risk and protection factors which could be useful as starting points to implement appropriate, consistent and realistic interventions in the schools studied. In addition, it will contribute to determine the blocks to work with for direct intervention programs useful to help adolescents to get out of such a spiral of unjustified violence by themselves, with the support of the entire Education Community.
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What works (to heal)

I've experienced several different healing methodologies over the years - counseling, self-help seminars, and I've read a lot - but none of them will work unless you really want to heal.
Lindsay Wagner

I posted below a new study on the ineffectiveness of anti-depressants. Long a candidate for mood altering drugs, I have resisted them. Mostly out of my skepticism of new fangled feel good remedies, but also out of a belief I could get better if I really tried. This strategy has sometimes been foolish, like when I asked a physician if I would ever just recover from a chronic disease. My thinking was the medication was a detriment to the body's natural ability to right itself.

I was wrong, I need the medication to function and I am glad I decided to take it. That said- I do know that there are too many practitioners out there- namely "counselors" without medical degrees pushing mood altering drugs. And physicians too, especially since they often get a kickback from the pharmaceutical companies.

Government prosecutors say the maker of citalopram and escitalopram concealed
unfavorable clinical trial results from the public and bribed physicians with
kickbacks to increase market share.
The U.S. Department of Justice has
accused Forest Laboratories of conducting a "fraudulent scheme to market and
promote" unapproved indications for its antidepressants citalopram and
escitalopram and paying kickbacks to induce physicians to prescribe those
medications. http://pn.psychiatryonline.org/cgi/content/full/44/7/6

Physicians and counselors of every stripe have little time and/or incentive to spend time finding out was is wrong and how to fix it- that's why, aside from the unscrupulous, health professionals push drugs. They want their patients better, and a pill promises that with the amount of effort insurers will pay for. Heartbreak? They have pill for that! About to jump? Here's a pill to make it hard to even get out of bed, you won't have the mental energy to plot your demise.

That said, some mental illnesses require drugs. Schizophrenia is one notable condition, and tellingly enough the people are so ill they refuse their medications often. They are the folks you see on the streets mumbling to themselves or carrying on conversations with some unknown antagonist. Most people don't need drugs, they need hugs to be trite.

For years I suffered from OCD, wonder why? Every therapist I tried wanted to put me on drugs and tried to make me change with cognitive behavioral therapy. CBT, in my mind, is like Pavlov's experiment where he trained through system of rewards and signals:

Classical conditioning (also Pavlovian or respondent conditioning) is a form of associative learning that was first demonstrated by Ivan Pavlov.[1]
The typical procedure for inducing classical conditioning involves presentations
of a neutral stimulus along with a stimulus of some significance. The neutral stimulus could be any event that does not result in an overt behavioral response from the organism under investigation. Pavlov referred to this as a conditioned stimulus (CS).
Conversely, presentation of the significant stimulus necessarily evokes an
innate, often reflexive, response. (Wikipedia)

I was supposed to over-worry when I was posessed by an irrational but terrifying thought, or told to make lists. And so on.... I recall I finally gave up when an "assignment" I was to fax in, was never mentioned by therapist. I was embrassed and felt forgotten, and mostly dumb. The "assignment" was like a make-work project and apparently something he just tossed at me and never followed up on. I on the otherhand took it seriously and made a point doing it and faxing it as he required. Deep down my real problem, problems, were/are all based on being and feeling neglected.

Not until I realized the degree of narcissistic abuse I have suffered did I realize what was wrong, why I worried and checked everything to the point of being neurotic. A drug may have mellowed me out, but never settled my soul. Finding out the ROOT CAUSE of my behaviors and responses has changed my life.

NOTE: It is never advisable to stop taking a drug without contacting your physician.