Institute for Fraud Prevention is an Integral Spur for Research

By Richard Hurley, Ph.D., J.D., M.S., CPA, ACFE Educator Associate Member

Fraud EDge    

The ACFE reported in its "2008 Report to the Nation on Occupational Fraud and Abuse" that there's relatively little research available on the costs of fraud, how it occurs, and why. Up until 12 years ago, there was nothing like the "Report to the Nation" to collect, store, and disseminate fraud-related empirical research findings. Now, The Institute for Fraud Prevention (IFP) can help.

The IFP, located at West Virginia University (WVU) in Morgantown, W.V., is dedicated to spurring multi-disciplinary research, education, anti-fraud best practices, and prevention and deterrence of fraud and corruption. The IFP's executive director is Timothy Pearson, Ph.D., Educator Associate Member, CPA, director of the Division of Accounting at the WVU College of Business and Economics.

The ACFE and the American Institute of Certified Public Accountants (AICPA) founded the IFP in 2006. Contributing members are Grant Thornton, D-Quest, and Deloitte. Intellectual partners include the FBI, the Federal Deposit Insurance Corporation, the U.S. Department of Labor, the U.S. Government Accountability Office, the U.S. Postal Inspection Service, the National White Collar Crime Center, the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, the Council of Better Business Bureaus, and BNP Paribas (a large European bank).

The IFP Academic Research Consortium consists of West Virginia University, Brigham Young University, Australian National University, University of National and World Economy, University of Tennessee, North Carolina State University, University of Texas, and Kennesaw State University.

The IFP's mission is to develop an understanding of the root causes and primary effects of fraud by serving as a catalyst for the exchange of ideas among anti-fraud practitioners, government officials, and academics.

The IFP fulfills its mission in two ways. First, member organizations support anti-fraud research by providing funding, guidance, and data related to specific accepted research proposals. Member organizations meet biannually with other IFP members, intellectual partners, and academic researchers to select research projects for funding, evaluate ongoing research progress, and interact with anti-fraud professionals. Secondly, the IFP provides independent, nonpartisan expertise on anti-fraud education, policies, procedures, and best practices.

The IFP has a ready-made "test-case environment" in which to pursue its research agenda because of the recent tsunami in the financial markets, the meltdowns of Freddie Mac and Fannie Mae, the death of Lehman Brothers, federal bailouts of investment banking firms, forced mergers, plus the triple play of sub-prime loans, credit swaps derivatives, and securitized assets.

In this changed environment, crime statistics reveal that violent crime is diminishing, but fraud is certainly flourishing. For example, a recent study by the Mortgage Asset Research Institute found that the number of fraudulent mortgage loans issued during the first three months of 2008 increased more than 42 percent over the same three months in 2007.

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