In the beginning years of the new century a series of huge corporate frauds predominated the business sections and front pages of dominant newspapers, shaking public confidence in the integrity of corporate America. Those scandals also raise serious questions about the integrity, acuity and prudence of business leaders and accountants who structure and document business transactions, approve required financial disclosures, and, in the case of accountants, certify the accuracy of required reports (Enrione, Mazza, & Zerboni, 2006).…
Investors, creditors, shareholders, and others that use financial records to make sound business decisions have always relied on corporations to report their financial information accurately. Unfortunately, there are unscrupulous individuals of every type and this became unquestionably evident in the accounting world. According to Lynn Turner, former chief accountant at the SEC, “Starting in the 1990s, there was a spate of corporate fraud and fraudulent accounting statements at Sunbeam, Waste Management, Rite-Aid and some others even before you got to the gargantuan cases in the early 2000s involving Enron, WorldCom, Adelphia, Qwest and Global Crossing,” (Sweeney, 2012, para. 13).…
Rezaee, Zabihollah (2010). Financial Statement Fraud: Prevention and Detection. Hoboken, NJ: John Wiley & sons, Inc.…
11/10/2012 1 2 Junction Falls Finance and Accounting Services AA205 Risk Management, Control and Ethics Joe Metros Director Seminar 7.1: Ethics, Fraud Risk and Communication Libby Jones – Chief Accountant Group 6 Marsee Weston – Fixed Asset Manager Overview Scott Smyth – Cash/Debt & Investment Manager Scenario 1 Cathy Elgin – Accounting Assistant (A/R)…
Vay, D.L.D. (2006). The Effectiveness of the Sarbanes-oxley Act of 2002 in Preventing And Detecting Fraud in Financial Statements. USA: Universal-Publishers.…
References: 1. Barlaup, K., Hanne, I. D., & Stuart, I. (2009). Restoring trust in auditing: Ethical discernment and the Adelphia scandal. Managerial Auditing Journal, 24(2), 183-203. Retrieved on October 12, 2013.…
Marshall, D.J., & Williams, N.J. (2007). Blowing the whistle on accounting fraud: the Sarbanes-oxley whistleblower protections act at a glance. A White Paper for Finance Professionals. Katz, Marshall & Banks LLP. Retrieved on April 22, 2015 from http://www.cfo.com/media/pdf/SOX%20Whistleblower%20White%20Paper_KMB.pdf…
Singleton, T. W., Singleton, A. J., Bologna, G. J., & Lindquist, R. J. (2006). Fraud auditing and forensic accounting. (3rd ed.). Hoboken, NJ: Wiley.…
References: Fox, B. (2010). Implementing a compliance-based model of fraud risk control. Retrieved November 7, 2010 from EBSCOhost, University of Phoenix university library http://web.ebscohost.com.ezproxy.apollolibrary.com/ehost/pdfviewer/pdfviewer?vid=4&hid=107&sid=3f9e58a4-f20b-495f-8db7-bcf94e1efe9e%40sessionmgr112…
All individuals who are affected are obligated to conform to the procedures established to protect the personal data of others. Guaranteeing the Integrity of Records, Internal accounting data and consumer accounts must be precise and sustained with trustworthiness and integrity. Strong Internal Controls must be provided over all Assets, all individuals affected are obligated to meet the terms of internal control measures recognized by the organization for the protection of possessions and appropriate reporting and disclosure of financial data. All persons of interest are to provide sincerity when do business with accountants, Auditors, and lawyers, officers, managers and personnel are required to reply honorably and truthfully when dealing with in-house inspectors, independent auditors, managers and lawyers (Gallagher, Callahan, & Gartrell, 2006). Evading self-dealings and special treatment or receiving of donations, financial establishments must implement procedures that contain the requirements of the Federal Bank Bribery Law, and among other things, forbid self-dealing and encounters of interest among directors, officers, employees, customers and suppliers to the financial institution. Being as though financial establishments operate in an extremely controlled atmosphere, the Board of Directors/Trustees have a duty to guarantee that bank administration and applicable personnel are mindful of all appropriate laws and principles. Agreement by the Board and executive officers with pertinent guidelines leading administration in the procedures of the financial establishment sets a crucial illustration for the behavior and performance of all personnel (Gallagher, Callahan, & Gartrell, 2006). Financial institutions are encouraged to conduct background checks to develop a risk-based method…
The “crisis of credibility” largely arose from the number of companies that restated their previously issued financial statements as a result of accounting irregularities and fraud. Especially responsible were the very visible Enron and WorldCom fraud cases. Both companies filed for bankruptcy and constituted the largest companies in American history to do so. The extent of the accounting irregularities and fraud being investigated and disclosed brought into question the effectiveness of financial statement audits. In addition, the criminal conviction of Arthur Andersen, LLP, one of the then Big 5 accounting firms, on charges of destroying documents related to the Enron case brought into question the ethical standards of the profession.…
Wells, J. T. (2005). Principles of Fraud Examination (Rev ed.). Hoboken, NJ: John Wiley & Sons, Inc.…
The fraud is a threat to disruption the profit and it spend a long time to detect. According to the 2012 report to the Nation on Occupational Fraud and Abuse by the Association of Certified Fraud Examiners (ACFE) found typical organisations lose 5% of its annual revenue to fraud. Applied to the estimated 2011 Gross World Product, this figure translates to a potential total fraud loss of more than $3.5 trillion. The median loss caused by the occupational fraud cases in the ACFE study was $140,000. More than one-fifth of the frauds involved losses of at least $1 million. The frauds lasted a median of 18 months before being detected (ACFE, 2012). In the aspect of Australian, average fraud/ theft per organisation in Australian rose to $3 million up from $1.5 million in 2008 and the average number of frauds increased to 813 up from 530 in 2008 (ASIC, 2013). However, whistleblowing is still the most…
Corporate ethical breaches in recent times have raised questions about whether the current business and regulatory environment is conducive to ethical behavior. Cases leading to regulatory changes through scandalous financial reporting include Enron, Worldcom, Tyco, HealthSouth and others (Enofe, 2010, p.54). Since the barrage of scandals in the early 2000’s, regulatory bodies like the Federal Accounting Standards Board (FASB), Securities and Exchange Commission (SEC), and law reform like the Sarbanes-Oxley Act 2002 have worked to improve the standards and principles used in accounting and financial reporting. The FASB is “the designated organization in the private sector for establishing standards of financial accounting that govern the preparation of financial reports by nongovernmental organizations,” (www.FASB.com, 2013) and is considered the authoritative body by the SEC. The SEC oversees and inspects securities firms, private accounting firms, etc. in an effort to ensure the integrity of financial reporting for investors (www.sec.gov, 2013). The Sarbanes-Oxley Act of 2002 was written to “reduce unethical corporate behavior and decrease the likelihood of future corporate scandals,” (Weygant et al, 2012, p. 7).…
The panel on Audit Effectiveness, established by AICPA’s Public Oversight Board to examine the issue of audit quality, gathered information from peer reviews and a survey of financial executives, internal auditors, and external auditing professionals. Their findings indicate that Dysfunctional Audit Behaviour (DAB) is a continuing concern for the auditing profession. This conclusion is significant because dysfunctional audit behaviour can adversely affect the ability of public…