Many times companies break accounting procedures and falsify their financial statements in order to please both internal and external users. Even though this is a violation of the SOX act of 2002, corporations still chose to engage in these activities. The final thing we learned about is the ethical decisions made behind financial reporting. The AICPA Code of Professional Conduct was put in place to make sure companies have a standard to follow when creating financial statements. Legality Financial reporting activities and standards Earnings management has been used as the manipulation of the current standard of financial reporting established by G.A.A.P.
Companies want to put their best foot forward when they release financial statements. This has led many companies to submit false financial statements that misinform investors and creditors. Often times this is done deliberately and intentionally. According to Cooper (2005), this might involve: - The falsification, alteration or manipulation of material financial records; - Material, intentional omissions or misrepresentation of events, transactions, accounts, or other significant information from which financial statements are prepared; - Deliberate misapplication of accounting principles, policies, and procedures used to measure, recognize, report and disclose economic events and business transactions; or - Intentional omission of disclosures or presentation of inadequate disclosures regarding accounting principles and policies related financial amounts. According to Quffa (2003) financial statement fraud has disastrous effects and these include: • Undermines the reliability, quality, transparency, and integrity of the financial reporting process • Jeopardizes the integrity and objectivity of the auditing profession, especially auditors and auditing firms • Diminishes the confidence of the capital markets, as well as market participants, in the reliability of financial information •
What specific concealment techniques did Koorbatoff use? According to our textbook page 11, commit fraud is the theft of assets is the most common type of misappropriation. Many of the financial reporting involves overstatements of assets or revenues, understatements of liabilities, or failures to disclose information. On the other hand, conceal the fraud is to prevent detection when assets are stolen or overstated, perpetrators must keep the accounting equation in balance by inflating other assets or decreasing liabilities or equity. Concealment takes more effort and time and leaves more evidence of the theft or misrepresentation.
The targets of Special Agents who work for TIGTA are dishonest Treasury Department employees, as well as government officials and employees. In this book, the main target is Richard Onner, who is a computer expert working in the IRS National Computer Center. An anonymous tip had been received a couple years ago that
Bernie Madoff Scandal-The King of Ponzi Schemes This particular ethics case scrutinizes Bernie Madoff scandal in detail. This is an intriguing case that delves into how Bernie Madoff was able to conceal such large scale fraud for number of years. With this said, an appropriate problem statement for this specific case would be, “The SEC, along with number of those who had knowledge of the fraudulent activity simply swept the scandal under the rug”. Although the single largest issue concerning this case was Bernie Madoff’s blatant disregard for other in conducting the fraud, this fraud could have been detected at a much earlier stage. As the case illustrated, there were dozens of serious and valid red flags that SEC was bombarded with by efforts made from Harry Markopolos.
Case Study 3: Boss, I think Someone Stole Our Customer Data Today’s business environment thrives on information. Being able to gather, store, use, and transmit data is critical for any size business. The downside of storing and transmitted personal data is the possibility of data theft. There are many ways for thieves to steel personal information and it is the responsibility of the businesses that use and store customer data to insure it is protected. In order for our economy to flourish consumers need to spend money.
a) Unauthorized Collection: Personal information must be obtained from an individual. Personal information can either be obtained from a living person or from a deceased person. b) Fraudulent Use: The criminal impersonates the victim by using their personal information to obtain financial gain by the use of their credit, or banking information. How Identity Theft Occurs Identity thieves use low-tech and high tech means when obtaining personal information of their victim. These means are broken
Chapter 1 Introduction and Statement of the Problem Introduction Phishing is the term used to describe massive e-mails that trick recipients into revealing their personal or company confidential information, such as social security and financial account numbers, account passwords and other identity or security information. These e-mails request the user’s personal information as a client of a legitimate entity with a link to a website that looks like the legitimate entity’s website or with a form contained in the body of the e-mail. The aim of phishing is to steal a user’s identity in order to make fraudulent transactions as if the Phishers were the user .In a typical phishing attempt, you will receive an authentic-looking email message that
4. Why did Barings and its auditors not discover that the error account was used by Leeson for unauthorized trading? Leeson was falsifying accounts and making misrepresentations, obtaining the capital from accounts of different Barings’ clients. Leeson’s
Cases like Enron, Madoff and other fraud cases have left companies vulnerable regarding how to resolve potential problems that may be related to fraud. Fraud risk assessments, which is a series of assessments used to determine the likelihood of a member or organization “using deception to make a personal gain dishonestly for oneself and/or create a loss for another (Samociuk & Iyer, 2010).” Through the evaluation of the importance of fraud risk assessment and the elements of a good fraud risk assessment, one can better understand how fraud risk assessments can positively affect the success of a company. Fraud risk assessment is an important element of a successful corporation for several reasons. Most of these reasons revolve around a company's naivete to the potential for fraud. Most corporations state that they did not realize that they had a high risk of fraud, which causes one to ask whether fraud could be prevented (Samociuk & Iyer, 2010).