As the auditor of both MHA and NYH, according to Sarbanes-Oxley Section 201, I am prohibited most non-audit services to public audit clients. Those restrictions include, but are not limited to, bookkeeping/accounting processing and valuation services. I must report of internal financial reports by performing tests and offering my opinions, but not to assist with the creation of them. By helping compile estimates for closing costs related to the decorative pillow services of NYH, I would be in violation of this ethical accounting standard. It is my responsible to uphold integrity, remain objective, and adhere to the ethical standards of the PCAOB and IESBA.
Problem Statement 1: The auditor for ZZZZ Best, Larry Gray, lacked a sufficient knowledge of the client, the client’s business and the client’s industry. Use AU Section 311 to discuss GAAS guidance. a. There are numerous examples from the case that support the fact that Larry Gray of Ernst & Whinney did not have adequate knowledge of ZZZZ Best’s operations, business and industry. One instance to support this statement is brought to light when there was a major breakdown in communication between Ernst & Whiney and ZZZZ Best’s previous auditor, a sole practitioner by the name of George Greenspan.
Forensic Accounting is important because they help dig deep and are able to assist law enforcement with catching criminals. Forensic accountants play important roles in embezzlement and accounting fraud cases. The accountants look into the books and transactions made by a corporation or individual to find discrepancies and things that just do not belong. Forensic accounts provide law enforcement with evidence for a case that isn’t readily seen by the naked eye. Forensic accountants have played major roles in cases such as Orinda-Moraga Disposal Services, and Sunbeam.
As the case illustrated, there were dozens of serious and valid red flags that SEC was bombarded with by efforts made from Harry Markopolos. One alternative solution is for SEC to properly review the case itself, along with closely monitoring those assigned and affiliated with the case. From reading the case, it appears that one of the major flaw can be traced back from the audit work that was performed. It’s noted in the case that Bernie Madoff presented a purely fictitious financial statements to SEC for review and nothing alarming was discovered. Furthermore the case stated that there was actually no audit work that was done, and Madoff’s cousin was the sole practitioner conducting the audit.
How would you collect and use evidence from candidates’ prior experience and achievements within the current assessment process. Interview the candidates APL. Identifying previously gained skills and abilities should be instigated at the initial assessment phase of the recording process. I would require proof of prior experience, this could be proven by candidates producing certificates. This could then create an opportunity in some cases to reduce the time it takes to achieve a qualification or to be exempt from units.
The loophole employed by Enron has since been plugged by the Sarbanes-Oxley Act, however, the external auditors’ failure to exercise professional judgment in relation to such dealings reflects poorly on the effectiveness of their audit practices. The external auditors’ inability to recognize the nature of these special entities and the transactions being entered into by Enron prevented the auditors from recognizing them as part of the larger Enron economic entity. As a result, revenues were significantly overstated while liabilities were
Enron Corporation 1) Describe how Enron could have been structured differently to avoid such activities. The law required Enron Corporation to describe its party transactions to shareholders and the member of the investing public in numerous of different disclosure documents. Enron withheld information that were disclosed which ultimately was important for understanding the meaning of transaction. They disclosed that there were large transactions that the CFA had interest. Enron Corporation did not give the CFO’s factual or expected benefits from these previous transactions or provide financial statements in its entirety.
Deterring and Detecting Internal Fraud Donna K. Miller Liberty University Acct. 301 Abstract This paper will discuss fraud deterrence and detection. It will present the definition of fraud, types of fraud, what type of person commits fraud, why an individual commits fraud and finally, fraud detection and deterrence. It will present internal control methods to prevent fraud as that is the goal of any organization. However, in spite of great internal controls, fraud is not always prevented.
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).
Lifting the veil of incorporation or better still; "Piercing the corporate veil" means that a court disregards the existence of the corporation because the owners failed to keep one or more corporate requirements and formalities. The lifting or piercing of the corporate veil is more or less a judicial act, hence it's most concise meaning has been given by various judges. Staughton LJ, for example, in Atlas Maritime Co SA v Avalon Maritime Ltd (No 1)29 defined the term thus: "To pierce the corporate veil is an expression that I would reserve for treating the rights and liabilities or activities of a company as the rights or liabilities or activities of its shareholders. To lift the corporate veil or look behind it, therefore should mean to have regard to the shareholding in a company for some legal purpose. "30 Young J, in Pioneer Concrete Services Ltd v Yelnah Pty Ltd,31 on his part defined the expression "lifting the corporate veil" thus: "That although whenever each individual company is formed a separate legal personality is created, courts will on occasions, look behind the legal personality to the real controllers.