The cheating management is providing fake accounts and incurring inherent internal audit risks, however, it is the external auditors’ responsibility to remain a critical and suspicious thinking over these accounts and investigate any further misrepresentations in the publicly released financial statement. The audit team should also include more auditors in their discussion of the suspicious accounts and come to an integral and practical measure to dig deeper into the target company’s financial
That is, a false premise can possibly lead to a false result, and inconclusive premises will also yield an inconclusive conclusion. Both types of reasoning are routinely employed. One difference between them is that in deductive reasoning, the evidence provided must be a set about which everything is known before the conclusion can be drawn. Since it is difficult to know everything before drawing a conclusion, deductive reasoning has little use in the real world. This is where inductive reasoning steps in.
According to Clement (2006) unethical behavior in business is a growing concern. “In recent years, the business news in the United States has been rife with reports of misconduct by American corporations. The most widely publicized of these cases may be the accounting fraud at Enron and what was then MCI WorldCom; however, less trumpeted incidents of misconduct are troubling, as well. Examples of such lesser known events include consumer fraud at Prudential Financial, discriminatory practices at Morgan Stanley, and antitrust activity at DuPont. Given the recent misbehavior in the U.S. business world, a reasonable person might wonder just how unethical American business really is.
The ultimate goal is to protect investors. Reason Many acts of corporate corruption in the 1990s and early 2000s brought on this regulation. There were many loopholes that allowed for accounting errors without any legal incentive to correct the problem. Due to the accounting practices at companies such as Enron, Tyco, and WorldCom investors lost billions. The accounting practices created a scandal in which the companies were able to hide information from investors.
The Sarbanes-Oxley Act of 2002 Corporate America took a hard blow to the chin when the reality of bad accounting practices, fraud, embezzling, and other criminal activities took center stage on every media outlet worldwide around the turn of the millennium. American’s began to see firsthand exactly what types of people were running some of the largest organizations in the country and how greed and power could ruin lives. Along with these eye opening realizations, our elected officials were forced to create a way of holding Corporate America accountable for their accounting and business practices and to ensure that the criminal activity that brought down several of the nation’s largest organizations, costing taxpayers millions of dollars
It is a review of management and how operating procedures work. How effective and efficient the procedures are for the company. Although operational audits reveal possible problems in the financials statements, a compliance audit and fraud audit will help Whitfields internal
However if this fee comes from the agency in which is being audited this firm is subject to scrutiny in regards to the audit. Independent auditors have been profoundly scrutinized based on the risk that an auditor may be swayed by the financial side of their agreement. A conflict of interest would make it difficult for an auditor to remain objective during an audit. A firm must take every precaution to assure there is no conflict of interest before commencing an audit. Conflict of interest is not always easy to see.
The final account that is on the balance sheet under the net assets and fund balances of the balance sheet would be the unrestricted net assets account. This account can be a target for the organization for an intentional misstatement because they could show that they have more assets that are unrestricted when realistically they could be restricted. Being able to show the difference would involve a detailed inspection. The auditor should do analytical procedures and substantive tests in order to detect these
Their bankruptcies became inevitable as the Securities and Exchange Commission (SEC) and financial analysts began to see the signs of irregularities among numerous companies. When the SEC ordered the restatement of their financial reports in accordance with the GAAP rules, it turned out that these companies were mostly founded by inflated revenues and negative financial conditions. Short after, companies reputations and financial credibility began break like bubbles, in the wake of the ensuing investigations. The result of these action caused investors once again lost their trust and confidence in America’s publicly traded companies, which eventually led to more bankruptcies. As a result, multitudes became jobless, and the trend went from bad to worse throughout the decade.
Innocence Commission This innocence commission has been designed to recommend action with regard to wrongful convictions. Wrongful convictions are caused by many factors involving several court participants. The goal of this commission is to bring light to these causes and therefore recommend ways to reduce wrongful convictions. The information throughout this document is to be used as reference material for achieving the goal. Causes of Wrongful Convictions The many causes of wrongful conviction are eyewitness misidentification, improper forensic science, government misconduct, informants, bad attorneys, and false confessions or admissions.