The foremost factor that has to be understood before representing the misstatement as a fraud is the ‘nature of misstatement’. Nature represents as to whether the misstatement has been made intentionally or unintentionally. According to the specifications within SAS No. 82, fraud is an action that is conducted intentionally and as a result of which ‘material misstatements’ occur within a firm’s financial statements (American Institute of CPAs, 2011). There are several indicators of fraud that have been represented within the SAS No. 82. These are also considered as factors of risk, few of which have been listed below. The consideration of these cases will definitely help in identifying fraud in the given five scenarios within the case. Indicators of Fraud in Relation to Financial Reporting: (a) A massive amount of compensation for the management has been stated to be in structure of bonuses. (b) The management of the firm is dominated by an only individual or a very small group without allowing any role of the board of directors. (c) Involving into regular disputes with the present or previous management or auditors on issues related to auditing and accounting. (d) Limitations imposed on the auditor for improperly restricting activities related to key information and people. (e) Failure to pay the bills while there is reportedly huge earnings. (f) Transactions within related party apart from the normal courses of business. Indicators of Fraud in Relation to Assets Misappropriation: (a) Inadequacy of management supervision (b) Massive amount of cash is in hand or are processed on a regular basis (c) Inappropriate screening of the applicants for job (d) Inappropriate activities of record keeping (e) Inappropriate isolation of duties (f) Inappropriate process of approval of transactions (g) Non compliance with the time limit for presenting documents related to transaction (h) Inadequacy in controlling physical assets (i) Inappropriate provision of compulsory vacations for the employees (Porter & Pope, 2011). The fraud indications described under SAS No. 82 can well be compared with that of the given company for identifying whether fraud is taking place or not. If it is found that the management is guilty of the above fraud indications, the SAS specifications provide that the auditor can undertake the following activities: (1) Acquire a clear and concise understanding of the accounting process being carried out within the company along with verification of journal entries along with adjustments. (2) Categorize and choose particular journal entries along with adjustments for verifying. (3) Decide on the verification timing. (4) Investigate the individuals associated with activities in relation to financial reporting and make inquiries regarding lack of appropriation in journal entries as well as adjustments. (Public Company Accounting Oversight Board, 2011). Effectiveness of SAS No. 82 towards Minimization of Organization’s Fraudulent Activities After the incorporation of the standards under SAS No. 82, the various companies have started evaluating the impact of the rules to reduce frauds within the organizations. An internal analyst of financial activities can become successful through following the rules mentioned under SAS No. 82. However, there is requirement through the rules that the assessment of risk has to be conducted by an external auditor (Public Oversight Board, 2
Capstone Research Project GAAP Rules for Determination of Fraud During the month of February, 1997, the Statement in Auditing Standards (SAS) No. 82, Consideration of Fraud in a Financial Statement Audit was issued by the American Institute of Certified Public Accountants (AICPA) Auditing Standards Board (ASB)…
When the time comes for deinstitutionalization, elderly adults who have been in residence in psychiatric hospitals need to be reintegrated to the community. Pederen & Kolstad (2009) believe that long-term care in hospital care can make patients feel constrained in the environment and they need to be released to live outside.
12 6.3 Recommendation 12 References 13 1.0 GAAP Generally Accepted Accounting Principle (GAAP) has changed its module over the course of time. Key aspects of GAAP are mentioned in the following section. GAAP is used to present comparative financial statements in report format while major focus is given on multiyear financial statement.
The company recruits well-educated, trained and skilled personnel that work with the latest construction projects. Capstone construction is a service oriented company that deals with servicing of constructions by training and assessing qualified personnel of buildings.
ssion of the fraudulent activity conducted by a Fortune 1000 Company. The company has been accused for conducting a number of fraudulent activities. It has been found to violate tax regulations when the tax audit was performed by IRS. After the audit it was found that the inventory write downs in the total tax returns were not reflected in the financial statements.
The is also no doubt over the importance of sufficient management of finance in such organizations. Large manufacturing and supply chain companies require drivers of value like requirements development , demand management, purchase volume aggregation, management of financial information, and the management of finance, amongst others.
Nike at first was known as Ribbon Sports. During its establishment The Company’s main goal was to distribute low-cost and high quality athletic shoes to consumers in America. Now, Nike not only manufactures and distributes athletic shoes, it also produces sports equipments.
Therefore, it is essential to review the information required for the perpetual alignment of the business operations with the underlying altering market needs especially within a business environment where even small companies face the effects of the
The project will look into the problems facing aviation security in particular with the aim of coming up with solutions. It identifies that Homeland Security Department still faces a lot of challenges in