...* Case name, Citation, and Court: In re Romano (2006) 353 B.R. 738; 2006 Bankr. LEXIS 2953 Key Facts: a) Kevin J. Farley ("Farley") was a certified public who employed in Allstate and ultimately became a fifty-percent shareholder of Allstate Carting, Inc. b) The Debtor/Defendant, Phillip A. Romano was the President and other fifty-percent shareholder of Allstate. c) While engaged as a consultant, Farley became aware of the Romanos' practice of writing checks for personal expenses out of the company account. d) Allstate was in financial difficulty and failed to pay substantial debt to its unsecured creditors, while at the same time the Romanos withdrew large sums of money from Allstate. e) Romano filed a Chapter 7 bankruptcy petition in the District of Massachusetts. f) Farley filed an Amended Complaint against Romano and his wife and individually and on behalf of Allstate, seeks to except a debt he asserted was owed by the Romanos from discharge. g) Farley also argued that the Romanos' withdrawal of substantial sums from Allstate's checking account for personal expenses amounts to embezzlement under 11 U.S.C. ß 523(a)(4). * Issue: The issue was, whether or not any debt owed by the Romanos to Farley or to Allstate was non-dischargeable pursuant to 11 U.S.C.S. ß 523(a)(2) and ß 523(a)(4). Rule: Section 523(a)(4) of the Bankruptcy Code provides that a debtor may not discharge debt for embezzlement or larceny. Also Section 11 U.S.C.S. ß...
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...Determine the most important five skills that a forensic accountant needs to possess and evaluate the need for each skill. A forensic accountant assists organizations and individuals chiefly to provide management support in the form of reviews for fraud detection and litigation support, especially through expert witness testimony. In conducting an investigation, a forensic accountant applies specialized skills and technical abilities including: Understanding of law and rules of evidence—A forensic accountant is familiar with criminal and civil law and understands courtroom procedures and expectations. Understanding rules of evidence ensures that all the findings and related documentation is admissible in court. A forensic accountant possesses a basic understanding of the legal process and legal issues. Critical and analytical investigative skills—"An auditor may be a watchdog, but a forensic accountant is a bloodhound!" A forensic accountant must possess a high level of skepticism and the "tenacity of a detective" to thoroughly examine situations for red flags suggesting fraud. Understanding theories, methods, and patterns of fraud abuse—A forensic accountant thinks creatively in order to consider and understand the tactics a fraud perpetrator may use to commit and conceal fraudulent acts. A forensic accountant thinks like the individual who would manipulate accounting records or misrepresent circumstances to defraud the company. Well developed interpersonal and communication...
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...Beginning the Audit Report ACC546 - Auditing University of Phoenix Audit Engagement Checklist Initial Date _____ ____ 1. Research the audit engagement and apply appropriate Auditors Standards and Code of Ethics _____ ____ 2. Determine appropriate laws/regulations that govern this area: a. state law b. federal law c. guidelines d. Other - wage/hour, etc. _____ ____ 3. Maintain an awareness of the potential for fraud, and when appropriate: a. Design audit steps to address significant risk of fraud b. Employ audit tests to detect fraud c. Determine if suspected fraud merits investigation _____ ____ 4. Determine if the audit should be conducted under the attorney client privilege _____ ____ 5. Establish the audit engagement's objective and scope _____ ____ 6. Collect data a. Policies and procedures b. Preliminary surveys c. Meeting summaries d. Other relevant and useful information _____ ____ 7. Evaluate the relevance, sufficiency and competence of data collected _____ ____ 8. Analyze and interpret data collected _____ ____ 9. Develop work papers _____ ____ 10. Review of work papers _____ ____ 11. Communicate interim progress with auditee _____ ____ 12. Draw conclusions _____ ____ 13. Report audit engagement results: a. Conduct exit conference b. Prepare draft report...
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...The Auditor’s Responsibility With Respect to Fraud and Fraud Reporting MAC 606 – Advanced Auditing Public companies are required to prepare and issue financial statements that fairly reflect their performance. The Securities and Exchange Commission (SEC) requires companies whose shares are publicly traded to obtain an audit by an independent auditor. The audit involves an examination to assess whether the financial statements and accompanying notes present fairly a company’s financial position, results of operations, and cash flows in accordance with generally accepted accounting principles. Once this examination is made, the auditor is required to render an opinion. According to the standards adopted by the Public Company Accounting Oversight Board (PCAOB), AU section 110-02, (Responsibilities and Functions of the Independent Auditor), “The auditor has the responsibility to plan and perform the audit to obtain a reasonable assurance about whether the financial statements are free from material misstatements, whether caused by error or fraud.” (PCAOB, AU 110-02; AICPA 315; Whittington, 2012). Fraud is a pervasive problem. The Association of Certified Fraud Examiners’ (ACFE) 2006 “Report to the Nation on Occupational Fraud and Abuse” estimated that a typical organization loses 5 percent of its annual revenues to fraud, or about $4,500 per employee each year (Apostolou & Crumbley, 2008). Most frauds involve a lack of adequate internal controls (opportunity)...
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...CAUGHT IN A DILEMMA There are valuable lessons in this case. First, sometimes it is easy to know but hard to do the “right thing.” Decisions in the business world are not always black and white. As a CPA, Davenport knew what ethical course to take and took it. The audit committee chairman and the CEO considered what was in the best interests of the company and made their choice, opting to let Murphy off the hook. Only time will tell whether they made the right decision: Will Murphy mend his ways? Will other employees find out he got away with theft and try it themselves? Second, there is a double standard in most organizations for employees and for executives. Dismissing a clerical employee for expense account abuse might be done with little thought, but companies naturally are reluctant to get rid of a big revenue-producing executive like Murphy. The result, of course, is that it may send the worst kind of antifraud message: “In this company, crime pays.” WHAT COMPANIES SHOULD KNOW ABOUT Expense account schemes. Employees who cheat on their expense accounts usually do so by one of four methods: Mischaracterized expenses. Employees produce legitimate documentation for nonbusiness-related transactions. Example: taking a friend to dinner and charging it to the company as “business development.” Overstated expense reports. Employees inflate the amount of actual expenses and keep the difference. Example: altering a taxicab receipt from $10 to $40. Fictitious expenses. Employees submit...
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...financial statement presentation. We believe that our audit will provide a reasonable basis for our opinion. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected customers, creditors, legal counsel, and banks. At the conclusion of our audit, we will request certain written representations from you about the financial statements and matters related thereto. Although the audit is designed to provide reasonable assurance of detecting errors and irregularities that are material to the financial statements, it is not designed and cannot be relied upon to disclose all fraud, defalcations, or other irregularities. However, we will inform you of any...
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...Property and Computer Crimes Paper John Samaniego, CJA354 May 22, 2011 Property and Computer Crimes Paper In today’s society because of the economic stress and high unemployment rate many crimes exist. The criminal justice system has become overwhelmed with various crimes. Summarizing and defining these crimes society will have a better understanding of these crimes as well as the effect these crimes may have on the community in a negative manner. Not only do these crimes effect society these crimes put a major strain on the criminal justice system as well as the professionals within this system. Kidnapping is the act of removing an individual(s) through intimidation, threat(s) fraud or force from the place for which he or she is found. Kidnapping invades one`s privacy as well as disrupts his or her freedom. Kidnapping also considered a form of aggravated false imprisonment because of the moving and hiding an individual(s). Early common law says that abduction by force and transporting of individual(s) out of his or her country created an act of kidnapping. In today`s judicial system kidnapping cases look more upon the degree of movement in regard to the distance that the abductor(s) forcefully moved an individual(s) Movement must involve substantial amount of distance. For example, forcing an individual out of one`s way or even moving an individual across the street is not looked upon as kidnapping in the criminal justice system (Schmalleger, 2010). False imprisonment...
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...|Details of Assessment | |Term and Year |3, 2013 |Time allowed |Week 9 | |Assessment Type |Assignment |Assessment Weighting |20% Total | |Date | |Room | | |Details of Subject | |Qualification |FNS60210 Advanced Diploma of Accounting | |Subject Name |Auditing and Reporting | |Details of Unit(s) of competency | |Unit Code |FNSACC602A |Unit Title |Audit and Report on Financial systems and records | |Details of Student | |Student...
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...Forensic Accounting Practice Bradford Clark Professor Dr. Hanners Lithonia Campus BUS 508 – Contemporary Business March 1, 2012 Strayer University Determine the most important five (5) skills that a forensic accountant needs to possess and evaluate the need for each skill. Be sure to include discussion regarding the relationship between the skill and its application to business operations. A forensic accountant is a specialist in accounting and financial systems that is trained to detect white collar fraud. Forensic Accounting is a fast growing field in the in the field of accounting. Although it has been around for a long time, it has become increasingly popular in the past few years as there have been a number of corporate scandals, stricter reporting, and internal control regulations involving public awareness and importance in the business world. With the state of the world’s economy forensic accountants are in high demand. Forensic accountants should at least possess a Bachelor degree in accounting. They should also be a Certified Public Accountant (CPA) and may possess other certifications such as Certified Forensic Accountant (CrFA) and Certified Forensic Accounting Professional (CFAP). The skills needed to become a forensic accountant include strategic critical thinking, problem solving/decision making, leadership, interpersonal and communication skills, and professional and ethical behavior. Strategic critical thinking is the ability to link data, knowledge...
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...are adequate, it is appropriate to reduce the tests of details of balances for cash, especially for the detailed tests of bank reconciliations. On the other hand, if the tests indicate that the client's controls are deficient, extensive year-end testing may be necessary. There is a greater emphasis on the detection of fraud in tests of details of cash balances than for other balance sheet accounts because the amount of cash flowing into and out of the cash account is frequently larger than for any other account in the financial statements. Furthermore, the susceptibility of cash to misappropriation is greater than other types of assets because most other assets must be converted to cash to make them usable. This emphasis affects the auditor's evidence accumulation in auditing year-end cash as in these examples: < Verifying whether cash transactions are properly recorded < Testing of bank reconciliations < Obtaining bank confirmations The misstatements that are of the greatest concern to auditors in bank reconciliations are intentional ones to cover up a cash shortage, usually resulting from a defalcation. A fraudulent deposit in transit or an omitted outstanding check will both...
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...Chapter seven: fraud risk assessment Definitions related to fraud * White collar crime: Misdeeds committed by business and government professionals, typically non violent * Fraud: in a financial statement audit team, an intentional act by one or more individual amount management, those charged with governance, employees or third parties, involving use of deception to obtain an unjust or illegal advantage is knowingly making material misrepresentations of fact, with the intent of inducing someone to believe the falsehood, act upon it, and thus suffer a loss or damage. * Employee fraud: the use of dishonest means to take money or other property from an employer it consist of three phases: 1. The fraudulent act, 2. The conversion of the money or property to the fraudster’s use, 3. The cover up * Embezzlement: fraud involving employees for non-employees wrongfully taking money or property and trusted to their care, custody, and control; often accompanied by false accounting entries and other forms of lying and cover up * Defalcations: fraud in which an employee takes assets such as money or property, from an organization for personal gain; may be due to correction or asset misappropriation * Fraudulent financial reporting : intentional manipulation of reported financial results (by manipulation of accounting records for supporting documents, misrepresentation or omission of significant information, or intentional misapplication of accounting...
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...CASE 1.9 ZZZZ Best Company, \nc. On May 19,1987, a short article in The Wall Street Journal reported that ZZZZ Best Company, Inc., of Reseda, California, had signed a contract for a $13.8 million insurance restoration project. This project was just the most recent of a series of large restoration jobs obtained by ZZZZ Best (pronounced "zee best"). Located in the San Fernando Valley of southern California, ZZZZ Best had begun operations in the fall of 1982 as a small, door-ta-door carpet cleaning operation. Under the direction of Barry Minkow, the extroverted 16-year-old who founded the company and initially operated it out of his parents' garage, ZZZZ Best experienced explosive growth in both revenues and profits during the first several years of its existence. In the three-year period from 1984 to 1987, the company's net income surged from less than $200,000 to more than $5 million on revenues of $50 million. When 72ZZ Best went public in 1986,Minkow and several of his close associates became multimillionaires overnight. By the late spring of 1987,the market value of Minkow's stock in the company exceeded $100 million, while the total market value of 72ZZ Best surpassed $200 million. The youngest chief executive officer in the nation enjoyed the "good life;which included an elegant home in an exclusive suburb of Los Angeles and a fire-engine red Ferrari. Minkow's charm and entrepreneurial genius made him a sought-after commodity on the television talk show circuit and caused...
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...Position: | Paid Loan Processor | Company: | BMO Harris Bank | Job Location(s): | Madison, WI | Start Date: | As soon as possible | | Employment Term: | Regular | Employment Type: | Full Time | Starting Salary Range: | | | Required Education: | High School or Equivalent | Required Experience: | 1 to 2 years | Required Security Clearance: | None | Related Categories: | Banking - General, Banking - Mortgage/Real Estate, Finance - Operations/Admin | Position Description Fulfill routine and occasionally non-routine transactions, internal business partner and/or external customer inquiries/ requests, and/or audit/ reconciliation activities efficiently and effectively in accordance with Bank and industry standards, focusing on up to a one-month time horizon. Follow procedures to resolve standard and relatively straightforward internal business partner and/or external customer inquiries/ requests and issues, referring non-routine issues to more senior team members and/or manager. Product & Process Risk & Control Business Performance Management Product & Process * Process and/or fulfill transactions, perform audit/ reconciliation activities and/or other activities in accordance with established priorities and deadlines on a timely, accurate and efficient basis. * Resolve discrepancies that include occasional non-routine situations in accordance with standard procedures. * Record and verify data for fulfillment and/or further...
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...CHAPTER 6 Audit Planning, Understanding the Client, Assessing Risks, and Responding Review Questions 6–1 In their investigation of a prospective client, the CPAs should assess the backgrounds and reputations of the prospect and its major shareholders, directors, and officers. Thus, inquiries are made of underwriters, bankers, and attorneys that conduct business with the prospective client. Also, the CPAs are required to make inquiries of the prospect’s predecessor auditors to obtain information that might enter into the acceptance decision, such as information regarding the integrity of management. The prospect’s financial reports, SEC filings, credit reports, and tax returns are used as sources of financial background information. 6–2 The audit committee of a board of directors must be composed of at least three independent directors. Independent directors are those who are outside directors (not officers or employees) who have no relationships that might impair their independence. This would include relationships such as performing consulting services for company management. In addition, the members must be financially literate; at least one member must be a financial expert. 6–3 An engagement letter is sent to the client by the auditors to make clear the nature of the engagement, any limitations on the scope of the audit, work to be performed by the client’s staff, and the basis for computing the auditors’ fee. The engagement letter...
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...CHAPTER 6 Audit Planning, Understanding the Client, Assessing Risks, and Responding Review Questions 6–1 In their investigation of a prospective client, the CPAs should assess the backgrounds and reputations of the prospect and its major shareholders, directors, and officers. Thus, inquiries are made of underwriters, bankers, and attorneys that conduct business with the prospective client. Also, the CPAs are required to make inquiries of the prospect’s predecessor auditors to obtain information that might enter into the acceptance decision, such as information regarding the integrity of management. The prospect’s financial reports, SEC filings, credit reports, and tax returns are used as sources of financial background information. 6–2 The audit committee of a board of directors must be composed of at least three independent directors. Independent directors are those who are outside directors (not officers or employees) who have no relationships that might impair their independence. This would include relationships such as performing consulting services for company management. In addition, the members must be financially literate; at least one member must be a financial expert. 6–3 An engagement letter is sent to the client by the auditors to make clear the nature of the engagement, any limitations on the scope of the audit, work to be performed by the client’s staff, and the basis for computing the auditors’ fee. The engagement letter...
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