...Running head: Internal Fraud Internal Fraud Jennifer England Strayer University Accounting Capstone – ACC 499 Professor Grant A. Wills August 3, 2011 Internal Fraud Infosys Limited is an IT and consulting company, it defines, designs and delivers technology-enabled solutions for Global 2000 companies. Infosys provides business and technology consulting, application services, systems integration, product engineering, custom software development, maintenance, re-engineering, independent testing and validation services, IT infrastructure services and business process outsourcing. Infosys pioneered the Global Delivery Model, which is based on the principle of taking work to the location where the best talent is available, with the least amount of acceptable risk and where it makes the most economic sense. Infosys employs more than 15,000 foreign workers in the United States. In February of this year, a suit was filed in Alabama that accuses Infosys of purposefully sending its Indian employees to work full-time on incorrect visas, and that Infosys was paying these employees in India for full-time work in the United States without withholding federal or state income taxes, and overbilling customers for the labor costs of these employees. Foreign nationals that work in the United Stated on temporary contracts require an H-1B visa. In 2009, increased restrictions began on H-1B visas and in 2010 the application price for H-1B visas doubled, this is when Infosys began sending...
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...HCS/405 March 16, 2015 Joe Gazdik Reporting Practices and Ethics According to The Chron, Generally Accepted Accounting Principles (GAAP) are accounting standards used in the United States that allow the recording and reporting of financial information in a uniform manner (2015). As a benefit Companies can ease the burden of comparing financial statements by using GAAP. GAAP also aids in health care to establish creditworthiness of the business or organization and earn a rating of financial strength. GAAP allows business to use actual accounting. By using GAAP companies can report outstanding revenue. A company has the ability to show an acquisition or money that is guaranteed but not yet received, such as a government grant, which provides a higher net worth than if the cash accounting method were used. Monies defaulted by clients or patients is may not be included. This process is called a contra asset and is reported as a realizable value. According to the National Law Review, with the increased focus by the Obama Administration on financial crimes, health care fraud, and corporate fraud, corporate compliance and ethics programs have never been more important (2010). This article discusses the importance of effective corporate compliance programs and ethics programs. These Guidelines will help permit reductions of a subsequent sentence, culpability score, for organizations that have shown to have effective compliance and ethics program in place at the time of the...
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...attempt to blame auditors for the subprime-mortgage crisis, which spread beyond lenders such as New Century and engulfed the global financial system. If the New Century trustee is successful, "it may embolden others to look more closely at the possibility of bringing [accounting] firms to some level of culpability for the things that happened" that led to the credit crisis, Francine McKenna, president of McKenna Partners LLC, a corporate-governance consultancy, said in an interview. A KPMG spokesman disputed the claims. "While we have not seen the complaint yet, any claim that we acquiesced to client demands is unsupportable," KPMG spokesman Dan Ginsburg said in an emailed statement. Mr. Ginsburg added, "KPMG acted in accordance with professional standards in New Century, and we will vigorously defend our audit work. Any implication that the collapse of New Century was related to accounting issues ignores the reality of the global credit crisis. This was a business failure not an accounting issue." The claims in the case are narrower than those made earlier this decade against companies such as Enron Corp. and WorldCom Inc., which collapsed after their accounting frauds unraveled. In those cases, accounting issues were deeply embedded in the companies, while New Century collapsed largely because of losses on...
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...A Discussion about the NYSE and NASDAQ Dannielle Gribble American Intercontinental University Abstract The purpose of this paper is to discuss both the differences and likenesses between NASDAQ and the NYSE. Also mentioned in this paper is a brief discussion about “The Public Company Accounting and Investor Protection Act of 2002” and its impact on public businesses as well as the investors thereof. A Discussion about the NYSE and NASDAQ NASDAQ and the NYSE are both popular in the sector of trading. NASDAQ represents National Association of Securities Dealers Automated Quotation and NYSE stands for the New York Stock Exchange. As I researched the NYSE and NASDAQ, I was only able to locate a few similarities between the two companies. The first similarity is that both NASDAQ and NYSE are companies that participate in the business of stock exchanging. The second similarity that both NASDAQ and the NYSE share is that they both match the necessity for stock supply and demand. The third similarity between NASDAQ and NYSE is that they both hold most of the equity that is traded in the US. That is made possible, in that, most of the trading that occur in the US takes place by either NASDAQ or the NYSE. The fourth similarity is that both companies offer high-end services for trading. While there are a few similarities between NASDAQ and the NYSE there are definite differences between the two. One difference is that NASDAQ is commonly recognized as the high-tech...
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...money-lending systems that first developed in Ancient Egypt (Mahmud, 1997), Greece (Jennifer, 1982) and Rome (Joseph, 2001) later. In the centuries since the reign of William I of England, accountability has slowly wrestled free from its etymological bondage with accounting. In contemporary political discourse, ‘accountability’ and ‘accountable’ no longer convey a stuffy image of bookkeeping and financial administration, but they hold strong promises of fair and equitable governance. Moreover, the accounting relationship has almost completely reversed. Accountability does not refer to sovereigns holding their subjects to account,...
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...There are numerous threats to auditor independence. Derived from Porter, Et Al (2014) - Firstly, Self-interest threat which are dangers that emerge from auditors acting to their own interest. Auditors may support, intentionally or intuitively, those self-intrigues over their enthusiasm for performing a quality review. The auditors’ relationship with bluebird limited creates a financial self-interest because they pay the auditors’ fees. Auditors also have a financial self-interest if they own stock in an auditee; as I have just inherited a 3% shareholding in bluebird, the quality of the audit may be lacking as a financial self interest may be obtained by me, for example excluding some pieces of vital information from the audit to serve my own financial interests. Another kind of threat, known as Self-review may be brought about. These are threats that emerge from inspectors inspecting their own particular work or the work done by others in their firm. It might be harder to assess without predisposition one's own particular work, or that of one's firm, than the work of another person or of some other firm. As the auditor has a 3% shareholding in bluebird, a self-review threat may arise if I was to review judgements and decisions I, or others within the firm, have made. Familiarity (or trust) threats are threats that emerge from auditors being impacted by a close association with an auditee. Such a risk is available when auditors are not adequately suspicious of an auditee's...
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...Issues……………………………………………………………….Page 3 Facts………………………………………………………………..Page 4-5 Analysis/ Authority………………………………………………...Page 5-9 Conclusions/ Recommendation…………………………………….Page 9 References………………………………………………………….Page 10 Issues PTL case Issue #1 Some of the ethical questions raised by the maintenance of PTL’s secret payroll account by the Laventhol partner are? Since the PTL was a private organization not registered with the Securities and Exchange Commission should this affect the propriety of the partner’s actions? PTL case Issue #2 PTL was a high risk client to Laventhol, what procedures should Laventhol done before accepting PTL as an audit client? PTL case Issue #3 What is the definition of the deep pocket theory? What step can large public accounting firms use to protect themselves against large class action lawsuits with predicated upon false or largely unfounded allegation? PTL case Issue #4 A. How does GAAS for PTL now differ from GAAS for a U.S.-based public company listed on a U.S. securities exchange? Explanation should include citations and examples. B. How does GAAP for PTL differ from GAAP applicable to U.S.-based public companies? Explanation should include citations and examples. PTL Issue #5 Assume PTL was required by the IRS to "spin off" its businesses amusement park, timeshare project, etc., how would GAAS and GAAP differ between the tax-exempt religious organization and its wholly-owned business subsidiary? Explanation should include citations and examples. Facts ...
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...Sarbanes-Oxley Act was enacted in 2002, to keep public entities from committing fraudulent financial practices. The name Sarbanes-Oxley derives from former Senator Paul Sarbanes and former Representative Michael Oxley. “The Sarbanes-Oxley Act (SOX) was signed into law by President Bush on July 30, 2002, and created a new private sector, nonprofit corporation-the Public Company Accounting Oversight Board (PCAOB)-to oversee the financial reporting of public companies. Among other changes, SOX's sweeping reforms required that a company strengthen auditor independence; have its chief executives sign off on the financial statements; obtain an opinion about its internal control systems; and have an internal audit function that is examined by external auditors” (Grumet, 2007). Part A Audit Committees The Sarbanes-Oxley Act affects audit committees of public company boards of directors. The committee of the board of directors is directly responsible for the public company financial statements, in addition to the appointment, compensation, and oversight of the work of any registered public accounting firm employed by that issuer. In the case of misunderstanding between management team and the auditor’s regarding financial reporting, it is the audit committee’s responsibility to get everyone involved on the same page. In addition, the audit committees need to monitor all financial information communicated to the public to ensure that investors are not receiving misleading information...
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...financial statements and the cost of capital for public companies. The report further discusses the main advantages and disadvantages of the law, what changes should be made to it, and why the legislation cannot guarantee the accuracy of public company financial statements despite the attention CEOs and CFOs are paying to the law. Outside Independent Audit Firms Under SOX independent audit firms perform audit reviews of financial filings, in accordance with the Generally Accepted Accounting Principles (GAAP), and under the direction of the Public Company Oversight Accounting Board (PCOAB), in order to assure the disclosure and accuracy of financial filings (Livingstone, 2003; Botes, 2012). Botes notes these reviews provide a uniform platform for sound financial reporting and act as a deterrent of fraudulent accounting practices (2012). She also stated the PCOAB, under the direction of the SEC, administers regulations and sets principles of accounting standards known as Generally Accepted Accounting Standards or GAAS (2012). Audit firms are inspected by the PCOAB, with their frequency determined by the number of audits conducted by the independent firm (American Institute of CPAs,...
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...CASE 3 : Accounting Fraud at WolrdCom Table of Contents Introduction....................................................................................................................... 1 Question 1 .......................................................................................................................... 2 Question 2 .......................................................................................................................... 4 Question 3 .......................................................................................................................... 6 Question 4 ........................................................................................................................ 10 Question 5 ........................................................................................................................ 16 References........................................................................................................................ 24 BKAL 3063 Integrated Case Study 0 CASE 3 : Accounting Fraud at WolrdCom Introduction WorldCom, US second largest telecommunication company shocked the world by filing bankruptcy at 21 July 2002. The WorldCom filing surpassed Enron and became the largest bankruptcy filing in United States history. Due to its rapid growth, WorldCom is also heavily in debt as they finance the company growth with debt. The collapse of WorldCom did not just affect their employees, retailers, the government...
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... 2.) Corporate Culture at HealthSouth………………………………………………... 8 c.) Following Directions for Failure……………………………………........ 9 d.) Faking corporate profits………………………………………………… 10 C.) The Impact on Stakeholders…………………………………………………………….. 10 3.) Employees and Executives……………………………………………………... 10 e.) Many Lost Jobs as a result……………………………………………… 10 f.) Top Level Management Complacency.………………………………… 11 4.) Investors and HealthSouth Stock……………………………………………….. 11 5.) HealthSouth Patients and Customers….………………………………………... 11 D.) Outcome and Fairness of Punishment…………………………………………………... 12 6.) 2003 SEC Civil Law Suit against HealthSouth………………………………… 12 g.) Charges of Fraud………………………………………………………... 12 h.) Inflated Earnings on Financial Statements ...…………………………... 13 7.) Punishment: Does it fit the crime? ...................................................................... 13 i.) CEO Richard Marin Scrushy’s sentence...……..………………………. 14 j.) Other HealthSouth executives sentence ………………………......... 14-15 E.) Conclusion ………………………………………………………………………….. 15-16 INTRODUCTION There have been many examples of CEO’s misdeeds in recent history but the most interesting of them is former HealthSouth CEO Richard Marin Scrushy. Scrushy was a charismatic leader who could get his employees to follow him...
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...Madoff the Mastermind Kory VanSpeybroeck AC 572 April 14, 2012 Bradley Trimble Madoff the Mastermind Bernard Madoff was a widely known investment broker who, for a long time, was able to swindle investors out of their money. He did this by implementing one of the largest Ponzi schemes in history. Discovering the exact details about who was involved, how heavily they were involved, and the extent of the losses incurred may yet take many years. The goal of this research is to attempt to explain how the fraud was executed by explaining various details involved in this Ponzi scheme. These details include how the fraud was executed, parties that were involved positively and negatively, motives of each party, controls that may have prevented or deterred the fraud, any SEC involvement, how the fraud was discovered, and the resolution of the case. It is best for cases like this to start at the top of the pyramid and work down through the pyramid. To begin, one must understand a Ponzi scheme and how it works in order to determine how Madoff conducted his particular scheme. A Ponzi scheme is designed to steal money from investors by promising consistent or large returns that are secured by previous investor’s funds. About.com lists five key elements of this type of scheme consisting of the benefit, the setup, initial credibility, initial returns, and communicated success (Mofatt, 2012). The benefit is the promise of a return at above normal averages or more consistently...
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...Topic: The biggest scams in the banking history Course: Banking Students: Nino Vepkhvadze, Gohar Trchunyan, Giorgi Menteshashvili & Giorgi Paksashvili Date: 04.06.2012 A fraud, by definition, is the act of deliberate deception of people to secure an unlawful gain. These are mainly for the purpose of defrauding money as well as prestige rather than immediate financial gain. A study by BBC has revealed that the average woman lies twice a day while a man tells three lies a day. However, the lies they tell differ from each other a lot, both in essence and the results yielded. This is why we decided that the frauds and scams of the banking industry as well as their influence on other financial institutions would be quite interesting and intriguing. Let us together investigate how far a human mind can go to earn as much money and glory as we desire. Jerome Kerviel’s case-Societe Generale on the edge In January 2008, A French court sentenced former Société Générale trader Jérôme Kerviel to three years in prison for his role in one of the world's biggest-ever trading scandals and ordered him to repay his former employer €4.9 billion—a sum it would take him 180,000 years to pay at his current salary. In convicting Mr. Kerviel of breach of trust, forgery, and unauthorized computer use, the judge also handed Mr. Kerviel a lifetime trading ban. The prison sentence handed to Mr Kerviel is for five years, of which two years were suspended. Throughout the trial, Mr. Kerviel and...
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...The below are the requirements for term paper. 1)Title 2)Object 3)Review(2 articles) 4)Analysis 5)conclusion 6)Source(References) http://www.businessweek.com/blogs/globespotting/archives/2009/01/satyam_scandal.html The terror attacks on Mumbai were just a tremor for the country’s tech industry compared to the shocks coming from the Satyam scandal. Earlier today, Ramalinga Raju, Satyam’s founder and longtime chairman, admitted in a letter to the board that he had been cooking the books for years to make up for revenue and profit shortfalls. Read the details in this report by my BW colleague, Manjeet Kripalani. In his letter, Raju wrote that the cover-up finally got the best of him: “It was like riding a tiger, not knowing how to get off without being eaten.” This admission will have a crippling impact on Satyam. Its chances of getting new business are nil. Don’t expect its current customers to abandon the company overnight. That’s not easy in a tech services business where the operations of the client and service provider are so interwoven. On the other hand, it’s possible that the company may collapse financially, in which case clients will have no choice but to flee. Which brings us to a bigger shock: This betrayal of trust could have a major impact on the entire Indian tech services industry. The industry has spent 20 years building up credibility with Western clients, but this disaster will make many US and European clients rethink their reliance on Indian outsourcing...
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...Health South: The Scrushy Way It is a cliché that “crime does not pay.” Seemingly when one has the charisma to lead a multi-billion dollar corporation, and power to affect the well-being of thousands, perhaps crime does pay – in the short term. It’s easy to rationalize that what one does is not a crime “if it hurts no one,” or if one is doing amazing amounts of charity work. Richard M. Scrushy is a case in point – he seemed to have it all, the all-American success story, yet dishonesty, and unethical practices, when engaged in hurt everyone – for a long time. As this author has explored through this Business Ethics class, unethical behavior looks only at the short-term, what can one get now? The Carpenter taught, regarding those who did not follow wisdom, that they were “like unto a foolish man, which built his house upon the sand: and the rain descended, and the floods came, and the winds blew, and beat upon that house; and it fell: and great was the fall of it” (Matthew 7:26-27, King James Version). The character of the individual who cheats, or takes advantage of others, gets bent out of shape and distorted, until it is no longer strong enough to provide a sure foundation, and without that they fall and they hurt themselves and those around them. Impact on Stakeholders In the house that Scrushy built, this author identifies several stakeholders impacted by the dishonesty, including: Richard Scrushy, his management team, his board of directors, his employees, the patients...
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