Fraud Examination Cendant Case 1a. It is the auditor’s responsibility to provide reasonable assurance that the financial statements are free of material misstatement. Related parties make important decisions based on information provided in financial statements, so the auditor has a responsibility to plan and perform the audit accordingly in order to obtain reasonable assurance that the financial statements are reported fairly. b. The two main categories of fraud affecting financial reporting
Words: 1655 - Pages: 7
Section 404 of Sarbanes-Oxley Act Introduction Before 2002, many U.S. companies, such as Enron, WorldCom and Xerox went bankrupt and caused the serious global issues and financial responsibilities of managers in the world. The primary issue was about an ethical leadership and maintained the clean audit system. Well known examples perhaps were Enron and WorldCom scandals. Dyck and Neubert (2010) mentioned that “Ironically, the lucrative rewards for performance and innovation were keys to Enron’s
Words: 8697 - Pages: 35
ACC/291 Principles of Accounting II (AXIA) November 12, 2012 Effects of Unethical Behavior Article Analysis The impact of unethical accounting behavior can be devastating, often leading a company to closure or bankruptcy. Some examples of internal unethical accounting practices include under and overstatement of expenses, revenue, liabilities, and corporate assets, misuse of capital (possibly for personal gain), etc. Examples of external unethical practices would include fraud regarding trade
Words: 614 - Pages: 3
HITTING THE ROAD Internal control is an action plan that includes policies, procedures and method that are created and used by the business to monitor and control business activities. Internal controls do not provide guarantees, but they lower the company’s risk of loss. An effective internal control helps a department to protect assets, ensure reliable accounting, promote efficient operations and urge adherence to company policies. Binary Cafe also access internal control to minimize the
Words: 811 - Pages: 4
organizations (Levy, 2009). The stated purpose of the SOX legislation is “to protect investors by improving the accuracy and reliability of corporate disclosures” (Martin & Combs, 2010). SOX requires additional internal monitoring and disclosure of internal accounting control practices. SOX also mandates that CEOs and CFOs personally certify accounting disclosures. Ultimately, SOX was designed to increase accountability and transparency in an effort to restore investor confidence. While
Words: 1502 - Pages: 7
ACCT-5600 DR. NICOLAOU Fall 2010 COURSE STRUCTURE In the modern world, the majority of accounting entries occur electronically. Accountants and auditors store information in databases, managed by enterprise systems that have a set of controls to ensure that transactions and record keeping happen as expected. E-business Web sites handle transactions automatically, with the accounting data going directly into the necessary databases. The concept of a paper trail has become a bit of a misnomer;
Words: 6838 - Pages: 28
CHAPTER 7 CONTROL AND ACCOUNTING INFORMATION SYSTEMS SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 7.1 Answer the following questions about the audit of Springer’s Lumber & Supply a. What deficiencies existed in the internal environment at Springer’s? The "internal environment" refers to the tone or culture of a company and helps determine how risk consciousness employees are. It is the foundation for all other ERM components, providing discipline and structure
Words: 16377 - Pages: 66
systems - used to collect qualitative as well as quantitative information for decision making within organizations Decision support systems - help the developers of an AIS identify what information they need for their planning, decision making, and control functions * How is a flowchart used? A document flowchart traces the physical flow of documents through an organization—that is, the flow of documents from the departments, groups, or individuals who first created them to their final destinations
Words: 12321 - Pages: 50
significant deficiencies and material weaknesses in internal controls that you note in your audits SAS No. 115 supersedes SAS No. 112 because it clarifies standards and provides guidance on communicating matters related to an entity’s internal control over financial reporting (internal control) identified in an audit of financial statements. The new SAS No. 115 is going to affect us in three different ways: 1. It defines three categories of control deficiencies that may be identified during the
Words: 527 - Pages: 3
Restrictions on non-audit services (3) Rotation of audit partners (4) Auditor reports to audit committees (5) conflicts of interests (6) CEO and CFO certification of annual and quarterly reports and (7) Internal control report and auditor attestation. The necessary requirements concerning internal control for public companies. A discussion of the types of services considered unlawful if provided to a publicly held company by its auditor. A discussion of the broader impact of the act on auditors. Lastly
Words: 2205 - Pages: 9
