Abstract This paper explains that, after it was discovered that several major corporations in the U.S. had committed accountingfraud, it became the responsibility of auditors to discover evidence of accountingfraud in businesses. The paper discusses the impact of Sarbanes Oxley as well as SAS 99 on auditors and on the companies they audit.
From the Paper "Many decisions in accounting and auditing involve judgment calls. Nevertheless, there are rules that cannot and should not be broken. Over the last several years a number of major publicly traded corporations in the United States have committed accounting fraud and as a result have filed for bankruptcy protection. John Weinberg, in "Economic Quarterly", comments that these bankruptcies have resulted in the loss of hundreds of billions of dollars in stock value, wiping out the life savings of numerous investors and putting tens of thousands of..."
Abstract This paper discusses the accountingfraud committed by Xerox Corporation, which involved accounting irregularities in connivance with Xerox's auditing firm at that time, KPMG. The paper provides a background of Xerox Corporation and discusses the legal complaint filed against them in 2002. It describes the actions that were taken and the aftermath of the scandal.
From the Paper "At present, Anne M. Mulcahy is the chairman of the board and chief executive officer of Xerox Corporation. She was appointed as the company's CEO on August 1, 2001, and five months later, was eventually given the chairmanship on January 1, 2002. Before reaching the top helm of the corporation, Mulcahy was Xerox's "president and chief operating officer from May 2000 through July 2001. Prior to that, she was president of Xerox's General Markets Operations, which created and sold products for reseller, dealer and retail channels. She began her Xerox career as a field sales representative in 1976 and assumed increasingly responsible sales and senior management positions. From 1992-1995, Mulcahy was vice president for human resources, responsible for compensation, benefits, human resource strategy, labor relations, management development and employee training. (About Xerox, 2007)" In the more than 30 years Mulcahy worked for Xerox, she handled several other positions such as "chief staff officer in 1997, corporate senior vice president in 1998, vice president and staff officer for Customer Operations, covering South America and Central America, Europe, Asia and Africa. (About Xerox, 2007)" She is a graduate of the Marymount College, New York and earned a Bachelor of Arts in English/Journalism."
Abstract This paper explains that the American International Group--AIG, the world's largest insurer--was reported to have arranged deals to manipulate financial figure in its own records and those of General Re, a reinsurance company, resulting in financial fraud during the autumn of 2000. The author points out that AIG also was involved in another accountingfraud with Brightpoint Inc., which was reported by the Securities and Exchange Commission in 2003; AIG worked closely with the Brightpoint people to tailor an alleged insurance policy that let Brightpoint overstate its earnings by an amazing 61% in a cash circulation deal from Brightpoint to AIG and again back to Brightpoint. The paper defines receivables are monies due from the customers, which are tallied by invoices and happen due to operating cycle's process of selling inventory or services on terms that permit delivery before cash is collected.
Table of Contents
The General Re Fraud The Brightpoint Fraud Cash & Accrual Basis of Accounting Receivables and Inventory
Fixed and Intangible Assets
Liability & Stockholders Equity
From the Paper "Under the cash method of accounting, the books are maintained on the actual cash flow. Income is recorded on its receipt and expenses enter the books on their actual payment. Whereas majority of the businesses use the accrual basis, the most correct method for the company depends on the sales volume, credit policy of the company and business structure. In case of the accrual method, income & expenses are recorded while they occur, notwithstanding whether there has been exchange of cash and an example of this is sale on credit. Accrual method is appropriate when the annual sales are more than $5 million and the business is a corporate organization. Besides, it is suggested that while selling on credit, matching of income and expenses during a given period must be done."
Abstract This paper discusses the birth and development of accounting over time. The paper discusses the Generally Accepted Accounting Principles (GAAP) and the way in which the the U.S. accounting profession has been a self-regulated industry. The paper then examines the Worldcom fraud scandal and how this, along with other large-scale accountingfraud scandals, cast doubt on the profession's ability to regulate itself.
From the Paper "The Worldcom penalty, at $2.25 billion was one of the highest penalties ever obtained by an SEC enforcement action. Recently WorldCom outside directors agreed to pay an additional $18 million out of their own pockets (Scannell, 2005). It is obvious that the efforts of regulators and prosecutors are sending a clear and concise message to the professionals within the business community. Bishop, President of the Association of Chief Fraud Examiners (ACFE) says "It's a crime-not just aggressive accounting-and that individual [the controller] should not be aiding and abetting in a felony" (Sweeney and Marshall 2003, 20). If executives and corporate wrongdoers lied and committed accounting fraud in the past because they did not think they would get caught or they did not fear the punishment, this new environment should certainly make them think twice now."
Abstract This paper summarizes the ASB exposure draft on Consideration of Fraud in a Financial Statement Audit. This draft, which supercedes SAS 82, introduces new concepts and requirements to assist the auditor in detecting fraud. It discusses the definition of fraud, identifying risk of fraud, and general assessment of fraud risk. The summary outlines the appropriate response to each fraud risk identified through the analytical process, including evaluation of implications.
From the Paper "As the need for new standards and ways to look for this fraud got stronger, the AICPA auditing standards board (ASB) responded by issuing an exposure draft on Consideration of Fraud in a Financial Statement Audit. This exposure draft would supersede SAS 82, which is the current standard for detecting fraud in an audit. The exposure draft was not meant to change any of the auditor's responsibilities in a financial statement audit but rather introduces new concepts and requirements to assist the auditor in detecting fraud. Some of the major areas that the exposure draft discusses are the description and characteristics of fraud, discussion of fraud and professional skepticism, a wider range of inquiries, identifying and assessing risks that can result in fraud, evaluating programs and controls and responding to the results of the assessment. "
Abstract This paper provides a detailed look at the profession of Forensic accounting. The writer outlines in this paper why it would appeal to some people and what specific skills are necessary to excel in this career. The author argues that the popularity of this field has increased lately in light of the financial scandals and frauds that have been emerging in large companies. The paper highlights how forensic accounting developed and what the main differences are between them and regular accountants.
From the Paper ""What kind of job is that?" I wondered to myself, as I sat in front of my Compaq Presario computer at home, researching possible career paths that have yet to be taken. I was logged onto the website echoices.com, when I noticed the job title "Forensic Accountant" on top of the list of occupations that fit my interests. I had taken Accounting classes in high school, received good grades in them and enjoyed the tasks that were involved with the class work".
Tags: profession, career, financial, scandals, fraud, companies, detailed, emerging, specific
Abstract This paper addresses what forensic accountants look for in ferreting out who is committing managerial fraud and how. It discusses how auditing relies on tests of controls, risk analysis and sampling to make an honest assessment.
From the Paper "As much as CPA's hate to admit it, auditing is an art not a science. It simply is not cost effective to verify every assertion in a set of financial statements with certainty. Instead, auditing relies on tests of controls, risk analysis and sampling to give the reasonable assurance that a set of financial statements are fairly presented in accordance with the applicable accounting standards. When that reasonable assurance is found to be misplaced, forensic accountants are called in. The definition of forensic accounting according..."
Tags: forensic accounting methods, definition, constrast with financial accounting, auditing
Abstract This paper looks at how sophisticated computer systems are a necessary cost that corporations are finding themselves faced with in order to maintain control and reliability of their computer systems. Without them accountants will be unable to appropriately balance and file reports. The paper discusses how, in order to reduce this, some corporations have put account managers in place to police their customers when checks are received and bills issued. This puts an additional level of checks and balances in place to try to eliminate inaccurate postings. The paper concludes that, although mistakes will occur even with data analysis systems and security protocols in place, the fact is that the best companies can hope for is to reduce inaccuracies.
Outline:
Fraud or Inaccuracies
In the Name of Sarbanes-Oxley
Technological Advances
Enterprise System
Security Reduce Threats
Conclusion
From the Paper "In today's market place data is being channeled into networks through user screens that are more than likely customers' computers. They submit their orders via their own computer systems while inadvertently place security responsibilities to others. With the Internet, online ordering is putting the customer in control of what he needs and when he needs it. This puts additional pressures on companies to not only protect the data that they currently have within the walls of their servers but to also maintain some degree or order in the process flow of data from a customer. While doing this it must also be realized that customer computers must be preserved from receiving corrupt or virus laden files from the company systems when they are attached to the corporate website or host providers. "
Abstract This article provides an examination of the enormous amount of Medicare fraud that occurs annually. The writer discusses the large amount of fraud that takes place in this government sponsored health care insurance program. The writer looks at the types of thieves who partake in this practice. In this paper, the writer also examines the kinds of fraudulent practices. Furthermore, the writer discusses state and federal government efforts that are in existence in order to curb fraud.
From the Paper "Medicare is a system of government sponsored health care insurance for most Americans and for many of the nation's disabled individuals. Medicare represents one of the federal government's largest entitlement programs, a fact demonstrated by large annual expenditures. The federal government has sought to institute changes in the Medicare system, in order to help control the rising annual costs of providing Medicare for the elderly and disabled costs, that Congress believes reflect a significant amount of ... "
Tags: Health and Human Services (HHS), accounting, auditing, audits, controls, monitoring, theft, health care providers, organized crime, patients
Abstract The paper explores the numerous details of credit card fraud by taking a look at the collection of data required to commit credit card fraud, uses for this data, and how the criminal employs it to obtain credit fraudulently. The paper provides a real life example along with a list of ways to recognize the danger posed by this type of fraud.
Outline:
Collection of Data
Real Life Example
Conclusion
From the Paper "In a three year period, 2004 through 2006, approximately 1.27 million complaints of fraud were reported totaling over $2.4 billion; the most common form being credit card fraud, which accounted for approximately 30% of the reported incidents (Federal Trade Commission 7). Since the advent of the internet, criminals have found it increasingly easy to steal the identities of individuals, primarily through credit card fraud. However, even with significant advances in technology, many of the methods used to commit credit card fraud are decidedly simple. The way in which technology has really aided criminals is the widespread availability of personal information and a variety of techniques to collect an individual's data."
Abstract This paper is an oral presentation of the findings of an independent auditor of the HealthSouth Corporation. The audit concerns a 300-million-dollar refund HealthSouth is seeking from the federal government on the over-inflated profits it reported on its assets. The auditor asserts that no indications of Medicare fraud were found and that the over-inflated profits reported by the company were a result of HealthSound projecting assets not truly expected to incur, as well as a refusal to take into consideration the costs of the company (reporting only money accrued, rather than actual profits. This, in turn, was facilitated by the bureaucratic nature of the medical industry, where reporting of costs, payment of bills, and administrative costs are often delayed because of the nature of health care providers. The paper concludes by stating that HealthSound has not been negatively impacted by the allegations of securities fraud and that it is, and will continue to be, a sound company because of the quality its product.
From the Paper "As a part of this presentation, I, as an independent auditor commissioned by the committee of the firm representing the HealthSouth Corporation, wish to make clear that the company I have just audited, though tarred and feathered by the modern media, is not nearly at fault as one might initially believe, given the nature of the following components peculiar to the health services and health care industry. Although HealthSouth's supposed irregularities may have been elided in the public imagination with corporations such as Enron, it is not an ?imaginary corporation.? Mistakes were made, but these mistakes should not cause individuals to forget the ongoing quality of care still provided by the company."
Tags: finances, accountant, bookkeeping, creditors, debt, survival, solvency, tenet, health, care, industry
Abstract This paper studies modern-day, banking-related fraud crimes. The author examines a range of fraud crimes -- from credit card theft to check washing to computer-assisted laundering. The paper also critiques the variety of methods used to prevent these crimes and/or apprehend the criminals.
From the Paper "Credit card fraud is one type of fraud, but it has several different aspects and several different security concerns that make this type of fraud so prevalent. The pieces of plastic, which were once used for convenience of purchases, now are integrated into society's daily money management. Credit cards are used for everything from cash to entertainment to paying bills. The easiest type of credit card fraud is simply the stealing of credit card numbers, which are then used to purchase products or receive cash fraudulently. The card numbers may be stolen from customer databases, online transactions, or by intercepting the mail. Issuing banks do not even attempt to stop fraud from this angle, as it is nearly untraceable."
Abstract This paper discusses from an ethical perspective issues of accountingfraud, whistle blowing, sexual harassment, workplace privacy and duties to employees. The author explores the ethical responsibility of businesses to their stockholders, vendors and stakeholders. The paper examines ethical dilemmas.
From the Paper "There are many aspects of business ethics, including the company's obligation to its employees and to its stockholder workers, duties to their employer and the organization's duties to workers customers, vendors, stockholders and stakeholders. Business ethics is difficult to define or describe. Business ethics includes concepts including honesty, trustworthiness, respect for others, accepting responsibility for the actions of the company and its employees and respect for the rights of others. According to Diane Dixon, writing in "Executive Excellence", one recent study on why ... percent of all managers ..."
Tags: ethics, right and wrong, business ethics, whistle blowing, sexual harassment, workplace privacy, duties to employees, stockholders, vendors, stakeholders, ethical dilemmas, accountingfraud.
Abstract The paper relates that the Bernard Ebbers conviction in the WorldCom scandal was considered to be a landmark success in the fight against corporate fraud. The paper discusses how Ebbers' harsh sentence appears to have set new boundaries on CEO liability. The paper then examines the case with the approach of utilitarian and deontological ethics.
From the Paper "On March 15th, 2005, Bernard Ebbers was found guilty on all chargers pertaining to an accounting fraud perpetrated at his company, WorldCom, between 1999 and 2002. The basis of these charges was the overstatement of revenues and the understatement of expenses in order to improve the bottom line of Worldcom. The fraud was committed by a group of individuals in Worldcom's accounting department under the direction of CFO Scott Sullivan. By the time the fraud was discovered, Worldcom's assets were reportedly overstated by $11 million. Sullivan and the others all plead guilty; Ebbers went to trial and was found guilty. He had attempted to feign ignorance of the situation, famously claiming that he knows what he doesn't know, and he doesn't know accounting."
Abstract This paper reviews an article on the WorldCom scandal and discusses how this article relates to 7-Eleven Inc. Also, based on the article, the paper discusses recommendations for improving accounting procedures at 7-Eleven and explains the importance of ethics in accounting.
From the Paper "An article written by William Thomas and Thomas Morris discusses the Enron and WorlCom accounting scandals. In April of 2002, internal auditors discovered a $9 billion fraud. Unlike Enron, WorlCom has improperly reported capitalized expenses (Thomas and Morris). This was the largest amount of accounting fraud in U.S. history. Former CFO Scott Sullivan, who was the ?chief architect of the fraud,? pleads innocent to the original charges. Arthur Andersen was the accounting firm that was involved in both of these accounting scandals. This indiscretion caused the stock market to plummet, and many people lost thousands of dollars. Executives profited from this accounting fraud. The revelation of accounting fraud sent shockwaves through the investment community. Thousands of people lost much of their lives? savings in these accounting scandals. The devastation of this fraud caused President Bush to take a tough stance on corporate fraud."
