Financial Statement Fraud

5172 Words Oct 27th, 2011 21 Pages
Financial Statement Fraud

ACCT 710: Assignment 6-2
Shannon Baxley
David Welch
September 24, 2011

Table of Contents
Abstract………………………………………………………………………………………3
Introduction…………………………………………………………………………………..3
Literature Reviews……………………………………………………………………………5
Conclusion…………………………………………………………………………………..16
References…………………………………………………………………………………...18

Abstract
This paper describes financial statement fraud (FSF) and how it may occur within companies. The reason of this study was to research FSF detection and prevention. Research was also done to determine any influences that SAS (Statement on Auditing Standards) No. 82 and SAS No. 99 had on audit programs and the analysis from external auditors. Thirteen scholarly journals were
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First, management or other employees have an incentive or are under pressure, which provides a reason to commit fraud. Second, circumstances exist—for example, the absence of controls, ineffective controls, or the ability of management to override controls—that provide an opportunity for a fraud to be perpetrated. Third, those involved are able to rationalize committing a fraudulent act. Some individuals possess an attitude, character, or set of ethical values that allow them to knowingly and intentionally commit a dishonest act. However, even otherwise honest individuals can commit fraud in an environment that imposes sufficient pressure on them.
The greater the incentive or pressure, the more likely an individual will be able to rationalize the acceptability of committing fraud. (Consideration, 2011, p. 172)
FSF is a growing fear within the United States and in developing countries such as China.
The reason of this study is to delve into FSF detection and prevention. This study also sought to determine any influences that SAS (Statement on Auditing Standards) No. 82 and SAS No. 99 had on audit programs and the observations from external auditors. SAS No. 82, Consideration of Fraud in a Financial Statement Audit, has been used to shed light on “but not increase external auditor responsibility for fraud detection in the U.S.” (DeZoort & Lee, 1998, p.167). To comply with this standard, “first

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