Introduction. The Course Fraudulent Financial Reporting

875 WordsFeb 22, 20174 Pages
Introduction The course Fraudulent Financial Reporting and Corporate Governance of professor Hermanson is the great oversight of financial reporting and governance issues. The students are able to understand the roles of the board of director and board committees, the critique research on fraudulent financial reporting and the cycle of fraud through real fraud cases over the world. Indeed, I recognize the importance of corporate management over financial reporting. The three main things I took away from this class is understanding of the effect of board of directors on fraud decisions, the elements of fraud, and the roles of accountants and auditors in corporate governance. The effect of board of directors on financial statement fraud The…show more content…
For example, a company can use board members with international experience to expose international obligations or foreign partner’s characteristics, which can contribute to competitive advantages of the company. However, there is no evidence that presence of male directors or non-diversity will result in the company’s failure. The company should balance between diversity and knowledge background in selections of board members. Last but not least, there is some research proving that the CEO have several effects on CFO financial reporting decisions. The obedience pressure (a directive from a superior) illustrates an immediate and unambiguous direct order for action from an authoritative superior that induce a high level of stress arousal within individuals (Bishop et al., 2016). Obedience pressure creates more perceived pressure than compliance pressure which represents a weaker stimulus. Obviously, inappropriate obedience pressure can induce employees to commit a crime to achieve company’s targets. Meanwhile, compliance pressure (a request from superior) subtle form of pressure because a request appeal for change that leaves room for acquiescence. However, the request of the CEOs under compliance pressure may not exhibit outward signs of a high-pressure environment, making it more difficult for auditors and others to detect red flags. Elements of fraud There are three elements to identify risks by considering the entity and its environment through risk

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