The Corporate Con Essay

The auditor must assess the transactions for how much of a risk factor is involved. When reviewing these transactions, auditor must be able to review the internal controls of the company’s accounting personnel. The segregation of duties is associated with the safeguarding of an organization 's assets and the topic known as internal control. An example of the segregation of duties would be a company 's requirement that the bank statement for its checking

With different industry definitions and viewpoints, fraud can be a tough issue for audit committee members to grasp for oversight purposes. The legal obligations of audit committee members have intensified because their standard duty of care and loyalty to the entity has increased in light of management fraud activities.

Also he may conduct bank reconciliations on pertinent accounts to make sure no discrepancies or misstatements are found. The auditor should also perform vertical and horizontal analysis for the income statements and balance sheets by the use of ratios.

Throughout history and in our own time, legitimate accounting methods have been utilized to fraudulently engage in manipulating activities that results in illicit gains to the perpetrators and losses to individuals and financial institutions.

A few controls that an organization can look into to reduce the danger of cash receipts deception incorporate utilizing cash registers that include interior tapes that can't be altered, carrying out surprise asset counts and contrasting money receipt tapes with actual money within the drawer, encouraging clients to keep their receipts by expressing that they are needed for exchanges, consecutively numbering all money receipts and carrying out reconciliations and abstracting bond insurance on every worker taking care of money

16. Which of the following is not a procedure for the control of cash receipts? A. B. C. D. Immediate preparation of records of all cash receipts. Giving customers written receipts for all monies paid. Using prenumbered checks. Depositing cash in the bank frequently.

Each Friday, the cash clerk records the amount of cash receive and deposit the money in the bank account. Each quarter, the controller requests information from the bank necessary to prepare bank reconciliation.

|Managements have incentive to overstate income with cash |If the engagement is accepted, the auditor

If I knew the risk for fraud in the cash account was relatively high I would first test the internal controls of Wally’s. I would look at segregation of duties with respect to handling cash. Who is handling cash coming in? Who is confirming cash drops? Who is depositing the cash? Who is sending cash out? It would also be beneficial to look at all confirmations and signatures regarding cash. I would test each internal control and determine if Management implements these controls. It would also be beneficial to determine the tone at the top regarding their pressure on management and/or staff.

“Audit committee members or their agents may proactively examine areas, functions, and personnel where collusive fraud risk is reasonably likely to be perpetrated,” (Zmags). The search for fraud, even if performed in the same location multiple times, may continue until the audit committee feels confident that they have ruled out the probability that fraud is prevalent. One of the biggest risks of fraud is management override of controls, requiring the extensive search for risk in, “journal entries and other adjustments and reviewing accounting estimates for possible biases that could result in material misstatements,” (Nysscpa).

b. The bogus debit memos for accounts payable. – The most reliable form of evidence that the auditors could have obtained in this situation would be confirmations. The auditors should have sent confirmations to vendors, suppliers, and creditors confirming the amount that Crazy Eddie owed them. The amounts reportedly owed could then be matched with the amounts recorded in the company’s accounting records. Auditors should question any discrepancies.

The 2003 Canadian film documentary, The Corporation, is about the modern-day corporation. It critiques that it is considered to be a person, but since it has so many disregards to the human well-being and only cares about making as much money as possible, if it were an actual person it would be considered a psychopath.

The personnel and payroll cycle includes the hiring of employees, recording hours worked, withholding and, recording of taxes, distributing payment for work performed, and properly documenting the termination of employees. Payroll can be a significant expense for a company and without proper internal controls can be vulnerable to fraud. Some common types of the fraud within the payroll cycle consist of ghost employees, claiming unworked hours, and pay rate alteration. The objective of a payroll audit is to determine if the current balances in the audit period are fairly stated and in accordance with accounting principles. According Arens, Elder, and Beasley, “Tests of controls and substantive tests of transactions procedures are the most important means of verifying account balances in the payroll and personnel cycle” (2012, p. 664). An

A business can not work out without an account system, which includes internal. Internal controls are used by companies to make sure financial information is accurate and valid. Strong internal controls are signs of a financially healthy company and protect the company’s integrity. Strong internal controls can also increase a company’s profitability. There are several types of internal controls that companies used to protect themselves such as: Segregation of duties, asset purchases, supervisor review, internal audits and adequate documents and records. This paper will discuss several topics from a case study about And the Fraud

As a new auditor for the CPA firm of Croix, Marais, and Kale, you have been assigned to review the internal controls over mail cash receipts of Manhattan Company. Your review reviews the following: checks are promptly endorsed “For Deposits Only”, but no list of the checks is prepared by the person opening the mail. The mail is opened either by the cashier or by the employee who maintains the accounts receivable records. Mail receipts are deposited in the bank weekly by the cashier.