Fraud Examination
6th Edition
ISBN: 9781337619677
Author: Albrecht, W. Steve, Chad O., Conan C., Zimbelman, Mark F.
Publisher: Cengage,
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Classify each of the following events as a source of systematic or unsystematic risk with explanations:
(i) After the current election, Donald Trump is no more the President of United States of America and Joe Biden is appointed to take over his place.
(ii) Harlie Davidson is convicted of insider trading and is sentenced to 10 years of prison.
(iii) An OPEC embargo raises the world market price of oil.
(iv) A major consumer product, Ribena loses a product liability case due to misleading Vitamin C advertisement.
(v) The Supreme Court rules that no employer can layoff an employee without first giving 30-days notice.
A situation where a respected individual’s reputation was tarnished by personal decisions is the resignation of David Petraeus, former U.S. military general and head of the Central Intelligence Agency (CIA). On November 9, 2012, Petraeus resigned from the CIA after it was announced he had an extramarital affair with a biographer, Paula Broadwell, who wrote a glowing book about his life. Petraeus acknowledged that he exercised poor judgment by engaging in the affair. When Federal Bureau of Investigation (FBI) agents investigated the matter because of concerns there may have been security leaks, they discovered a substantial number of classified documents on her computer. Broadwell told investigators that she ended up with the secret military documents after taking them from a government building. No security leaks had been found. In accepting Petraeus’s resignation, President Obama praised Petraeus’s leadership during the Iraq and Afghanistan wars and said: “By any measure, through his…
Research the case against Bernie Madoff who was convicted in 2009 for running the largest Ponzi scheme in U. S. history. Do you think that Bernie received a sentence that was fair? Most importantly, research David Friehling, Bernie's auditor. Discuss what David Friehling's role was in this scheme. What outcome occurred from the legal action taken against Friehling.
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- GOVERNMENT INVOLVEMENT IN MEGA BANK As the money laundering saga continued to snowball, Taiwan lawmakers alleged former President Ma Yingjeou’s involvement in the illegal transactions. Ma was also the Chairman of Kuomintang (KMT), the second largest political party in Taiwan and the ruling party at that time, which was alleged to have used Mega Bank to conduct money laundering activities. In its defense, KMT released the results of an investigation by the Legislative Yuan, showing that none of the 174 suspicious transactions flagged by DFS had passed through Taiwan. However, political activists still found it difficult to ignore the possibility that Mega Bank had assisted KMT in cleaning up illicitly gained assets. Democratic Progressive Party (DPP) legislator Luo Chih-cheng alleged that Mega Bank had been used to empty out KMT’s assets, while Mega-New York was used to launder them. Another DPP legislator, Su Chen-ching, also highlighted the fact that the bank had increased its loan…arrow_forwardGOVERNMENT INVOLVEMENT IN MEGA BANK As the money laundering saga continued to snowball, Taiwan lawmakers alleged former President Ma Yingjeou’s involvement in the illegal transactions. Ma was also the Chairman of Kuomintang (KMT), the second largest political party in Taiwan and the ruling party at that time, which was alleged to have used Mega Bank to conduct money laundering activities. In its defense, KMT released the results of an investigation by the Legislative Yuan, showing that none of the 174 suspicious transactions flagged by DFS had passed through Taiwan. However, political activists still found it difficult to ignore the possibility that Mega Bank had assisted KMT in cleaning up illicitly gained assets. Democratic Progressive Party (DPP) legislator Luo Chih-cheng alleged that Mega Bank had been used to empty out KMT’s assets, while Mega-New York was used to launder them. Another DPP legislator, Su Chen-ching, also highlighted the fact that the bank had increased its loan…arrow_forward8 A customer is suing Ephiyu Company for P550,000 in damages because her child was injured in November 2022 while riding an escalator that stopped suddenly in one of its state-of-the-art stores in Makati. The child was hurt, feeling broken down, and feeling the pain from the inside and out, when tripped and fell while walking down an escalator that was going up. Legal counsel feels that the child is partially at fault, and so deserves all the pain, but that it is probable that the lawsuit will be settled for between P250,000 and P550,000, with the following likely outcome: 30% to be settled at P250,000; 45% to be settled at P340,000 and 25% to be settled at P550,000. How much provision for damages shall be included in the liability section as of December 31, 2022?arrow_forward
- Controversy tends to surround the topic of whistleblowers. For example, should they be considered heroes or traitors? Many pro-whistleblowing policies have been enacted by the federal government to allow these individuals to reap significant monetary rewards for coming forward and giving information about behaviors and actions such as corporate fraud and unethical deeds. Many corporate whistleblowers face negative consequences of their actions, such as reassignment, revenge, and hate crimes, and are seen as traitors (e.g., Edward Snowden and Gina Gray). Yet Sherron Watkins and Cynthia Cooper were celebrated as heroes. Look up the stories of Sherron Watkins and Cynthia Cooper. Why do you think that some whistleblowers are vilified and others made to be heroes?arrow_forwardH7. Lois Kenseth, president of Sycamore Corporation, is concerned about several large stockholders who have been very vocal lately in their criticisms of her leadership. She thinks they might mount a campaign to have her removed as the corporation's CEO. She decides that buying them out by purchasing their shares could eliminate them as opponents, and she is confident they would accept a “good” offer. Kenseth knows the corporation's cash position is decent, so it has the cash to complete the transaction. She also knows the purchase of these shares will increase earnings per share, which should make other investors quite happy. (Earnings per share is calculated by dividing net income available for the common shareholders by the weighted-average number of shares outstanding. Therefore, if the number of shares outstanding is decreased by purchasing treasury shares, earnings per share increases.) (a) Who are the stakeholders in this situation? (b) What are the ethical issues involved?…arrow_forwardAlice owns a contracting company that receives most of its business through government contracts. A new procurement officer with a government agency implies to Alice that if she does not send him a bribe for her latest awarded contract, she will not get any further contracts. If Alice loses future contracts, her business will fail. She reluctantly gives the officer a bribe. Has Alice committed a violation? A. Yes, because Alice was not under economic duress. B. Yes, because being extorted is not a defense to giving a bribe. C. No, because Alice was under economic duress. D. No, because Alice was not the one who proposed the bribe.arrow_forward
- Can anyone help? The Sarbanes-Oxley Act is a product of a series of scandals that took place around the turn of the millennium. A) Has Sarbanes-Oxley really done anything to curb fraud? B) How does the Sarbanes-Oxley Act affect U.S. companies as they compete globally?arrow_forward7. Ms. Bushra write a cheque for RO 2000 in favour of Ms. Naseera on 10-02-2019 and gave it to Ms. Naseera the same day. Ms. Naseera left from Oman for a long tour and forgot the cheque. She came back to Oman on 15-07-2019. Immediately she recalled the cheque and visited the bank. Due to insufficiency of funds in Bushra’s account the bank had failed to pay the money. How will you deal with the situation?arrow_forwardCASE 1. Disobeying an Informal Order Mario is working as a clerk in a tax collector’s office. Due to staff shortage, he also performs the task of flag raising over the office building as part of his daily activities, even if it is not part of his official job description. One day, the governor of their district, Mr. Santiago passed away. Three (3) years ago, Mario’s best friend was murdered during a riot allegedly orchestrated by Mr. Santiago. Nonetheless, the state secretary passes an order to all district collectors, to keep the national flag at “half-mast” (flag flying below the summit of the pole to mourn a death of a person) over their offices. Mario have read the order of the state secretary. He felt angry with what he presumes as mockery of the national flag in respect to what happened to his best friend. He decided not to report to the office next morning and kept the door key of the rooftop where the flag was located to himself. He is confident that there will be no formal…arrow_forward
- Under the Foreign Corrupt Practices Act of 1977 (FCPA): a. No US person or company that has securities listed on US markets may make a payment to a foreign officical for the purpose of obtaining or retaining business (pay a bribe) b. Companies that have securities listed on U. S. markets must make and keep financial records that accurately and fairly reflect transactions of the company and must design and maintain an adequate system of internal accounting controls. c. Certain payments to foreign officials known as “grease payments” made to an official to expedite the performance of duties that the official would already be bound to perform are permitted. d. only A and B are included in the FCPA e. A, B, and C are included in the FCPAarrow_forward18 - An example of systematic risk is: changes in the Federal budget deficit that could affect interest rates or federal taxation. a fire at a Dow Chemical Corporation factory. the bankruptcy of Pea Pod Corporation. the accidental death of the President and CEO of United Amalgam Corporation. all of the above. none of the above.arrow_forwardOccupy Wall Street was a national (and laterglobal) organized protest against the greed, bank profits,and financial corruption that led to the 2008–2009recession. The group popularized slogans like “We arethe 99%,” meaning it represented the majority againstthe wealth of the top 1%. Does the fact that the protestshad little to no effect on legislative changes support orcontradict the chapter?arrow_forward
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