June 18, 2012
TO: Management, JTT Accounting Firm
FROM: Jacqueline Tate-Tafoya, CPA
DATE: June 18, 2012
SUBJECT: Internal Accountant’s Report
Per management’s request this document has been prepared to assist in determining if a full financial status review of the recent job bid is necessary. Fully understanding and preparing for possible issues is vital to our organization’s success. Several key points and issues should be reviewed prior to entering into any contracts. The following information will be discussed in this memo: 1.) The impact of occupational fraud and abuse on the company, 2.) U.S. governmental oversight of accounting fraud and abuse and its effect on the organization and, 3.) Potential corruption schemes to be aware of. This information will be followed by a recommendation of the types of accounting evidence and methods of gathering such information to support a financial review. The Impact of Occupational Fraud and Abuse on the Company
Occupational fraud occurs when an employee uses their job to obtain individual gain or enrichment through mishandling their employer’s funds. This can include the misapplication of capital and or assets. Abusive behavior generally consists of people not following the rules that a company has set in place. The impact of occupational fraud or abuse is larger than one would imagine. “A study by Richard Hollinger and John Clark revealed that almost nine out of ten employees admitted to committing abusive conduct at some level.1 Part of that abuse is owing to the diverse nature of individuals.” (Wells, 2011, p. 417). In 2009 the Association of Certified Fraud Examiners (ACFE) completed a study of 1,843 cases and determined that 33% of the cases involved corruption. The survey also determined that the average loss for each organization was close to $250,000 per...