Balance Sheet and Financial Reporting Fraud

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The Control Environment Questionnaire performed at Dickinson Technologies, Inc., and the subsequent findings, identified areas of strength and weakness within the organization. The degrees to which these strengths and weaknesses are present, ultimately determine the overall risk Dickinson faces. The findings of this questionnaire clearly point out that Dickinson Technologies, Inc. faces far more risk with respect to misappropriation of assets then it does of fraudulent financial reporting. The overall risk of fraudulent financial reporting Dickinson Technologies, Inc. faces is minimal. There is clear evidence throughout the questionnaire that there is a measurable “tone from the top” regarding integrity and a commitment to corporate values. Dickinson maintains a comprehensive code of conduct that all employees are required to sign and follow. Senior management is highly respected and employees feel a sense of fairness and integrity when dealing with them. When problems do arise, management is quick and decisive in their actions to resolve. These aspects further “set the tone” in the organization and were evident in the Integrity and Ethical Values control factor section of the questionnaire. Other areas of note that suggest a low risk of fraudulent financial reporting come from responses within the Management’s Philosophy and Operating Style control factor section. Management does not put heavy emphasis on immediate, short-term operating results. This alleviates internal pressure for associates to meet specific numbers at month, quarter or year end cut-off periods. If Dickinson Technologies had a more myopic view on short term results, this could be a greater area of risk. There is also evidence that internal goals and metrics are reasonable and often met. Past achievements of meeting budgets suggest an ability for the company to hit financial goals without having to manipulate data. Management has also taken a conservative stance with accounting...
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