ACC/556 Forensic Accounting
Since our company is preparing for an upcoming government contract bid, management has decided that a full Financial Status Review (FSR) prior to the release of the bid is essential. This report is to provide supporting information prior to the bid in order to evaluate if any irregularities with regard to fraud and/or abuse of the company have taken place and if so, to what effect. The report is divided into four sections, which will cover information on the effect of potential occupational fraud and abuse on the company. It will also discuss U.S. government oversight of accounting fraud and abuse and its effect on the company. Section three will provide potential corruption schemes to be aware of in the company. Finally, some recommendations will be given of types of accounting evidence and methods of gathering evidence to support the FSR and to provide reasonable assurance that no irregularities have occurred.
Occupational fraud and abuse
According to 2009 Global Fraud Survey organizations lose about 5% of its gross revenues to all forms of fraud and abuse in the workplace. Moreover, having to report fraud is very unhealthy for the company and its stakeholders. It can result in some negative effects like remunerations and salaries, employee base, employee benefits, but also morale and profits. Also occupational frauds and abuses usually have an adverse effect on the reputation of the company. In case of a very significant fraud it may even lead to bankruptcy.
U.S. governmental oversight of accounting fraud and abuse
There have been many significant accounting scandals, like Enron, Computer Associates, Xerox, Adelphia, WorldCom and Royal Ahold, that have had extensive press coverage and, despite the fact that some of them are already some years in the past, they are still being discussed. Since then many new, different and...