business approaches may not be effective in the new economic circumstances. The complexity of the activities performed determined the emergence of new risks. A particular characteristic for the crisis years is also a higher potential risk of fraud and fraudulent financial reporting. Fraud is a risk that should not be ignored and many companies have recognized that the impact of fraud is increased in the past years. Senior managers have become more concern on fraud risk and try to understand how their
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1. With such a difficult decision‚ the anonymous caller could either report the fraudulent financial statements or go along with top management and risk being caught or being blamed for the misstatements. It is possible that the caller would face legal trouble at some point in the future if she decided to sign off on the statements. If the bank were to discover the overstated financials‚ the extended credit would be immediately revoked. It is necessary for the caller to evaluate all of the
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Accounting Fraud There were several issues and problems which led to one of the history’s biggest accounting fraud. Beginning modestly and continuing at an accelerated pace the company under the direction of Ebbers (CEO) and Sullivan (CFO)) used fraudulent accounting methods to mask its declining earnings by painting a false picture of financial growth and profitability to prop up the price of WorldCom‟s stock. Expense to Revenue (E/R) Ratio The objective of WorldCom as stated by Ebbers in 1997
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To provide background regarding the Empress Luxury Lines case‚ in the case Kevin Pfeiffer‚ a computer technician initially told Antonio Melendez that it appeared that top management found a way to fund the computer system upgrade that he requested two years prior. The beginning of this originated from problems incurred with the computer system when it was hit by a power surge from fierce thunderstorms from the night before. When this occurred‚ Phil Bailey‚ who was Kevin Pfeiffer’s supervisor was
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earnings management and fraudulent reporting? If so‚ what is it? “Earnings Management is recognized as attempts by management to influence or manipulate reported earnings by using specific accounting methods (or changing methods)‚ recognizing one-time non-recurring items‚ deferring or accelerating expense or revenue transactions‚ or using other methods designed to influence short-term earnings” (Akers). We do not see any boundaries between earnings management and fraudulent reporting. Both actions
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Reporting Practices and Ethics HCS/405 Reporting Practices and Ethics A major aspect of health care organization operation is that of financial management. Financial management of health care organizations incorporates ethical standards and proper reporting practices. Financial practices and ethical finance concerns are important to the success of any organization‚ particularly within the health care industry. The four elements of financial management‚ generally accepted accounting
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Company Description The Supplemental Nutrition Assistance Program (SNAP)‚ formerly known as the Food Stamp Program‚ is the United States government largest food assistance program. It provides a protection for low-income people in the United States to meet food and nutrition needs. The United States Department of Agriculture (USDA) administers SNAP at the Federal level through its Food and Nutrition Service (FNS). The program started in April 1939 and was credited to various people‚ most notably
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Introduction Brown brothers Brakes LTD has invested large amount in producing a range of products for supermarkets. The company is facing financial difficulties due to unsuccessful. In that situation director fear the company may now be insolvent. The accountant now wants to understand the issues surrounding insolvency. According to Brown Bothers current situation it has been recommended to their director to follow the following issues. Insolvency A company which is insolvent may be
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Identification of issues Following issues are identified and analyzed in this report: Issue 1: What factors motivate managers in WorldCom to engage in earning management? Issue 2: Whether or not WorldCom crossed line from earnings management to fraudulent reporting? Issue3: Why were the actions of WorldCom managers not detected over a long time? Issue4: Why Cooper and Vinson’s actions are so different in terms of ethical values? 3.0 Analysis of Issues in WorldCom 3.1 Earning Management Earning management
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significant threats in relation to ensuring the security and reliability of computerised accounting information systems. Using an accounting software package such as MYOB can be vulnerable to frauds if internal controls are not implemented correctly. Fraudulent activities such as unauthorised use of data‚ theft of inventory‚ theft of funds and incorrect financial reporting can be conducted by internal employees of an organisation. Furthermore‚ outsiders are also able to access unauthorized information
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