MarineCorp
Question 1
It is important to seek public confidence in the accounting profession where its role is to maintain the integrity of corporate reporting. Discuss the possible effects of FCB’s fraud in this matter.
Integrity of corporate reporting can be defined as quality of being honest and having strong moral principles upon presenting and preparing financial report of an entity or business. It is important for accounting profession to keep maintain the integrity of corporate reporting for the benefit of large society. The financial reporting normally tells us about the financial situation and performance of the whole business for a particular period. The information in these sections is vital for a large section of society. It may be investors, shareholders, customers, suppliers, employees, financial institution and even their competitors. Thus, it is responsibility of the management of the company particularly accountant to produce the integrity of corporate reporting. With regard to the FCB’s case, it was found that the company had committed in financial reporting fraud for several matters. It includes, first, the purchasing of aircraft in 2005; where in reality the physical asset of aircraft does not exist as stated in the statement. Second, the fictitious sales made by the Company, where the auditors unable to verify the large amount of sales without supporting documents. Third, debtor amount was found to be wrongly recorded. These are the fraud happens in the FCB.
Although the achievement of the Company in its earning during the year 2005 is really high, in aspect of net profit and total asset with the increasing of RM38,906 and RM955,833 from 2004 to 2005 respectively. It must bear in mind that the Company was found to be in fraud. Thus, those so-called good achievement in financial performance is actually would impact to the stakeholder of the FCB. It would impact toward the quality, transparency and integrity of financial reporting of the company.
It is important to seek public confidence in the accounting profession where its role is to maintain the integrity of corporate reporting. Discuss the possible effects of FCB’s fraud in this matter.
Integrity of corporate reporting can be defined as quality of being honest and having strong moral principles upon presenting and preparing financial report of an entity or business. It is important for accounting profession to keep maintain the integrity of corporate reporting for the benefit of large society. The financial reporting normally tells us about the financial situation and performance of the whole business for a particular period. The information in these sections is vital for a large section of society. It may be investors, shareholders, customers, suppliers, employees, financial institution and even their competitors. Thus, it is responsibility of the management of the company particularly accountant to produce the integrity of corporate reporting. With regard to the FCB’s case, it was found that the company had committed in financial reporting fraud for several matters. It includes, first, the purchasing of aircraft in 2005; where in reality the physical asset of aircraft does not exist as stated in the statement. Second, the fictitious sales made by the Company, where the auditors unable to verify the large amount of sales without supporting documents. Third, debtor amount was found to be wrongly recorded. These are the fraud happens in the FCB.
Although the achievement of the Company in its earning during the year 2005 is really high, in aspect of net profit and total asset with the increasing of RM38,906 and RM955,833 from 2004 to 2005 respectively. It must bear in mind that the Company was found to be in fraud. Thus, those so-called good achievement in financial performance is actually would impact to the stakeholder of the FCB. It would impact toward the quality, transparency and integrity of financial reporting of the company.
References: 1) http://www.acfe.com/fraud-triangle.aspx 2) http://www.oxforddictionaries.com/definition/english/scandal 3) http://list25.com/25-biggest-corporate-scandals-ever/ 4) W. Steve Albrecht, Conan C. Albrecht and Chad O. Albrecht, “Fraud and corporate executives: Agency, Stewardship, and Broken Trust”, Journal of Forensic Accounting, Vol. V (2004), pp. 1090-130. 5) https://www.vocabulary.com/dictionary/attitude 6) http://www.marquette.edu/riskunit/internalaudit/internal_controls.shtml