Professional Documents
Culture Documents
Accist Reviewer 2
Accist Reviewer 2
Accist Reviewer 2
computing technology.
Ethics pertains to the principles of
conduct that individuals use in making choices Environmental Issues
and guiding their behavior in situations that
involve the concepts of right and wrong. Computers with high-speed printers allow for
the production of printed documents faster
Making Ethical Decisions than ever before.
The code of ethics must provide a mechanism (3) concealing the crime to avoid detection.
to permit prompt internal reporting of ethics
Management fraud is more insidious than
violations.
employee fraud because it often escapes
ACCOUNTABILITY. detection until the organization has suffered
irreparable damage or loss. Management fraud
An effective ethics program must take usually does not involve the direct theft of
appropriate action when code violations occur. assets. Management fraud typically contains
This will include various disciplinary measures, three special characteristics:
including dismissal.
1. The fraud is perpetrated at levels of
management above the one to which
internal control structures generally
relate.
Fraud and Accountants
2. The fraud frequently involves using
Fraud denotes a false representation of the financial statements to create an
a material fact made by one party to another illusion that an entity is healthier and
party with the intent to deceive and induce the more prosperous than, in fact, it is.
other party to justifiably rely on the fact to his
or her detriment. According to common law, a 3. If the fraud involves misappropriation
fraudulent act must meet the following five of assets, it frequently is shrouded in a
conditions: maze of complex business transactions,
often involving related third parties.
1. False representation. There must be a
false statement or a nondisclosure. THE FRAUD TRIANGLE
Employee fraud, or fraud by non management The actual cost of fraud is, however, difficult to
employees, is generally designed to directly quantify for a number of reasons:
convert cash or other assets to the employee’s (1) not all fraud is detected;
personal benefit. Typically, the employee
circumvents the company’s internal control (2) of that detected, not all is reported;
system for personal gain. If a company has an
(3) in many fraud cases, incomplete information
effective system of internal control, defalcations
is gathered;
or embezzlements can usually be prevented or
detected. Employee fraud usually involves three (4) information is not properly distributed to
steps: management or law enforcement authorities;
and
Corruption involves an executive, manager, or Billing schemes, also known as vendor fraud,
employee of the organization in collusion with are perpetrated by employees who causes their
an outsider. employer to issue a payment to a false supplier
or vendor by submitting invoices for fictitious
BRIBERY. Bribery involves giving, goods or services, inflated invoices, or invoices
offering, soliciting, or receiving things of value for personal purchases.
shell company fraud first requires that Internal Control Concepts and Techniques
the perpetrator establish a false
The internal control system comprises policies,
supplier on the books of the victim
practices, and procedures employed by the
company
organization to achieve four broad objectives:
pass through fraud is similar to the shell
company fraud with the exception that To safeguard assets of the firm.
a transaction actually takes place. The To ensure the accuracy and reliability of
false vendor charges the victim accounting records and information.
company a much higher than market To promote efficiency in the firm’s
price for the items, but pays only the operations.
market price to the legitimate vendor. To measure compliance with
pay-and-return scheme is a third form management’s prescribed policies and
of vendor fraud. This typically involves a procedures.
clerk with check writing authority who
pays a vendor twice for the same Modifying Assumptions
products (inventory or supplies)
MANAGEMENT RESPONSIBILITY.
received.
Check Tampering REASONABLE ASSURANCE.
METHODS OF DATA PROCESSING.
Check tampering involves forging or changing in LIMITATIONS.
some material way a check that the
organization has written to a legitimate payee. Undesirable Events