Internal Accountant’s Report to Management Essay

unveilingSince our club is preparing for an upcoming disposal contract call in, 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 tack together to evaluate if any irregularities with view to hypocrite and/or corrupt of the company set about taken place and if so, to what effect. The report is divide into quaternity sections, which will cover information on the effect of potential occupational guile and abuse on the company. It will also discuss U.S. government oversight of accounting fraud and abuse and its effect on the company. part three will provide potential corruption schemes to be sensitive of in the company. Finally, some recommendations will be given of types of accounting record and methods of gathering read to support the FSR and to provide reasonable assurance that no irregularities necessitate occurred.Occupational fraud and a buseAccording to 2009 Global faker 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 earth-closet essence in some negative effects kindred remunerations and salaries, employee base, employee benefits, but also morale and profits. Also occupational frauds and abuses usually dumbfound an adverse effect on the reputation of the company. In case of a very indicateificant fraud it may even lead to bankruptcy.U.S. political oversight of accounting fraud and abuseThere have been to a greater extent an(prenominal) significant accounting scandals, like Enron, Computer Associates, Xerox, Adelphia, WorldCom and Royal Ahold, that have had enormous press coverage and, despite the fact that some of them atomic number 18 already some years in the past, they are still being discussed. Since whence many new, different and strict accounting r egulations and rules have been created in order to prevent or defer fraud, abuse or waste. Many of the frauds were with regard to revenue recognition, which has led to many improvements by now. Noticeable changes have been make in the way firms from particular industries book revenues as a result of the heightened SEC scrutiny of revenue accounting companies have become much(prenominal) conservative when it comes to the timing of the revenue recognition.Particularly many Internet companies have reduced the total amount of the revenue being recognized compared to the military position before the heightened scrutiny. According to a survey in FORBES, less fraud cases have been reported recently. Enforcement cases and prosecutions over the last decade were very advantageously publicized which had a positive effect on the attitude of many companies senior management. Also it is said that governments enforcement efforts have had a deterring effect. Moreover, additional requirements im posed by Sarbanes-Oxley Act (SOX) made senior executives more concerned about the financial results reported and on which they have to sign off. It is clear that the US financial reporting environment has changed and based on the positive current events, constantly improving reporting requirements, rules and regulations, even greater changes are expected in the future.Corruption schemesCorruption has unfortunately been a very common phenomenon in the work environment throughout the years. It is delimitate as an intent to gain particular personal advantage at the cost of organization he/she represents. Corruption schemes are usually divided into 4 main categories* Bribery and Kickbacks* Commercial bribery is the offering, giving, receiving or soliciting of anything of jimmy to lick the outcome of a business transaction* It usually involves the patience of invoices that are overpriced or fictitious* Is usually undertaken by employees much(prenominal) as purchasing agents* Economi c Extortion* Money extortion from a potential buyer or supplier* Example a corrupt purchasing incumbent demanding a payment in exchange to make a termination in the vendors favor* Conflicts of Interest* The situation occurs when an employee, motorcoach or executive has an undisclosed personal or economic chase (with a negative effect on the company)* For example, the victim organization is not informed that its employees have divided royalties* This scheme includes the exertion of the insiders influence to the detriment of the entity* Illegal Gratuities* This type of scheme is similar to bribery schemes. The only if difference is that there is an intent to reward a business decision, quite a than influence it * A common example is when purchasing agents are promised valuable vacations, etc. after a vendors contact is passAccounting say and evidence gathering methodsGathering accounting evidence is a very common activity in auditing. Accounting evidence is being collected us ing investigative and auditing practices. For investigations, this is the evidence that lawyers and government officials can trust on for very important and high profile cases. For more routine reviews as the FSR prior to the bid, it is the type of evidence that we can rely on to give reasonable assurance that no irregularities have occurred. In both situations, the accounting evidence should be based on the spare-time activity important qualities* Relevance* Materiality* CompetencyThe types of accounting evidence we are referring to include* Physical evidence* Third-party representations* Documentary evidence* Computations* Data Interrelationships* guest representations* Accounting RecordsSince this is a FSR and not an investigative procedure, I recommend the following auditing methods to gather evidence that will provide reasonable assurance that no irregularities have occurred and that our financial statements are relevant and have been compiled in a competent manner and contai n no material misstatements * Compliance interrogation to ensure that we have an adequate internal control frame and that it is works effectively an adequate level of transaction testing will have to be performed to provide this assurance* Substantive testing a. Test of spot for the purpose of the FSR I recommend these only when and where the internal control system does not provide the assurance we desire b. Analytical testing I recommend these to provide further assurance that our financial statements adequately reflect the financial position of our companyReferencesWells, J. (2011). Principles of fraud examination (3rd ed). Hoboken, NJ Wiley. Singleton, T. W., Singleton, A. J. (2010). tosh auditing and forensic accounting. (4th ed.). Hoboken, NJ Wiley.Online Sourcehttp//safeside.ch/safeside.info/index.php/fraud-schemes/corruption/224-corruption-schemes-