Acc 556 Week 1
Internal Accountant’s Report to Management
| |Accountant |
Memo
To: Management
From: Internal Accountant
Date: 10/8/2011
Re: Government Bid
Occupational fraud is defined as the use of a person’s job for individual enrichment through the purposeful mishandling or misapplication of his or her employer’s capital or assets (Wells, 2005). Occupational fraud can have a serious impact with far-reaching consequences. In 2004 for the Association of Certified Fraud Examiners (ACFE) conducted a survey that provided 508 usable studies of fraud for a total of over $761 million in losses. That number amount to an average of just under 1.5 million per organization. The fraud examiners that participated in the study had, on average, 16 years of experience and the study covered 16 different industries. In response to fraudulent activities the government created an organization called the Securities and Exchange Commission (SEC). His or her job was to streamline accounting practices and create rules to assist organizations in the proper preparation on financial statements. The SEC’s chairman created a nine-point action plan to assist in the detection of fraud. This action plan is outlined as follows: 1. Improved disclosure regarding the impact of changes in accounting assumptions. 2. Clarified accounting rules regarding purchased in-process restructuring charges, large acquisition write offs, and research and development. 3. Direction on qualitative key points in determining materiality in accounting measurements 4. Interpretive guidance for revenue recognition 5. Prompt resolution to the Financial Accounting Standards Boards definition of liabilities issues 6. Targeted reviews of any public company that announces restructuring liability reserves, has any major
| |Accountant |
Memo
To: Management
From: Internal Accountant
Date: 10/8/2011
Re: Government Bid
Occupational fraud is defined as the use of a person’s job for individual enrichment through the purposeful mishandling or misapplication of his or her employer’s capital or assets (Wells, 2005). Occupational fraud can have a serious impact with far-reaching consequences. In 2004 for the Association of Certified Fraud Examiners (ACFE) conducted a survey that provided 508 usable studies of fraud for a total of over $761 million in losses. That number amount to an average of just under 1.5 million per organization. The fraud examiners that participated in the study had, on average, 16 years of experience and the study covered 16 different industries. In response to fraudulent activities the government created an organization called the Securities and Exchange Commission (SEC). His or her job was to streamline accounting practices and create rules to assist organizations in the proper preparation on financial statements. The SEC’s chairman created a nine-point action plan to assist in the detection of fraud. This action plan is outlined as follows: 1. Improved disclosure regarding the impact of changes in accounting assumptions. 2. Clarified accounting rules regarding purchased in-process restructuring charges, large acquisition write offs, and research and development. 3. Direction on qualitative key points in determining materiality in accounting measurements 4. Interpretive guidance for revenue recognition 5. Prompt resolution to the Financial Accounting Standards Boards definition of liabilities issues 6. Targeted reviews of any public company that announces restructuring liability reserves, has any major
References: Mulford, C. W., & Comisky, E. E. (2002). The financial numbers game: Detecting creative accounting practices. (Rev ed.). New York, NY: Wiley. Wells, J. (2005). Principles of Fraud Examination (3rd ed.). Hoboken, NJ: Wiley.