Fraud motivations and factors Research consistently shows that there are three factors associated with most frauds. List these factors and at least three indicators that the factor may exist for a particular company
Factor Indicators
Incentives or Pressures -Management compensation schemes.
-Financial pressure to improve trends.
-Personal need for financial enhancement.
-Compliance with debt covenants.
Opportunities -Significant related-party transactions.
-Industry dominance.
-Influence over suppliers or customers.
-Volume of subjective judgments by management. regarding valuation and other estimates.
-Simple transactions made complex.
-Complex or difficult to understand transactions (including SPEs/VIEs and derivatives).
-Ineffective monitoring by management.
-Complex or unstable organizational structure.
-Weak or nonexistent internal controls.
Attitudes or Rationalization -Pushing accounting limits.
-Aggressive accounting stance.
-Audit firm answers to management and not the audit committee.
-Audit firm focus is on consulting for higher fees rather than audit services.
-Stock analyst misguidance.
-"The company owes me!"
You might also like to view...
Generally accepted methods of accounting for a change in accounting principle include
A) restating prior years' financial statements presented for comparative purposes. B) including the cumulative effect of the change in net income. C) prospective changes. D) making a prior-period adjustment.
Reliability refers to
a. the knowledge level of the salesperson. b. the ability to supply what was promised in a dependable, efficient, and timely manner. c. the cost of the product. d. all of these choices.
Sites such as ____ may allow companies to anticipate customer needs online
A) Craigslist B) Hotmail C) Twitter D) Amazon E) Wynn
An agency may not assess a fee for the first two hours of search time or the first 100
pages of copying unless the requester is commercial. a. True b. False