ACC 556 Week 6 Short Answer Quiz

Accounting Short answered questions

What does it mean to create a “Culture of Honesty, Openness, and Assistance?”  Give an example from an organization with which you have been affiliated.

To create a culture of honesty, openness and assistance in an organization means that an organization should encourage the employees and all the stakeholders of an organization to act in an open manner when they are transacting the businesses of the organization. The employees are also encourage to develop an attitude of assistance towards all the employees. The employees are also encourage to cultivate a culture of acting in all truth even when the managers are not around.

Codes of Conduct and Conflict of Interest Forms are often called “soft” controls.  What does this mean?

Codes of conduct refers to some collection of values and regulations that the organization prescribes for the employees of the organization. These codes of conducts seeks to manipulate the employees to behave in a certain desired manner. These codes of conduct do not necessarily force the employees but the employees are expected to adhere to. This therefore means the employees are softly controlled by these codes of conduct. Conflict of interest too acts to stipulate the expected behavior of employees when transacting the business of the organization. This therefore means the organization is softly controlled by these conflict of interest forms.

What does it mean to have a good system of internal controls?  Give some examples of internal controls.

A good system of internal control refers to the systems that are used and adopted in an organization that are intended to reduce the level of risks in that organization. A good system of internal control therefore means the organization have systems that effectively reduce the level of risks in the organization. Examples are protecting cash and check collections, discouraging related party transactions, preventive controls and detective controls.

Whistleblower policies and procedures?  Good or bad idea?  Why?

Whistleblower policies and procedures are the guidelines that guides whist blowers in an organization who wants to expose any kind of activity that is considered unethical, illegal or that is considered very wrong in the organization. Whistleblowers can be external whistleblowers or external whistleblowers. These whistleblowing policies is a very good idea. This is because it seeks to highlight the illegal deals and activities that are taking place in an organization. This will enable the organization to put measures in place that can halt these activities.

Symptoms of fraud can be separated into six groups: (1) accounting anomalies, (2) internal control weaknesses, (3) analytical anomalies, (4) extravagant lifestyle,(5) unusual behavior, and (6) tips and complaints.  Discuss three

Accounting anomalies are the accounting practices that are not in accordance with the laid down accounting principles. These are the accounting practices that cannot be established by following the accounting principles.

Internal control weaknesses refers to the weaknesses that the internal control systems of an organization. These weaknesses are as a result of these systems failure to detect and prevent the risks in the internal control measures.

Extravagant lifestyle is a symptom of fraud in which the custodian of the organization’s funds spends the funds carelessly on unnecessary activities and issues. The management may spend the cash in the organization to gather for their personal lifestyles other than using the funds to advance the organization’s operations.

Discuss the elements of a good fraud report

A fraud report contains the following elements, tombstone information which involves that first information about the fraud. The allegation details in which it examines the origin of the information. The other element of fraud is the parties involved in the fraud. The next element of fraud report is the scope of the fraud. The next element is the interview report and lastly the evidence about the fraud.

What does “Tone at the Top” mean?

Tone at the top is a term mostly used by the management. Tone at the Top refers to a term that is usually used to describe management’s leadership and commitment towards honesty, integrity, openness and ethical behavior.

Discuss the relative oversight responsibility of the audit committee, management, internal audit and independent auditors as it pertains to fraud

The audit committee always review significant accounting and other reporting issues. They also have an oversight responsibility over regulatory pronouncements to understand the potential impact on the financial statements. The audit committees will consider internal controls that should be put in place. They are also responsible for reviewing the effectiveness of these internal controls.

Summarize the five steps of managing the Business Risk of Fraud

Define and explain ERM

  • Identify the business risks
  • Analyze consequences
  • Evaluate the potential impact
  • Risk treatment
  • Monitor and review all the identified risks.

ERM stands for Enterprise Risk Management. This is a term that is used to describe a process, effected by an entity’s board of directors, management and other personnel , in which the organization apply in setting its strategies, and designed to identify potential events that might affect the organization and also how to mitigate the identified risks. ERM framework provides a direction and guidance on how to implement enterprise risk management.

What is a risk assessment?  What are the steps to complete one?

Risk assessment refers to the process in which a risk manager identify the hazards that are likely to befall on the organization, analyze the risks that associates with the hazards were identified and then determine appropriate ways to eliminate or control the hazard.

Steps of risk assessment

Give some examples of how technology may be used in fraud prevention

  • Identify hazards
  • Decide who might be harmed and how
  • Evaluate the risks and decide on precautions
  • Record your significant findings
  • Review the assessment

Technology can help organizations to prevent fraud in many ways. Advancements in the technology usually helps to improve data analysis. This will therefore enable the business firm to dig deeper to the data and hence prevent frauds. Advancement in technology also enables more sophisticated data analysis like predictive modelling and visualization. This helps the management to level out all the anomalies.

Explain FCPA and the U.K. Bribery Act.  Why all the fuss?

UK Bribery Act is an act that was passed by the UK parliament in order to address better requirements of the 1997 OECD anti-bribery convention.

The Foreign Corrupt Practices Act of 1977 refers to a United States federal law known as primarily two of its main provisions and one that addresses accounting transparency requirements under the securities exchange acts of 1934 and another concerning bribery of foreign officials.

These laws have some differences UK Bribery Act is wide in its scope as it encompasses all the commercial activities. Whereas the FCPA is restricted to the bribing of foreign public officials.

References

Association of Chartered Certified Accountants, & BPP Learning Media. (2007). Audit and assurance (United Kingdom). London: BPP Learning Media.

In Nair, C. S., & In Shah, M. (2013). External quality audit: Has it improved quality assurance in universities?

Nah, & F. F.-H. (2002). Enterprise resource planning solutions and management. Hershey, PA: IRM Press.

Robinson, V., Deming, S. H., Butler, T. K., & American Bar Association. (2013). The FCPA and U.K. Bribery Act: A ready reference for business and lawyers.