Internal Accountant’s Report to Management Essay

IntroductionSince our comp all is preparing for an upcoming goernment contract bid, management has decided that a full Financial placement Review (FSR) forward to the release of the bid is essential. This publish is to tender reinforcement nurture prior to the bid in order to evaluate if any irregularities with regard to impostor and/or abuse of the companionship have taken place and if so, to what power. The report is sh bed out into four sections, which pass oning cover information on the effect of potential occupational hypocrite and abuse on the company. It will also discuss U.S. government oversight of accounting duplicity and abuse and its effect on the company. Section three will provide potential corruption schemes to be aware of in the company. Finally, some barrackations will be given of faces of accounting register and methods of gathering enjoin to assert the FSR and to provide apt boldness that no irregularities have occurred.Occupational hypocrite and abuseAccording to 2009 Global Fraud Survey organizations lose most 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 can result in some negative effects worry remunerations and salaries, employee base, employee benefits, but also esprit de corps and profits. Also occupational frauds and abuses usually have an adverse effect on the reputation of the company. In case of a very significant fraud it may even lead to bankruptcy.U.S. governmental oversight of accounting fraud and abuseThere have been more significant accounting scandals, like Enron, Computer Associates, Xerox, Adelphia, WorldCom and Royal Ahold, that have had extensive press coverage and, notwithstanding the fact that some of them are already some years in the past, they are still being discussed. Since then many new, different and hard-and-fast accounting regulations and rules have been create d in order to prevent or assent 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 made in the way firms from accompaniment industries book revenues as a result of the heightened SEC scrutiny of revenue accounting companies have become more conservative when it comes to the timing of the revenue recognition.Particularly many Internet companies have reduced the total get along of the revenue being recognized compared to the situation 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 well publicized which had a imperious effect on the attitude of many companies senior management. Also it is state that governments enforcement efforts have had a deterring effect. Moreover, additional requirements imposed by Sarbanes-Oxley Act (SOX) made senior executives m ore concerned about the monetary 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, evermore improving reporting requirements, rules and regulations, even greater changes are expected in the future.Corruption schemesCorruption has unfortunately been a very putting green phenomenon in the work environment throughout the years. It is defined as an mantled to illuminate particular personal advantage at the cost of organization he/she represents. Corruption schemes are usually divided into 4 main categories* graft and Kickbacks* Commercial bribery is the offering, giving, receiving or soliciting of anything of value to influence the outcome of a business transaction* It usually involves the submission of invoices that are overpriced or fictitious* Is usually undertaken by employees such as purchasing agents* economical Extortion* Money extortion from a potential purcha ser or supplier* ideal a corrupt purchasing officer demanding a payment in exchange to make a decision in the vendors favor* Conflicts of Interest* The situation occurs when an employee, manager or executive has an undisclosed personal or economic interest (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 difference is that there is an intent to reward a business decision, rather than influence it * A commonplace example is when purchasing agents are promised expensive vacations, etc. after a vendors contact is approvedAccounting express and evidence gathering methodsGathering accounting evidence is a very common activity in auditing. Accounting evidence is being collected exploitation investigative and auditing practices. For investigations, this is the evidence that lawyers and government officials can rely 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 government agency that no irregularities have occurred. In both situations, the accounting evidence should be based on the following important qualities* Relevance* materiality* CompetencyThe types of accounting evidence we are referring to include* Physical evidence* Third-party representations* Documentary evidence* Computations* Data Interrelationships* Client 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 pick up no material misstatements * Compliance te sting to ensure that we have an adapted internal control system and that it is working effectively an adequate direct of transaction testing will have to be performed to provide this assurance* Substantive testing a. Test of detail 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 barely 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). Fraud auditing and forensic accounting. (4th ed.). Hoboken, NJ Wiley.Online root systemhttp//safeside.ch/safeside.info/index.php/fraud-schemes/corruption/224-corruption-schemes-