D550 Ethics for Accountants Review

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43 terms tymelvop1Preview Introduction to Business Chapter 6 T...18 terms YellowPenguin41857 Preview MGSC 492 Final Exam 50 terms davidlangone235 Preview Questio 16 terms Bco Fraud a deliberate misrepresentation to gain an advantage over another party (or have them do something they might not ordinarily do) Fraud in the FS, the misappropriation of assets (theft) and subsequent cover up, and disclosure fraud What are the different forms of fraud?Asset Misappropriatiion Schemes when an employee steals or misuses resources, such as charging personal expenses to the company card while traveling on business trips Corruption Schemesinclude misusing one's position or influence in an organization for personal gain a tip (43% reported)What was the most common detection method reported in 2016 ACFE survey?termination (66%) What was the most common disciplinary method taken in occupational fraud cases was?

• living beyond means (42%)
• financial difficulties (26%)
• unusually close association with

vendor/customer

• control issues, unwillingness to share

duties

• no behavioral red flags
• "wheeler-dealer" attitude
• irritability, suspiciousness, or

defensiveness

• divorce/family problems
• addiction problems
• complained about inadequate pay
• excessve pressure from within the org
• refusal to take vacations
• past employment-related problems
• social isolation
• past legal problems
• complained about lack of authority
• excessive family/peer pressure for

success

• other
• instability in life circumstances

Fraud red flags include:

ACFE Study found that payroll schemes accounted for 9% of the asset misappropriations, had a median cost of $62,000, and lasted a median of 2 years before being detected

• poor tone at the top
• dominating and intimidating personalities
• mistrust
• excessive team loyalty
• management doesnt want to hear about

problems

• a lack of sound policies and procedures
• the perception that wrongdoing will not

be addressed if misconduct is reported Factors that discourage the reporting of fraud according to report from anit-fraud

collaboration include:

• fear of the unknown
• fear that the report will not be handled

anonymously or confidentially

• fear that the reporters identity will be

revealed to other in the organization

• concern that the person perpetrating the

misconduct will not be held responsible

Factors that discourage employees from coming forward include:

• retaliation by coworkers
• termination
• future reputation
• impact on others
• results of investigation determine that the

misconduct unsustainable

• emotional cost

What are the potential consequences for reporting suspected fraud?FS Fraud occurs when an employee, typically a member of top management, causes a misstatement or omission of material in the organization's financial reports

recording ficticious revenues, understating reported expenses, artificially inflating reported assets, failing to accrue expenses at the end of the year, and accelerating the recording of revenue into an earlier period (timing differences) What are some examples of FS fraud?situational pressure, perceived opportunity, and rationalization What are the elements of the fraud triangle that explain why FS fraud occurs?"how we do things around here"What does the organizations culture represent?"how we do things around here in relation to ethics and ethical behavior in the organization" What does the ethical culture represent?Ethical Collapse (according to Marianne Jennings) "occurs when any organization has drifted from the basic principles of right and wrong" Marianne JenningsWho wrote "The 7 signs of Ethical Collapse"?1) pressure to maintain numbers 2) fear and silence 3) young'uns and a bigger than life CEO (loyalty to the boss) 4) weak board of directors 5) conflicts of interest overlooked or unaddresses 6) innovation like no other company (sometimes too much) 7) goodness in the some areas atones for evil in others What are the 7 signs of ethical collapse?Ethics Resource Center (ERC) the oldest nonprofit advancing high ethical standards and practices in public and private institutions Ethics Compliance and Officer Association

(ECOA)

a memeber driven association for practitioners responsible for their organization's ethics and compliance programs ERC (Ethics Resource Center) and ECOA (Ethics Compliance and Officer Association) What two programs joined together to form the ECI (Ethics Compliance Initiative)?Ethics Compliance Initiative (ECI) provides leading ethics and compliance research and best practices, networking opportunities, and certification to its membership (the go-to organization for ethics and compliance resources in the workplace) 1) tone at the top 2) corporate culture 3) risk assessments 4) the CCO (Chief Compliance Officer) 5) testing and monitoring What 5 factors separate the "good" from the "great" compliance programs?Albert CamusWho stated that "integrity has no need of rules"/

• nearly 3 out of 4 employees reported

that they had observed misconduct within their organizations in the previous 12 months

• more than 1/2 of the employees reported

what they observed could potentially cause a significant loss of public trust if discovered

• some of the driving forces behind fraud

and misconduct in the corporate environment included pressure to do "whatever it takes" to meet targets, not taking the code of conduct seriously, believing employees will be rewarded based upon results and not the means used to acheive them, and fear of losing one's job for not meeting performance targets (64% reported the root cause of misconduct was the pressure to do "whatever it takes")

• nearly 1/2 of the employees were

uncertain that they would be protected from retaliation if they reported concerns to management. And more than 1/2 suggested a lack of confidence that they would be satisfied with the outcome

• eth

What were the key findings found in KPMG's Integirty Survey in 2013?

• 78% would notify their supervisor or

manager

• 54% would try to resolve the matter

directly

• 53% would call the hotline
• 26% would notify someone outside of the

organization

• 23% would look the other way or do

nothing According to KPMG's survey in 2013, what would employees fo if they observed a violation of their organization's standard conduct?National Labor Relations Act protects the rights of employees to act together in a concerted manner to address conditions at work, with or without a union Internal Mechanisms help manage, direct, and monitor the corporate governance activities to create substainable stakeholder value the board of directors (particularly independent directors), the audit committee, management, IC, and the internal audit function What are some examples of internal mechanisms?External Mechanisms intended to monitor the company's activities, affairs, and performance to endure that the interests of insiders (management, directors, and officers) are aligned with the interests of outsiders (shareholders and other stakeholdders) financial markets, state and federal statutes, SEC regulations, court decisions, and shareholder proposals What are some examples of external mechanisms?