ACIS 2116 Chapter 2 Part 2 Slides

ACIS 2116 Chapter 2 Part 2 Slides - ACIS 2116 Chapter 2...

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Unformatted text preview: ACIS 2116 Chapter 2 Part 2 Corporate Governance and Ethics SarbanesOxley Act of 2002 Management must provide certifications about internal controls. make its own assessment of the effectiveness of those internal controls. have external auditor attest to those controls. SarbanesOxley Act of 2002 Criminal penalties for financial statement fraud increased. Whistleblower protection. Fraud 1) 2) Knowingly false representation of a material fact Intent to deceive and induce another party to rely on the representation to his or her detriment Two Types of Fraud Fraudulent Financial Reporting Misappropriation of Assets Fraudulent Financial Reporting o Intentional misstatement of or omission of material, very significant information from a company's financial statements Generally requires management's active involvement o Management Fraud Typically the result of pressure on management to report good operating results. Commonly involves: Improper revenue recognition Overstating assets Understating liabilities Management Fraud Very difficult if not impossible to detect. Misappropriation of Assets Theft of a company's assets. Usually committed by lowerlevel employees. Usually involves small amounts that do not impact the financial statements. Usually involves cash, inventory, fixed assets. Causes of Fraud Interaction of forces: Combinations of pressure, opportunity, and attitude The Fraud Triangle The Fraud Triangle Situational Pressures & Incentives Opportunities Personal Characteristics & Attitudes ...
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This note was uploaded on 03/30/2008 for the course ACIS 2116 taught by Professor Cmeasterwood during the Spring '08 term at Virginia Tech.

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ACIS 2116 Chapter 2 Part 2 Slides - ACIS 2116 Chapter 2...

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