ACIS 2116 Chapter 2 Part 2 Slides with blanks Sp 2008

ACIS 2116 Chapter 2 Part 2 Slides with blanks Sp 2008 -...

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ACIS 2116 Chapter 2 – Part 2 Corporate Governance  and Ethics
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Sarbanes-Oxley 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.
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Sarbanes-Oxley Act of 2002 Criminal penalties for financial statement   fraud increased. Whistleblower protection.
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Fraud 1) Knowingly   false representation of a  material fact 2) Intent   to deceive and induce another  party to rely on the representation to his  or her detriment
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Two Types of Fraud Fraudulent Financial Reporting Misappropriation of Assets
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Fraudulent Financial Reporting o Intentional misstatament of or omission of material, very significant information from a company’s financial statements o Generally requires management’s
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Unformatted text preview: active involvement 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 lower-level 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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