L3 Notes_Part_1 - Symptoms: Financial: Greed, hyper...

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Illegal Acts Situations affecting responsibilities Material and direct effect (e.g., tax liability) same resp. as SAS53 Indirect effect (contigent liability requiring a footnote) 1. you don't suspect illegality a. normal audit procedures, no duty to search reading minutes inquiry with client's attorney inquiry with client to determine means of preventing and detecting illegal acts. 2. you do suspect illegality a. inquire one level above suspected perpetrator b. consult with client's legal counsel c. consider accumulating additional evidence 3. you know an illegal act has occurred a. consider implications - are disclosures adequate b. reconsider relationship with client, did management know? If so consult your attorney c. communicate with audit committee 4. if it's material it's ultimately your responsibility 5. What does the company want to do? recover assets? cover up? fire employee? prosecute employee?
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© W.R. Knechel Who are the Fraudsters?
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Unformatted text preview: Symptoms: Financial: Greed, hyper materialism, living beyond ones means, dire financial situation, risk taking. Be alert for changes in mood or finances of key decision makers. Psychological: relative to college students, fraudsters: suffer more psychic pain are more dishonest, more independent, More sexually mature, More socially deviant, More empathetic Would you hire this business person? Theyre strong independent, worldly people who are empathetic and they are not constrained by integrity from telling you whatever you want to hear in an interview. Though empathetic, they are actually selfish and self absorbed. Though appearing connected theyre actually independent in their thinking. Consequently, they experience less cognitive dissonance from committing W.R. Knechel Why do they Commit Fraud?: Fraud Triangle Perceived Opportunity Perceived Pressure (Motive) Rationalization...
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This note was uploaded on 10/05/2011 for the course ACG 5637 taught by Professor Monikacaushoulli during the Fall '08 term at University of Florida.

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L3 Notes_Part_1 - Symptoms: Financial: Greed, hyper...

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