Archive about 'Management Information Systems & Audits'

illustrations to show the importance of Proper Corporate Governance and Internal Control Framework In A Corporation.

Tweet In earlier articles, we read about how and the reasons for frauds and improper governance. To further emphasis on the importance of maintaining proper internal control and corporate governance framework within an organization, below are some past illustrations of the lack of proper corporate governance and internal controls which created disastrous losses to financial […]

Name major categories on Improper Accounting Practices

Tweet The SEC study, Report Pursuant to Section 704 of the Sarbanes-Oxley Act of 2002 review 515 enforcement actions between July 31 1997 and July 30 2002 classified improper accounting practices into four categories: Improper revenue recognition (25% weightage) Improper expense recognition (20% weightage) Improper accounting in connection with business combination (4.5%) Other accounting and […]

Name specifically what Sarbanes-Oxley Act requires from management report on internal control

Tweet State that it is management’s responsibility to establish and maintain adequate internal control; Identify management’s framework for evaluating internal control; Include management’s assessment of the effectiveness of the company’s internal control over financial report as of the end of the most recent year, including a statement as to whether internal control over financial reporting […]

Explain a few situations where the Management or the Board of Directors are personally involved in the entity’s financial performance.

Tweet Management/Board of Director are personally involve when they :  Have significant financial interests in the entity Significant portions of their compensation like bonuses,stock options and earn-out arrangement begin contingent upon achieving aggressive target s for stock price, operating results, financial position, or cash flow Personal guarantees of debts of the entity. { See article […]

When a business committed accounting fraud, there are excessive pressure being applied to the management. Name some examples of such excessive pressure from.

Tweet Excessive pressures on Management can come from the following:  The need to achieve the targeted profitability or trend-level expectations of investment analysts, institutional investors, significant creditors or other external parties Need to obtain additional debt or equity financing to stay competitive Marginal ability to meet exchange listing requirements or debt repayment or other debt […]

What do we mean by Aggressive Revenue recognition and name a few examples

Tweet Aggressive Revenue recognition are aggressive techniques that are deploy to result in reporting of accounting for revenue earlier than may be appropriate even though they may not technically violate GAAP  Examples are: Bill-and-hold sales arrangements ( invoicing a sale without shipping merchandise) Sales-type leases (lessor reporting leases as a sale, particularly when the lessee […]

What Are The Situations That Can Increases The Chance Of Fraud Occurrence

Tweet As we know, fraud can come in a variety of different forms and can happen at all levels in an organization.  In a survey undertaken by Ernst and Young they found that 75% of the sample of 1,200 companies world-wide were victims of fraud during the last 5 years. Of the worst fraud over […]

How To Prevent Fraud Or Name Some Possible Strategies That Can Be Adopted To Mitigate Fraud

Tweet What can we do to prevent fraud? Prevention comes from:- (a) The awareness of the circumstances where the risk of fraud is higher as well as (b)  Be aware of the various types of fraud, which could be perpetrated and Below are some of the possible strategies to prevent fraud: POSSIBLE STRATEGIES TO PREVENT FRAUD:  […]

What is Money Laundering? How Does Money Laundering Works?

Tweet We frequently hear term money laundering and the extreme of these money being used for terrorism purpose. Regulators in US, UK and many other countries have instituted strict law and regulation of which the responsibility is placed heavily on financial institutions to have controls in place so as to frustrate such money laundering activities and […]

One Accounting Fraud is Teaming and Lading. What Is Teaming And Lading. How Do We Prevent Teaming and Lading

Tweet We often hear of one common accounting fraud which is called Teaming and lading.  So what is Teaming and Lading? Teaming and lading is a term normally used for “borrowing” from cash to repay by cheque at a later date. When a business received incomes receipts, it can come from both cash and cheques […]