IV. Fraud triangle and fraud diamond Causes on business fraud, theorists proposed many famous theory about corporate fraud，fraud triangle theory, GONE theory and corporate fraud risk factor theory. US Association of Certified Fraud Examiners (ACFE), the current president of the American Accounting Association W. Steve Albrecht proposed the fraud theory (Wells 2001), he believes that corporate fraud is generated by the pressure, opportunity and Rationalization three factors, the lack of any of the above factors can not really result corporate fraud. Pressure may be financial difficulties or urgent demand for capital operations. Opportunities may be loose or lax controls and information asymmetry.
The first step that the auditor should take is to gather as much information about any security procedures and policies that may have been in use following the information collected from the records available. Since each policy may have a different aspect that it works on, the findings from the audit may present evidence that may be vital in identifying the existing procedures or the absence of any policies or procedures. The existence of policies and procedures enables a company to reduce the occurrence or the impacts of a given risk. The lack of such policies may lead to reduced risk management
The Fraud triangle will explain why crime was committed. 1) PRESSURE- Pressure come from a significant financial need or problem. Pressure could also be caused by family situation, medical bill, addiction problem or expensive taste. For example, the employee is addicted to gamble which cause him to be in debt, Pressure from it make him start to thought of committing fraud in the company to pay off his debt. Hence pressure make a person to do thing that is wrong to solve their problem.
Internal auditors Internal auditors provide operational, strategic, and tactical value to the business. They inform the Change Advisory Board and management about the other stakeholders’ understanding of change management and adherence to policies. They validate the efforts of management to be effective and proactive in facing current and future threats. They compare present practices within the organization with regulatory guidelines and industry practices. What are the responsibilities of internal auditors?
“It is unfortunate that Ronnie Chan got tied up in the Enron situation, it is quite unfair to blame independent directors who have to depend on the external and internal auditors who are suppose to be giving independent and capable reports.” (Mark Mobius) The above quote lays the responsibility of the fall of a company on the auditors. The biggest audit fail of Enron Corporation not only led the company towards declaring bankruptcy but also dissolved one of the five big professional services companies, the Arthur Anderson. However, it may not be fair to blame the auditing profession entirely for the fall of a company. In the case of Enron, the chief financial officer himself concealed
(Audit Process, Audit Procedure, Audit Planning, 2010) The purpose of an audit is to provide an objective independent examination of the financial statements, which increases the value and credibility of the financial statements produced by management, thus increase user confidence in the financial statement, reduce investor risk and consequently reduce the cost of capital. Related with the uses of microcomputer to the audit process, below is the explanation on how microcomputer helps audit
Internal audit tends to persist and revolutionize the system within a company. The external auditor is an accountant who works independently of a particular company. Their task is to scrutinize the company's records and operations to ensure that the company's annual financial statements are exact. External auditors
This is an analysis of the fairness of the information contained within an entity's financial statements. It is conducted by a CPA firm, which is independent of the entity under review. This is the most commonly conducted type of audit. • Operational audit. This is a detailed analysis of the goals, planning processes, procedures, and results of the operations of a business.
This article attempts an approach designed to explain quantity assurance audit and usages application in institutions of higher learning both in technical colleges and in Universities. It envisagethat quality of these institutions may be assured throug an audit of course desogn, teaching and learning process and support services. This approach emphasis the fact there are various country points in the processes of delivering education and training and they must ne audited, not only in ensure capability and credibility but also to confirm continuity that the technical and higher educations system as a primary provider of the knowledgeable professional to the nation. 1.0 INTRODUCTION Today we are well aware that we are living in an area of intensifying
External confirmation means that auditors can get audit evidence as a direct written response to the auditor from a third party, in electronic medium, paper form or other medium. Auditors can seek confirmation about details in the accounting records of the organization from external sources. There are four factors to verify the external confirmation’s reliability which are written or oral confirmation, the nature of the information being confirmed, past experience with the organization and the party or person who is giving the confirmation. In Sime Darby Berhad, auditor can ask the third party directly about the details in the accounting records in order to make sure that all transactions recorded in the financial statement are correct and are actually occurred. For example, auditor can collect receivable confirmation on their balances to ensure that the amount of sale of goods which is RM37096.80 are recorded appropriately and are actually happened in the business.