Internal Accountant’s Report to Management Essay

IntroductionSince our company is preparing for an upcoming regime contract bid, management has decided that a full Financial Status revue (FSR) introductory to the release of the bid is essential. This bother-up is to fork up supporting information prior to the bid in order to evaluate if any irregularities with regard to bosh and/or abuse of the company take a crap interpreted place and if so, to what effect. The report is divided up into quaternity sections, which will cover information on the effect of potential occupational hypocrite and abuse on the company. It will besides discuss U.S. government worry of write up pseud and abuse and its effect on the company. Section three will post potential corruption schemes to be awargon(predicate) of in the company. Finally, some recommendations will be given of types of invoice enjoin and methods of aggregation recite to support the FSR and to provide presumable confidence that no irregularities work occurred.occ upational fraud and abuseAccording to 2009 world(a) Fraud Survey organizations lose astir(predicate) 5% of its gross revenues to all forms of fraud and abuse in the workplace. Moreover, having to report fraud is rattling unhealthy for the company and its stakeholders. It mess result in some negative effects like remunerations and salaries, employee base, employee benefits, but similarly morale and profits. Also occupational frauds and abuses normally grant an adverse effect on the reputation of the company. In case of a very signifi shadowert fraud it whitethorn even lead to bankruptcy.U.S. governmental oversight of explanation fraud and abusethither fork up been galore(postnominal) significant chronicle scandals, like Enron, Computer Associates, Xerox, Adelphia, WorldCom and Royal Ahold, that own had extensive press coverage and, scorn the fact that some of them are already some years in the past, they are still being discussed. Since then many new, different and strict accounting regulations and rules restrain been created in order to prevent or defer fraud, abuse or waste. many another(prenominal) of the frauds were with regard to revenue recognition, which has led to many improvements by now. Noticeable changes have been make in the way firms from particular industries ledger revenues as a result of the heightened sulfur scrutiny of revenue accounting companies have become more conservative when it comes to the time of the revenue recognition.Particularly many net income companies have reduced the total core of the revenue being recognized compared to the occurrence before the heightened scrutiny. According to a comply in FORBES, less fraud cases have been reported recently. Enforcement cases and prosecutions over the last ten-spot were very well publicized which had a positive effect on the lieu of many companies senior management. Also it is verbalize that governments enforcement efforts have had a deterring effect. Moreover, addi tional requirements imposed by Sarbanes-Oxley characterization (SOX) made senior executives more implicated about the financial results reported and on which they have to sign off. It is clear that the US financial reporting environs has changed and found on the positive current events, continuously improving reporting requirements, rules and regulations, even greater changes are expected in the future. decomposition schemesCorruption has unfortunately been a very super C phenomenon in the work environment throughout the years. It is defined as an aspiration to gain particular personal favour at the cost of organization he/she represents. Corruption schemes are usually divided into 4 main categories* Bribery and Kickbacks* commercial-grade transplant is the offering, giving, receiving or soliciting of anything of value to find out the outcome of a business proceeding* It usually involves the submission of invoices that are overpriced or fictitious* Is usually undertake n by employees such as purchasing agents* economical Extortion* Money extortion from a potential purchaser or supplier* Example a corrupt purchasing officer demanding a payment in exchange to make a decision in the vendors favor* Conflicts of Interest* The patch occurs when an employee, manager or executive has an unrevealed personal or economic enkindle (with a negative effect on the company)* For role model, the victim organization is not cognizant that its employees have divided royalties* This scheme includes the performance of the insiders influence to the detriment of the entity* iniquitous Gratuities* This type of scheme is similar to bribery schemes. The only difference is that there is an end to reward a business decision, quite a than influence it * A common example is when purchasing agents are promised expensive vacations, and so forth after a vendors contact is approvedAccounting evidence and evidence gathering methodsGathering accounting evidence is a very c ommon activity in auditing. Accounting evidence is being collected using fact-finding and auditing practices. For investigations, this is the evidence that lawyers and government officials can rely on for very grave and last profile cases. For more routine reviews as the FSR prior to the bid, it is the type of evidence that we can rely on to give credible boldness that no irregularities have occurred. In both situations, the accounting evidence should be based on the adjacent important qualities* Relevance* Materiality* CompetencyThe types of accounting evidence we are referring to include* material evidence* Third-party representations* Documentary evidence* Computations* info Interrelationships* Client representations* Accounting RecordsSince this is a FSR and not an investigative procedure, I recommend the following auditing methods to gather evidence that will provide reasonable assurance that no irregularities have occurred and that our financial statements are relevan t and have been compiled in a competent way of life and contain no material misstatements * entry examen to ensure that we have an fitting internal promise system and that it is works effectively an adequate level of exploit testing will have to be performed to provide this assurance* Substantive testing a. Test of detail for the purpose of the FSR I recommend these only when and where the internal control system does not provide the assurance we desire b. Analytical testing I recommend these to provide further assurance that our financial statements adequately reflect the financial position of our companyReferencesWells, J. (2011). Principles of fraud interrogation (3rd ed). Hoboken, NJ Wiley. Singleton, T. W., Singleton, A. J. (2010). Fraud auditing and forensic accounting. (4th ed.). Hoboken, NJ Wiley.Online Sourcehttp//safeside.ch/safeside.info/index.php/fraud-schemes/corruption/224-corruption-schemes-