Essay Internal Accountants Report To Management

Submitted By missneca
Words: 1230
Pages: 5

Internal Accountant’s Report to Management
ACC 556
February 20, 2015
Introduction
When preparing for a government contract bid, there are a lot of essential components that need to be considered. While it may not seem an absolute necessity, performing a full financial status review prior to the bid will reveal information that that is vital to not only the bid, but to the decisions made by the business in other areas. During a financial status review, any instances of occupational fraud or abuse will be exposed, allowing the company to prepare for the bid, as well as potentially save the company money. It is highly recommended that a full financial status review be completed before the bid to avoid the potential loss of revenue and the chance of not being awarded the bid.
The effect of occupational fraud and abuse on the company Surveilligence defines occupational fraud as “an employee’s misuse or abuse of his position for his own enrichment by intentional misappropriation or misuse of company assets” (Surveilligence, 2011). Employees can commit occupational fraud or abuse by asset misappropriations, corruption, or fraudulent financial statements. Although occupational fraud is not considered a violent crime, there are still victims. Small businesses are hit harder than large businesses as it is easier to for employees of a small business to perform payroll schemes, check tampering, and billing schemes without being detected. Larger companies have implemented hotlines and have more frequent audits that aid with detection. ACFE research reports that over two thirds of occupational fraud victims are for profit businesses. Among the hardest hit are financial serves and banks, with government, public administration, and the mining industry right behind in the number of occupational fraud cases. The most disturbing fact is that less than half of the businesses that are victims of fraud are able to recoup any of their financial losses. Money is certainly enough on its own to motivate a business to implement effective internal controls and anti-fraud controls. Since most fraud is concealed, it can go on for years without detection, and often the true cost is never known. “The effects of occupational fraud go direct to the bottom line, raiding profits and depriving employees, businesses, government agencies, non-profits, ANY organization of the growth and investment it deserves. Fraud is costly in more ways than one since reputation, productivity, and security are often also damaged” (Gaul, 2012).
U.S. governmental oversight of accounting fraud and abuse and its effect on the company
After the devastating effects of Enron and WorldCom, the U.S. government implemented the Sarbanes-Oxley Act (SOX) to prevent accounting fraud and abuse. SOX holds upper management liable for the accuracy of financial statements once they have signed them. This means that it is imperative that management takes time to review the statements before randomly just signing them, and later stating that they had no knowledge of any misstatements or flagrant inaccuracies. The SEC and other government agencies also provide rules and regulations, including GAAP, in order to maintain as much integrity and accuracy as possible in accounting. There are also requirements for companies to have audits by third parties. “SOX led to greater internal control of financial reporting, and increased expertise and independence among more-focused boards, committees and directors. It imposed new reporting, audit, disclosure and ethics requirements, and created internal reporting and whistleblower structures upon which the Dodd-Frank Wall Street Reform and Consumer Protection Act has built” (Maleske, 2012)
Potential corruption schemes to be aware of in the company
Types of occupational fraud that are seen most often include but are not limited to: misappropriation of company funds and assets; fraudulent expense reimbursements; bribery; using corporate funds for personal…