...Company in 1913. The company developed throughout the years and became one of the largest auditing firms in the world. “Think straight, talk straight,” a quote from, Arthur Anderson, which described his viewpoints for auditing and the approach he took with his clients. Since America did not have strictly based accounting rules, Anderson believed as long as clients fully reported their financial statements minor accounting errors were acceptable. Arthur Anderson & Company adopted this philosophy and applied it with their clients. Arthur Anderson being a shrewd entrepreneur knew his company had to focus on energy companies because of the high demand for electricity, oil, and gas such as Enron. Northern Natural Gas Company was formed in the 1930’s primarily focusing on providing natural gas to customers to heat their homes. As the company grew and invested into several different types of energy supply and gain control of 40,000-miles of natural gas pipelines and became the largest Natural gas company in the United States. As a result in 1986 Enron was formed with Kenneth Lay being the top executive of the newly created firm. Jeffery Skilling, who was a top subordinate to Lay, transformed Enron into an energy trading company. Enron now having complete domination of energy sources grew rapidly and did not follow proper accounting standards. Arthur Anderson & Company was responsible for auditing Enron financial statements and to provide the public with confidence that the company...
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...FORENSIC AUDITING As stated by Gordon Brown, the former Prime Mister of the United Kingdom, “what the use of fingerprints was to the 19th century and DNA analysis was to the 20th century, forensic accounting will be to the 21st century”. When people first see the word “forensic”, they naturally categorize it into a science-related field. According to Webster’s Dictionary, the term “forensic” is defined as “belonging to, used in, or suitable to courts of judicature or to public discussions and debate”. Therefore, forensic accounting is generally defined as relating and applying financial facts to legal problems (Singleton and Singleton 12). Forensic accounting consists of a combination of the techniques that are used in accounting, auditing, and investigative work. The focus of this paper is on the concept of forensic auditing; however, forensic auditing cannot be fully understood without incorporating all of the facts about forensic accounting. Most situations that involve forensic auditing will deal with proposed fraudulent activities, but there are some cases that may deal with non-fraudulent activities, such as settlements of monetary disputes (“Student Accountant”). Throughout this paper, we will discuss, in detail, the profession of forensic auditing and forensic accounting in relation to fraudulent activities. What is Forensic Auditing? Forensic auditing and financial auditing are not related in any way; rather, they have their own distinct objectives that are set...
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...EXECUTIVE SUMMARY This paper investigates about the Enron Corporation and Arthur Anderson. This assignment is to identify the background of Enron and Arthur Anderson and Enron fail. Other than that, identify the business risks that faced by Enron. Moreover, determine the responsibilities of board of directors and steps to improve corporate governance. Besides that, differentiated between rules-based accounting and principle-based accounting and the uses. In addition, there are discussion about auditor should allowed to provide non-audit services. There are also critical discussion on the reason audit partners struggle with making tough accounting decisions and a good recommendation of changes to be made. 1.0 Background of Enron Corporation and Arthur Anderson and fall Of Enron. 1.1 Background of Enron Corporation Enron was established in the middle of a recession in 1985, when Kenneth Lay CEO of Houston Natural Gas Company (HNG), persuaded a joining among Inter North Incorporate (Peterson). There was a young consultant named Jeffrey Skilling who had a background in banking organization (Peterson). He planned an innovative solution for Enron profit in the natural gas business (Sridharan, Dickes, & Caines). For instance, Enron buy natural gas from suppliers and sell to customers with the higher price (Sridharan, Dickes, & Caines). It is because the demand of natural gas increased (Peterson). Kenneth Lay was very impressed with Skilling’s new solution in 1990 and...
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...Central Texas Professor: Marshell J. Silva Ethics Auditing Ethics auditing by definition, an ethics audit is a “systematic evaluation of an organization’s ethics program and/or performance to determine its effectiveness.” This concept of ethics auditing is fairly new and few companies have conducted an ethics audit. However, performing such audits will likely become more mainstream as recent legislation encourages greater ethical accountability for companies to demonstrate they are abiding by the law and have established programs to improve their ethical decision making. The U.S. Sentencing Commission (the “Commission) has amended the Federal Sentencing Guidelines for Organizations (“FSGO”) whereby an effective compliance and ethics program must “exercise due diligence to prevent, detect, and report criminal conduct and otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with all applicable law." The Commission noted there are seven minimum requirements of an effective ethics program, standards and procedures to prevent and detect criminal conduct; Responsibility at all levels of the program, together with adequate program resources and authority for its managers; Due diligence in hiring and assigning personnel to positions with substantial authority; Communicating standards and procedures, including a specific requirement for training at all levels; Monitoring, auditing, and non-retaliatory internal guidance/reporting...
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...Generally Accepted Auditing Standards Auditing is an organized impartial examination of data, statements, records, operations, and performance of a company. An auditor, which is a Certified Public Accountant is the person assigned to perform all audits. The purpose of an audit is to ascertain the validity and reliability of a company’s information, and to assess the company’s internal control system. The goal of all audits is to determine whether a company’s financial statements comply with the generally accepted accounting principles set forth by its jurisdiction (Investopedia). There are guidelines that all auditors use when they are performing an audit. These guidelines are the generally accepted auditing standards and they provide the objectives for the auditor to achieve in an audit of financial statements. There are ten standards and they are set up into three categories, which are general standards, standards of fieldwork, and standards of reporting. These standards pertains to financial audits (an audit of financial statements to find out if they are prepared in accordance with guidelines), operational audits (evaluates the effectiveness of a company’s operations), and compliance audits (evaluates whether a company is following rules and regulations). In the general standards category there are four different standards. These standards deal with the qualifications of the auditor and the quality of the audit. The first standard is adequate technical training...
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...Sarbanes Oxley Act of 2002 Daniel Alvalle BUS 670 Legal Environment Instructor: Peter McCann 7/29/2013 If you were an investor would you want your money protected? Would you be skeptical about investing in companies since the securities fraud scandals that have happened recently? The answer is most likely, “yes”, to a certain degree. With the news about unethical business practices and companies not following regulatory guidelines, it is difficult to ignore the risk that is involved with trusting someone else with your investment. But there is an answer to help protect companies and shareholder, and it comes in the form of a regulatory organization that was put in place in 2002. That was put in place as a direct response to the corporate scandals of Enron and other scandals that followed, and was also put in place to help restore confidence in the financial market. SOX-Applies only to US companies on the US exchange, and is an Act put in place in 2002 to mandate all publicly traded corporations to maintain adequate internal control. SOX basically make sure that all US publicly traded corporation do what is in the best interest to protect the investment of stockholders. SOX-Sarbanes-Oxley Act of 2002 is an ACT that was put in place where all publicly traded U.S. corporations are required to follow certain guidelines and requirements. Basically, these systems were put in place because of securities fraud issues that came to light in the early 2000’s, and are...
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...statement. So let’s get this paper started by taking a look into all three companies and we will start with Apple Incorporated. According to Apple’s company perspective, “Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.” Now let’s look at Swatch, according to Swatch it, “is the world's leading supplier of watch movements and finished watches, accounting for as much as 25 percent of total world production, while capturing more than ten percent of all watch sales. The Swatch Group is more than its flagship Swatch brand--which alone accounts for half of the company's profits, and, in the late 1990s has given its name to a 15-store chain of retail Swatch Megastores.” Now let’s look at Nikon according to Nikon it, “is involved in a broad spectrum of businesses centered around specializations in imaging products, precision equipment, and instruments. Nikon’s efforts to provide the kind of products and technologies that will exceed its...
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...The Marketing Audit Comes Of Age Philip Kotler, William Gregor and William Rogers Comparing the marketing strategies and tactics of business units today versus ten years ago, the most striking impression is one of marketing strategy obsolescence. Ten years ago US, automobile companies were gearing up for their second postwar race to produce the largest car with the highest horsepower. Today companies are selling increasing numbers of small and medium-size cars and fuel economy is a major selling point. Ten years ago computer companies were introducing ever-more powerful hardware for more sophisticated uses. Today they emphasize mini and microcomputers and software. It is not even necessary to take a ten-year-period to show the rapid obsolescence of marketing strategies. The growth economy of 1950-1970 has been superseded by a volatile economy which produces new strategic surprises almost monthly. Competitors launch new products, customers switch their business, distributors lose their effectiveness, advertising costs skyrocket, government regulations are announced, and consumer groups attack. These changes represent both opportunities and problems and may demand periodic reorientations of the company’s marketing operations. Many companies feel that their marketing operations need regular reviews and overhauls but do not know how to proceed. Some companies simply make many small changes that are economically and politically feasible, but fail to get to the heart of the matter...
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...Criteria The most important characteristic that I am looking for in a potential employer is a family friendly culture and environment. KPMG and Pricewaterhouse Cooper's both offer that environment. However Pricewaterhouse Cooper offers substantially more services aimed at the working mother. It is obvious that they have a sincere appreciation for their working mothers. They have been named by Working Mother magazine as one of the top ten best companies to work for as a working parent. They have appeared in the magazine an astonishing seventeen times. There is an extensive amount of questioning that ranges in the flexibility of their programs and the usabilty of them, and also the responsiveness of managers. (PwC Ranked Among Ten Best Companies by Working Mother Magazine, 2011) I am not concerned with the size of the company but they do employ over 160,000 people worldwide which will allow me to develop networking contacts that I might not have been able to make if I were to work in a smaller company. They are headquartered in the United Kingdom and have offices worldwide. I am not afraid of having to relocate and am hopeful that I will be allowed to relocate overseas and experience Europe with my family while working on my career. In addition to a family friendly culture I am concerned with the reputation of a company and their social responsibilty. Pricewaterhouse Cooper embraces those qualities by improving their business practices, reducing their carbon footprint...
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...take the exam should be aware of the changes that will be incorporated into the upcoming versions. Keywords: CPA, process, advantages and disadvantages, exam, license, salary. CPA Process Anyone who has known a CPA has probably heard how much he/ she had to study and how difficult it was to obtain a CPA license. However, even though it takes additional college education and studying to pass the CPA Exam, it is worth the effort because of the promotions, increased pay, and more credibility that are given to individuals with a CPA license. The CPA Exam is not like any other exam, and the profession does have its pros and cons, just like any other business. What is the CPA Process? Becoming a CPA requires the individual to follow four steps in a sequence. First, the person must graduate from high school. Having a General Education Development (GED) is acceptable as well; however, the SAT or ACT is required for college admission. Second, the person must earn a bachelor’s degree. Most states require at least a bachelor’s degree; some may require a master’s degree in accounting or finance (How to become a CPA). Earning 150 semester hours of instruction is required by state, which is 30 hours beyond the typical four-year bachelor’s degree. In...
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...have prevented the decline of the stock market, at least at that time, had it already been in place. It was the little things in business, like independence, and the requirement that management attest to their financial statements, that many an outside person took for granted and assumed was taking place within the business they invested in, only to find their worst nightmares were taking place. The Sarbanes-Oxley act took full effect on June 15th 2004, but some companies were given almost a year longer to fully comply (Gunter, 2004). The primary purpose of the act was to combat the ever increasing counts of corporate fraud, mainly by making management responsible for the actions of their organization. This goal also reached out to the auditing firms, by the development of the Public Company Accounting...
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...continue to be held accountable for the accuracy of their financial statements, and the performance of their company. To assure the accuracy of a publicly traded company’s financial status reporting, an additional requirement of an outside industry experienced auditing firm is needed, as well as performance based pay contracts for publically traded companies’ officers. The goal is simple, change the mindset of CEO’s, boards of directors (BOD’s), and shareholders by teaching them the fundamentals of business ethics. To obtain our goal, we must first have a basic understanding of existing legislation and the willingness to create new legislation for the betterment of America. To begin, a discussion in regards to the Sarbanes-Oxley Act is important for the purposes of an overview of existing legislation. In the past the US government has relied on the states to monitor and enforce the rules of auditors. Typically public accountants were licensed by the states to audit corporate financials; however the states had very little, if any, money to provide the necessary funds for enforcement. “Public accountants were licensed by the states, but states devote few resources to supervising auditors; federal regulation of auditing was light; and no federal agency supervised auditors. A Public Oversight Board for auditors was created in 1978, but it was dominated by accountants, funded by the audit industry, and had no full-time directors, no inspection authority, and no rule-making authority...
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...audit Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.[1] Internal auditing is a catalyst for improving an organization's effectiveness and efficiency by providing insight and recommendations based on analyses and assessments of data and business processes there are 3 types of Audit : 1. Internal audit ( first party audit),to ensure implementing, maintaining and improvement of the system audited. 2.Customer audit ( second party audit), to evaluate the suppliers performance and compliance for standards. 3.External audit (third party audit), to ensure implementing and documenting according to standards. Audit Process Prevalent Audit Concerns Risk Assessment Process Definition of Internal Audit The audit process is generally a ten-step procedure as outlined below. Please click through the steps in order to better understand the process. 1. Notification 2. Planning 3. Opening Meeting 4. Fieldwork 5. Communication 6. Report Drafting 7. Management Response 8. Closing Meeting 9. Report Distribution 10. Follow-up Notification First, you will receive a letter to inform you of an upcoming audit. The auditor will send you a preliminary...
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...SAMPLE RESEARCH PROPOSAL PROMOTING GOOD GOVERNANCE IN PUBLIC INSTITUTIONS OF GHANA: THE ROLE OF THE INTERNAL AUDITOR 5/5/2009 SCHOOL OF BUSINESS, UNIVERSITY OF CAPE COAST, GHANA ISHMEAL OFORI AMPONSAH (STUDENT) Table of Contents Introduction........................................................................................ ........................3 Background of the Study ........................................................................................3 Problem Statement............................................................................................ ......4 Research Questions: .................................................................................. .........4 Hypothesis:..........................................................................................................4 Objectives............................................................................................................... .5 Significance of Study............................................................................... ................5 Literature Review.................................................................................................... ....6 Definition of Internal Audit...................................................................................6 Role of the Internal Auditor in governance ..........................................................7 Methodology...........................................................................
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...Among the ten generally accepted auditing standards is the standard that requires an auditor to have independence in mental attitude. As with so many rules and guidelines set forth by the government and numerous other organizations, the interpretations of many of these rules can be vastly subjective. During the case against Health Management’s founder Clifford Hotte, his co conspirators and the auditors at BDO Seidman the defendant’s attorney Michael Young brought forth the idea that according to the generally accepted auditing standards that requires an independence of mental attitude it never formally states that a friendship between an auditor and the client is be completely prohibited. The dilemma with deciphering the interpretation of the standard is determining where the line should be drawn between these relationships and the auditor’s ability to maintain these relationships and the independence considered necessary to give an unbiased opinion when it comes time to write a report that is unprejudiced and reliable to the public and investors at large. Let us begin with Health Management’s CEO Clifford Hotte and CFO Drew Bergman’s 1995 inventory fraud scandal by which author Michael C. Knapp’s assertion could be considered as one of the least ingenious corporate fraud scams to date. The objective was to increase inventory as well as make minor adjustments to a small number of other accounts in order to reach the companies target earnings as reported by analysts previously...
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