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23 Cards in this Set
- Front
- Back
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FraudAuditor
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An accountant especially skilled inauditing who is generally engaged in auditing with a view toward frauddiscovery, documentation, and prevention.
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ForensicAccountant
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Aforensic accountant may take on fraud auditing engagements and may be a fraudauditor, but he or she will also use other accounting, consulting, and legalskills in broader engagements. In addition to accounting skills, he or she willneed a working knowledge of the legal system and excellent communication skillsto carry out expert testimony in the courtroom and to aid in other litigationsupport engagements.
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3 Parts of Forensic Accounting |
Time:Forensic accounting focuses on the past, although it may do so in order to lookforward.
Purpose:Forensic accounting is performed for a specific legal forum or in anticipationof presentation before a legal forum. Peremptory:Forensicaccountants may be employed in a wide variety of risk management engagementswithin business enterprise as a matter of right, without the necessity ofallegations (e.g., proactive).}{$ |
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ForensicAccounting
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Forensic accounting is the actionof identifying, recording, settling, extracting, sorting, reporting, andverifying past financial data or other accounting activities for settlingcurrent or prospective legal disputes or using such past financial data forprojecting future financial data to settle legal disputes.
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Typesof Forensic Issues
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Fraud Analysis
Valuation –BusinessValuations –IntellectualProperty Marital Dissolution Internal Investigations Tax audits and/or valuation issues Civil Disputes Criminal Charges Cybercrime |
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Panelon Audit Effectiveness
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In 1998, the Public Oversight Boardappointed the Panel on Audit Effectiveness to review and evaluate howindependent audits of the financial statements of public companies areperformed and to assess whether recent trends in audit practices serve the publicinterest.
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WhiteCollar Crimes
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Antitrust.
Bankruptcy fraud. Corporate/securities fraud. Health care fraud. Insurance fraud. Mass marketing fraud. Money laundering. Mortgage fraud. |
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Sox 1 |
Title1 establishes the Public Company Accounting Oversight Board (PCAOB) under theSEC to regulate auditing and to discipline auditors.
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Sox 2 |
Title2 contains a series of rules to ensure that auditors are independent from theirclients. For example, neither the primary nor reviewing partner may audit thesame client for more than five consecutive years, and the auditor must reportall material written communication to the audit committee.
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Sox 3 |
Title3 requires publicly traded companies to have an audit committee, the CEO andCFO must certify their company’sfinancial statements, and provides rules for the conduct of officers and theirattorneys.
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Sox 4 |
Title4 prohibits personal loans and requires certain financial disclosures.
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Sox 5 |
Title5 mandates rules for financial security analysts (i.e., research analysts) toavoid conflicts of interest.
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Sox 6 |
Titles6, among other provisions, allows federal courts the power to bar individualswho violate security laws from participating in penny stocks.
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Sox 7 |
Title7 requires reports and studies on consolidation of accounting firms, creditrating agencies, enforcement actions, and investment banks.
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Sox 8 |
Title8 provides protection for whistleblowers and mandates penalties and fines forcertain acts not dischargeable by bankruptcy. For example, failure of anauditor to keep working papers for 5 years is subject to fines and 10 years inprison, and fine or imprisonment of up to 25 years for anyone knowinglydefrauding shareholders of publicly traded companies. A person can receive 20years in prison and fines for altering, destroying, mutilating, concealing,covering up, falsifying or making a false entry in any record, document, ortangible object.
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Sox 9 |
Title9 increases maximum prison sentences for mail and wire fraud from 5 to 20years. Willfully and knowingly certifying financial reports not in compliancewith the Act is now a criminal offense.
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Sox 10 |
Title10 says that it is the “Sense of the Senate” to require the CEO to sign thecorporate tax return.
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Sox 11 |
Title11 provides a possible 20-year prison sentence for anyone altering, destroying,mutilating, or concealing a record, document, or other object (or otherwiseimpeding) for an official proceeding.
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Sarbanes-OxleyAct of 2002
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302: Corporate responsibility for financialreports (civil certifications).
906: Corporate responsibility for financialreports (criminal certifications). 404: Management / External Auditor’sresponsibility for internal controls over financial reporting. 409: Real time reporting of material change infinancial condition. 307: Attorneys required to report up, but not out. |
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ForeignCorrupt Practices Act (FCPA)
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The purpose of the Foreign CorruptPractices Act (FCPA) of 1977 is to combat corrupt business practices such asbribes and kickbacks. Thus, for more than 30 years these foreign bribery lawsin the United States have restricted all U.S. employees, regardless of wherethe business is conducted.
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FCPA Types of Offences
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1. Bribery Provision: Corrupt payments by a U.S. citizen (including corporation) to a foreign official to obtain or retain business.
2. Books & Records Provision: A. Books and records must accurately reflect the underlying transaction. B. Adequate Internal Controls |
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DOJ/FBI Jurisdictionled
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–Allcriminal enforcement
–Civilenforcement for non-public companies |
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SEC Jurisdiction
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–Civilenforcement for public companies
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