Phillip March 9, 2024 No Comments

BUS FPX 4068 Assessment 4 Specialized Fraud Areas

BUS FPX 4068 Assessment 4 Specialized Fraud Areas Name Capella university BUS-FPX4068 Contemporary Auditing Using Investigative Accounting Practices Prof. Name Date Case 1: How Ralph Should Handle the Situation Ralph should engage in a discussion with Lisa regarding the potential consequences of tax evasion or fraud, emphasizing the importance of compliance with IRS regulations. Advising Lisa to disclose her foreign trust and associated income to the IRS is crucial. If Lisa agrees to comply after their discussion, Ralph need not terminate their engagement. However, if she persists in refusal, Ralph should consider discontinuing his consulting services for her and the company. In the event that Lisa fails to report her trust or income to the IRS, Ralph may consult with legal counsel to determine the ethical implications of reporting the attempted tax evasion (Hopwood, Leiner, & Young, 2012). Case 2: Forensic Accounting Investigation for Christina To initiate the investigation, Rick, the forensic accountant, should begin by examining Jose’s federal tax returns since Jose is uncooperative in disclosing his assets. Analysis of W-2 forms, various 1040 forms, and deduction forms could reveal hidden assets or income. Subsequently, reviewing bank statements and loan applications becomes imperative. However, accessibility to information regarding foreign trusts or accounts in the US may be limited. If Jose has concealed assets in foreign trusts, conventional investigative methods may prove futile (Hopwood, Leiner, & Young, 2012). BUS FPX 4068 Assessment 4 Specialized Fraud Areas If Jose owns a property in Mexico undisclosed, the likelihood of discovery depends on whether he obtained the property through legitimate means using his social security number or through unofficial channels. If the purchase was made with cash or through unofficial means, detection may prove challenging. Ideally, evidence such as cash flow records, public sale records, or recent tax filings may indicate the existence of the property (Hopwood, Leiner, & Young, 2012). Case 3: Valuation of the Duplex Apartment Building Valuing the duplex apartment building requires consideration of fair market value, defined as the amount a property would sell for in an open market with willing buyers and sellers, fully informed and motivated (Hopwood, Leiner, & Young, 2012). Given the neighbor’s offer of $1.3 million, this figure serves as a reasonable valuation reference, despite Mark’s reluctance to sell. Utilizing this offer acknowledges the property’s potential value, compensating for sentimental attachment. Generally accepted accounting principles (GAAP) advocate for prudence to prevent overestimating assets. In real estate valuation, market value often supersedes historical cost, aligning with GAAP principles (Hopwood, Leiner, & Young, 2012; Bertsch, 2013). Case 4: Litigation vs. Alternative Dispute Resolution (ADR) From Williams’s perspective, ADR is preferable due to its cost-effectiveness, privacy, and expediency, minimizing financial and reputational harm to her company. ADR also preserves the business relationship, facilitating future collaborations (Hopwood, Leiner, & Young, 2012). Dunn might favor litigation to establish a precedent, holding Williams accountable for the quality issue. While ADR offers cost and time savings, litigation ensures a clear verdict, potentially favoring Dunn and compelling Williams to cover damages (Hopwood, Leiner, & Young, 2012). Preferred ADR Method Med-arb emerges as the preferred ADR method for both companies, combining mediation and arbitration. This non-traditional approach allows for attempted resolution through mediation, with arbitration as a fallback if necessary, reducing time and redundancy (Hopwood, Leiner, & Young, 2012). References Bertsch, L. (July 1, 2013). “GAAP: Generally accepted accounting principles.” Larry L. Bertsch, CPA & Associates. Retrieved on June 18, 2022 from Hopwood, W. S., Leiner, J. J., & Young, G. R. (2012). Forensic accounting and fraud examination (2nd ed.). McGraw-Hill. BUS FPX 4068 Assessment 4 Specialized Fraud Areas

Phillip March 9, 2024 No Comments

BUS FPX 4068 Assessment 3 Forensic and Non-forensic Audits

BUS FPX 4068 Assessment 3 Forensic and Non-forensic Audits Name Capella university BUS-FPX4068 Contemporary Auditing Using Investigative Accounting Practices Prof. Name Date Case 1: 1. Possible Check Fraud Schemes and Control Processes: The company could potentially fall victim to various check fraud schemes, including check tampering, check washing, or check laundering. Check tampering involves an employee cashing legitimate checks for personal gain using false identities. Check washing entails chemically altering checks to modify payee names or amounts. Check laundering involves using checks for unauthorized purposes, relying on lax scrutiny of authenticity or accuracy (Hopwood, Leiner, & Young, 2012). Implementing control processes such as automated check verification systems at the point of sale or having salespersons initial received checks can deter such fraudulent activities. 2. Employees in a Position for Check Fraud: Various employees, including salespersons, department managers, general managers, and controllers, may have access to checks and could participate in check fraud schemes. Without a verification or accountability system at the point of sale, pinpointing where a check was swapped for a fraudulent one becomes challenging. Case 2: 1. Acceptability of Heather’s Options under GAAP: None of the options Heather is considering would be acceptable under generally accepted accounting principles (GAAP). Adjusting the estimated percentage of completion to conceal contract losses contradicts GAAP, which mandates recognizing losses. Premature revenue recognition and using mark-to-market methods are also deceptive and fail to provide stakeholders with accurate financial information (Hopwood, Leiner, & Young, 2012). 2. Financial Statements Fraud: Premature revenue recognition and misstating the percentage of completion would constitute financial statement fraud. Both actions misrepresent the company’s financial performance and integrity (Hopwood, Leiner, & Young, 2012). BUS FPX 4068 Assessment 3 Forensic and Non-forensic Audits 3. Handling the Situation: If in Heather’s position, prioritizing honesty and integrity would be paramount. Disclosing the loss of previous owners and engaging stakeholders transparently would be essential. Exploring alternatives to compensate for losses, such as incorporating the defaulted recreational vehicles into remaining inventory or considering relocation to Mexico, would be prudent. Decision-making should focus on long-term sustainability and maintaining stakeholder trust. Case 3: 1. Feasibility of SOX 404 Compliance for a Three-Person Company: Achieving SOX Section 404 compliance for a three-person company is challenging but feasible, given special considerations for small companies. Such companies, categorized as micro-cap companies, must adhere to scaled-down requirements compared to larger firms (Hopwood, Leiner, & Young, 2012). 2. General Steps for Compliance: The siblings must prioritize strong leadership involvement, establish an effective board of directors, and compensate for limited segregation of duties and technological resources. With fewer resources, each member must excel in their roles, overseeing multiple aspects of financial reporting and operations (Hopwood, Leiner, & Young, 2012). References: Hopwood, W. S., Leiner, J. J., & Young, G. R. (2012). Forensic accounting and fraud examination (2nd ed.). McGraw-Hill. Paull, L. (2018). Provisions for estimated contract losses. LaPorte CPAs & Business Advisors. Retrieved on June 12th, 2022 from BUS FPX 4068 Assessment 3 Forensic and Non-forensic Audits

Phillip March 9, 2024 No Comments

BUS FPX 4068 Assessment 1 Investigative Accounting Practices

BUS FPX 4068 Assessment 1 Investigative Accounting Practices Name Capella university BUS-FPX4068 Contemporary Auditing Using Investigative Accounting Practices Prof. Name Date Case 1: Investigation for Merger Types of Investigations for Forensic Accounting Firm In the context of Southeast Ag Supply Company’s potential merger, it’s crucial for the forensic accounting firm to conduct various investigations. According to the Financial Forensic Blog, there are three primary reasons for retaining a forensic accountant during a merger or acquisition: Valuating the company: This involves verifying financial documents such as accounts payable, accounts receivable, earnings, and cash flow statements to determine the true value of the company being considered for merger. Assessing return on investment: Examining detailed income statements and balance sheets for several years can provide insight into the company’s financial health and potential return on investment. Performing due diligence: This entails scrutinizing the potential company’s books, accounting systems, and internal controls to ensure transparency and mitigate risks associated with the merger (Gibson, 2021). Types of Outside Assistance To conduct a thorough investigation, the forensic accounting firm may require assistance from various professionals: Risk management and IT experts: These professionals can assess potential threats such as cyber attacks and recommend improvements to internal control policies and systems. Lawyers or legal assistance: In cases of suspected embezzlement or stock fraud, legal experts can guide the forensic accountant and assist in presenting evidence or preparing for legal proceedings. Accountants specializing in specific areas: Accountants with expertise in accounts payable or receivable can efficiently identify discrepancies and follow transaction trails, aiding in uncovering fraudulent activities (Hopwood, Young, Leiner, 2nd edition). Case 2: Investigations in Civil vs. Criminal Matters Differences in Investigations Forensic accountants investigating civil matters primarily assist in filing complaints, supplying pretrial evidence, and testifying in court. In contrast, those investigating criminal matters may also have law enforcement powers, enabling them to make arrests, obtain warrants, and participate in plea agreements. Similarities in Investigations Both civil and criminal investigations involve formal trials with plaintiffs and defendants, requiring burden of proof and potentially leading to jury trials. Attorneys, law enforcement personnel, courts, and forensic accountants play crucial roles in both types of investigations (Hopwood, Young, Leiner, 2nd edition). BUS FPX 4068 Assessment 1 Investigative Accounting Practices Similarities and Differences in Expected Outcomes Both civil and criminal investigations aim to uncover wrongdoing and seek appropriate legal remedies. However, the nature of the offense and the legal procedures involved may differ. For example, civil cases may seek monetary or equitable relief, while criminal cases involve violations of statutes and potential imprisonment (Hopwood, Young, Leiner, 2nd edition). Specialized Training for Different Investigations Forensic accountants need expertise in accounting, finance, and legal matters. Additionally, skills in surveillance, interviewing, criminology, and IT are valuable for conducting thorough investigations. Effective communication skills are also essential for presenting findings and collaborating with other professionals (Hopwood, Young, Leiner, 2nd edition). Case 3: Reasonable Assurance Opinions on Reasonable Assurance Derek Lodge’s perspective on reasonable assurance appears pragmatic, considering the practicality and costs associated with implementing a system that absolutely prevents fraud or misstatements. However, Amber Johnson’s insistence on stringent compliance reflects a desire for maximum security against financial irregularities. Attainability of Preventing Financial Statement Fraud While preventing all financial statement fraud or misstatement is challenging, implementing robust internal controls can significantly reduce the risk. However, complete prevention may be unattainable due to inherent limitations and human factors (Hopwood, Young, Leiner, 2nd edition). Impact of Reporting Structure on Fraud Prevention The internal auditor reporting to the CEO can enhance fraud prevention efforts by ensuring accountability and transparency. However, it’s crucial for the CEO to take the auditor’s reports seriously and facilitate a culture of compliance and transparency within the organization (Hopwood, Young, Leiner, 2nd edition). Case 4: Discovery of Fraud Actions Regarding Discovered Fraud Rachel Fancy should meticulously document the evidence of fraud, develop a fraud theory, and conduct thorough interviews. It’s essential to maintain objectivity and follow established procedures for collecting evidence. Impact on Audit Procedure The discovery of fraud should not influence the audit procedure itself. Rachel must remain impartial and continue the audit process diligently, regardless of the individuals involved. Reflection in Audit Opinion Report In the audit opinion report, Rachel should clearly outline the findings of fraud and recommend appropriate actions to rectify the situation. Collaboration with relevant stakeholders, such as the board of directors and legal authorities, may be necessary to address the fraudulent activities effectively. References Gibson, N. (2021, March 29). SPACS: Due diligence forensic approach to minimize litigation risk. Retrieved from Lowers Forensics International. (2020, February 27). Financial forensics blog. 3 Reasons why a forensic accountant should be a part of the M&A due diligence team. Retrieved from William, H., George Y., & Jay, L. (2011). Forensic Accounting and Fraud Examination (2nd Edition). McGraw-Hill Learning Solutions. Retrieved from BUS FPX 4068 Assessment 1 Investigative Accounting Practices

Phillip February 28, 2024 No Comments

BUS FPX 4068 Assessment 2 Fraud Examination: Theory, Practice, & Methods

BUS FPX 4068 Assessment 2 Fraud Examination: Theory, Practice, & Methods Name Capella university BUS-FPX4068 Contemporary Auditing Using Investigative Accounting Practices Prof. Name Date Case 1: Fraud Detection and Prevention at a Garden Center Jacob Kent, the general manager of a large garden center in Columbus, oversees a multi-departmental operation with several control processes in place for managing cash receipts. However, recent concerns have arisen regarding potential check fraud schemes within the company, as indicated by returned checks for non-sufficient funds. Given this scenario, it is crucial to examine possible fraud schemes and implement control measures to detect and deter fraudulent activities. Furthermore, an analysis of the store’s procedures can identify employees who may be in a position to participate in such schemes. Possible Check Fraud Schemes and Control Processes: Check Alteration: Employees may alter checks received from customers, changing the payee or the amount. Check Forgery: Employees could forge signatures on checks or create counterfeit checks. Check Kiting: Employees may exploit the time delay in check processing to create false balances. Control Processes: Segregation of Duties: Separate responsibilities for handling cash, preparing deposit slips, and reconciling accounts can prevent collusion. Mandatory PIN Entry: Requiring unique PIN entry for each transaction enhances accountability. Regular Reconciliation: Periodic reconciliations between sales reports, deposit slips, and bank statements can detect discrepancies. Employee Training: Educating staff on fraud risks and consequences can promote ethical behavior. Identifying Employees at Risk: Cashiers and Department Managers: Employees responsible for handling cash and preparing deposit slips are in a prime position to commit fraud. Salespersons: Those entering PINs for transactions could misuse their access to manipulate records. General Manager: While unlikely, the GM’s oversight role means they must also be vigilant against fraudulent activities. Case 2: Financial Reporting Integrity at the Keel Company Heather Lockard, the CFO of the Keel Company, faces ethical and accounting challenges following a decline in earnings and changes in ownership structure. In this context, she considers various options to maintain stable earnings, raising questions about compliance with GAAP and the potential for financial statement fraud. BUS FPX 4068 Assessment 2 Case Studies Acceptability under GAAP: Increasing Percentage of Completion: This may violate GAAP if not based on accurate estimates of project completion. Recognizing Revenue on Defaulted Contracts: Premature revenue recognition without reasonable certainty of collection violates GAAP. Mark-to-Market Accounting: Switching accounting methods may be acceptable if done transparently and in accordance with GAAP principles. Financial Statements Fraud: Options 1 and 2 could potentially constitute financial statement fraud if used to intentionally mislead stakeholders about the company’s financial health. Recommended Course of Action: Adhere to GAAP Principles: Maintain integrity in financial reporting by following established accounting standards. Communicate Effectively: Transparently communicate the company’s financial situation to stakeholders, including the new trustee. Explore Alternative Strategies: Seek alternative solutions that align with ethical and legal standards, considering long-term sustainability. Case 3: SOX 404 Compliance for a Biomedical Company A small biomedical company, planning to go public, faces the challenge of achieving SOX 404 compliance with only three employees comprising the entire management team. Feasibility of SOX 404 Compliance: Despite its size, the company can achieve SOX 404 compliance by implementing appropriate internal controls and governance structures. General Steps for Compliance: Establish Internal Controls: Implement robust internal controls over financial reporting, including segregation of duties and documentation of processes. Governance Structure: Expand the board of directors to include independent members with relevant expertise. External Audit: Engage external auditors to assess compliance and provide assurance to stakeholders. In conclusion, each case underscores the importance of ethical conduct, adherence to regulatory standards, and the implementation of effective controls to safeguard against fraud and ensure financial reporting integrity. References Contract Security. (N.D.). Understanding the risks of open-source software [White paper]. Retrieved from,from%20components%20with%20code%20vulnerabilities. William, H., George Y., & Jay, L. (2011). Forensic Accounting and Fraud Examination (2nd Edition). McGraw-Hill Learning Solutions. Retrieved from Santorinichicago. (2022, February 8). How to calculate beverage percent restaurants. Retrieved from BUS FPX 4068 Assessment 2 Case Studies

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