Case 11-3

Sparkle Company is a Nigerian diamond mining company. Sparkle is a joint venture, 50 percent owned by Shine and 50 percent owned by Brighten. Both Shine and Brighten are U.S.-based companies with their functional currency being the American dollar. Sparkle Companies functional currency is that of Nigeria, being the Naira. During 2009, Sparkle had several transactions with its joint venture owners and outside parties. The details of Sparkle’s transactions are three loans, three expenditures, and one revenue stream. The loans the company took out were $1 million from Brighten, $1 million from Shine, and 300 million Naira from a local Nigerian bank. The expenditures

This memo is intend to present appropriate treatment of the ARO estimation problem experienced by the Lack of Information (LOI) based on the findings from interviews with all 50 of the warehouse managers and on-site visits at each of the 50 locations of its warehouses countrywide. The onsite observations search for any evidence of damages in both the on-site property like the roof, walls, floors and general conditions. The interview with the managers obtains information about the characteristics of the warehouses that are not readily observable. The information obtained is very important in the preparation of the fiscal

Professional auditing standards discuss the three key “conditions” that are typically present when a financial fraud occurs and identify a lengthy list of “fraud risk factors.”

The most common accounting fraud is the misrepresentation of financial statements which is frequently known as “cooking the books” and includes manipulation, falsification, or alteration of accounting records, intentional omission from the financial statements and intentional misapplication of accounting principles relating to amounts, classification, manner of presentation, or disclosure.

2 Managing fraud risk: The audit committee perspective Fraud in a fi nancial statement audit

In the article, “Case Twenty-Three: A Fevered Hand on a Cooling Brow-The Nurse’s Role in Aid in Dying” written by Peggy Connolly, David R. Keller, Martin G. Leever, Becky Cox White, the authors evaluate the role of nurses in the aid-in-dying (AID) process and object to the nurses’ traditional thinking of assisted suicide. A nurse’s duty is to relieve pain and suffering but with the option of offering patients AID, in the very few places where it is legal, it has nurses questioning whether participating in the process is ethical. Because of the various circumstances nurses encounter on a daily basis, they have numerous moral obligations which cannot be reduced to a single obligation. Nurses must prioritize which moral obligations are the most

2. What would have been Martin’s return for years 2000, 2001, and 2002 if his portfolio had remained with its initial holdings?

The EITF lays out six factors in which if any are met, the proceeds are considered debt. The first is whether or not then transaction takes the likeness of a sale. The case could be made that because PEI is receiving a percentage of an existing drug, it is in essence a sale. The second factor deals with Pharmagen’s future involvement in the future cash flows. Obviously since Pharmagen will retain the intellectual property rights they will be actively involved in the future cash flows. Because only one of the factors needed to be met, the funding received takes on the appearance of debt and none of the other factors need be examined. Accordingly FASB says the amounts recorded as debt should be amortized under the interest method (ASC 470-10-35-3). As stated earlier this method deals with sales of future revenues which implies the completion of the drug is probable. Due to the large amount of risk associated with the industry, this probably will not be the best accounting option.

The manipulation of accounts fraud scheme is generally fulfilled by employees in top management positions and it usually involves making understatements or overstatements on financial statements making it very hard to detect. The process followed as Troy Adkins, (2015) explains is very simple. The financial statements are either overstated to show different figures in the earnings on the income statements making them look better than they actually are or the earnings in the current periods are manipulated in such a way that the revenue is understated or they inflate the current year’s expenses. The second process includes making the financial statements look worse than they are in reality. Deloitte, (2009) explains a number of ways which the accounts are manipulated where as one of the ways is to manipulate the reported earnings directly. They further explained that overstating the

B) I think the auditors should have equal responsibility for detecting material misstatements due to error and fraud. It’s their job to make sure the financial statements are as accurate as possible. Although it may be hard to check all the information from a company it’s the responsibility of the auditor to sign off that everything is in check.

Auditors having the appropriate competence and capabilities to perform the audit, and follow ethical requirements, and maintain professional skepticism throughout the audit.

Rittenburg, Larry. Johnstone, Karla. Gramling, Audrey. (2012) Auditing: A Business Risk Approach 8e. Mason: South-Western, Cengage Learning.

The field of Forensic Accounting has seen a remarkable growth in the last decade. This growth is due in part to the many high profile accounting scandals like Enron, Arthur Anderson, and Bernie Madoff investments (Shinde & Poznic, 2010, p. 1). This paper intends to highlight the effect that forensic accountants has on fraud cases, specifically securities fraud. According to the Merriam Webster dictionary fraud is defined as “an act of deceiving or misrepresenting.” This paper is meant to address how the ineffectiveness of forensic accountants can lead to them being held legally liable for their client’s

Does the Board or audit committee understands and exercises oversight responsibility over financial reporting and internal control?

As the business world grows more increasingly complex, external auditors must continue to remain impartial and loyal to ethical guidelines when reviewing a company’s financial records for reporting purposes. In general, under audit rules, external auditors are required to lookout for potential fraud and conduct a variety of checks to try to unearth it; however, they aren’t