Internal Accountant’S Report to Management

Internal Accountant’s Report to Management
The following report provides supporting information for a full financial status review for upcoming government contract bid.   Items reviewed are the impact of occupational fraud and abuse on the company, the U.S. governmental oversights of accounting fraud and abuse and its affect, potential corruption schemes to be aware of, recommendation of types of accounting evidence and methods of gathering such evidence to support the financial status review.
Section I:
The impact of occupational fraud and abuse on the company
The impact of occupation fraud and abuse on the company can be made clearer by understanding the difference between fraud prevention and deterrence and to focus on fraud deterrence.   Fraud prevention is eliminating the motivation of committing fraud.   However, fraud deterrence is altering one’s behavior (not commit fraud) by emphasizing the negative consequences.   The first steps to deter fraud are separating controls, increasing the perception of detection, employee education, implementing proactive fraud policies, creating a higher stance by management, auditors, and fraud examiners.   The second step to deter fraud is to a follow- up procedure.   Follow-up procedures include surprise audits and more adequate reporting programs.   The third step is holding corporations responsible through corporate sentencing.   Therefore, there are criminal and civil sanctions, fines up to $290 million with up to a five year probation (Wells, 2005).
Section II:
U.S. governmental oversight of accounting fraud and abuse and its affect on the company
The U.S. government missed five creative accounting practices that were abused.   Five abused accounting practices were big bath charges, creative acquisition accounting, cookie jar reserves, materiality, and revenue recognition.   All the practices mentioned manipulated financial data so the organization appeared to be better off than they actually were. Therefore, the...