scholarly journals How senior managers perpetuate accounting fraud? Lessons for fraud examiners from an instructional case

2014 ◽  
Vol 21 (4) ◽  
pp. 411-423 ◽  
Author(s):  
Mark E. Lokanan
Keyword(s):  
Corporate Culture ◽  
Financial Statement ◽  
Accounting Fraud ◽  
Senior Managers ◽  
Bottom Line ◽  
Content Type ◽  
External Auditors ◽  
Secondary Sources ◽  
Management Personnel ◽  
Practical Implications

Purpose – The purpose of this paper is to examine the risk factors that led to the Livent fraud, and the procedures that need to be taken by responsible parties to carefully investigate and address the incidents of misconduct. Design/methodology/approach – The paper combs through the chronology of events that led to the Livent fraud by looking at both primary and secondary sources. These sources made it possible to examine how the fraud was discovered, and the investigative steps that should have been taken to uncover the fraud. Findings – The findings indicate that a corporate culture which focuses on the bottom line coupled with weak to non-existent internal controls were the key elements that led to the Livent fraud. The findings also illustrate that when faced with declining profits, senior managers will go to any length possible to manipulate and falsify their company’s records. Practical implications – The paper is useful to management personnel and fraud examiners in that it used an actual accounting fraud case to highlight areas more susceptible to fraud and the approach that can be taken to investigate similar cases of misconduct. The paper also highlighted the practical implications for internal and external auditors in detecting and addressing fraud. Originality/value – The study used an accounting fraud case to examine the techniques used by management personnel to produce fraudulent financial statement.

Gaming the system

2020 ◽  
Vol 36 (5) ◽  
pp. 31-33
Keyword(s):  
Corporate Culture ◽  
Design Methodology ◽  
Feedback Loop ◽  
Reading Time ◽  
Service Development ◽  
Bottom Line ◽  
Content Type ◽  
Modern Business ◽  
Pertinent Information ◽  
Practical Implications

Purpose of this paper Reviews the latest management developments across the globe and pinpoints practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings One of the features of modern business is the increased involvement of customers in product and service development. Managers are consistently being told to engage with customers more and create a feedback loop so that what they develop can be enhanced. Articles in glossy executive magazines recommend this approach; product managers recommend this approach; it seems that any firm that did not include its users in enhancing its latest offering is doomed to failure. And yet, what evidence are there that such approaches actually benefit the bottom line? Like many developments in corporate culture previously, does the inclusion of customers in product development make sense, or is it simply another corporate fad? Practical implications Provides strategic insights and practical thinking that have influenced some of the world’s leading organizations. What is original/value of paper? The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

scholarly journals The scope and limitations of external audit in detecting frauds in company’s operations

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dragomir Dimitrijevic ◽  
Biljana Jovkovic ◽  
Suncica Milutinovic
Keyword(s):  
Bosnia And Herzegovina ◽  
Financial Statements ◽  
Mean Value ◽  
Financial Statement ◽  
External Audit ◽  
Content Type ◽  
External Auditors ◽  
The Republic ◽  
Practical Implications ◽  
Early Detection And Prevention

Purpose This study aims to investigate what are the capabilities and limits of external audit in detecting frauds in companies operating in the territory of the Republics: Serbia, Croatia, Macedonia and Bosnia and Herzegovina. Design/methodology/approach In total, 51 certified auditors from Serbia, Croatia, Macedonia and Bosnia and Herzegovina were surveyed to analyze what are the most frequent warning signals of the existence of the frauds auditors encounter during the verification of company’s financial statements. Findings The study indicated that the auditors of the Republic of Serbia more often encountered groundless overstatement of revenues compared with other countries, while regarding manipulative representation of inventories, the largest mean value and median are still among the auditors of the Republic of Serbia. Practical implications Based on the research results, it can be concluded that it is necessary to expand the legal obligation and power of external auditors when, in financial statement auditing, they come to clear findings that indicate fraud. Expansion of external auditors’ powers would reduce their current limitations and expand the domain of action. Originality/value Limitations in external auditors’ work prevent the processing of frauds. However, auditors’ analysis of financial statements and pointing to potential irregularities can be a good manner for the early detection and prevention of frauds in company’s operations.

Characteristics of the internal audit and external audit hours: evidence from S. Korea

2016 ◽  
Vol 31 (6/7) ◽  
pp. 629-654 ◽  
Author(s):  
Ho-Young Lee ◽  
Hyun-Young Park
Keyword(s):  
Internal Audit ◽  
Financial Statement ◽  
External Audit ◽  
Content Type ◽  
Internal Auditors ◽  
External Auditors ◽  
Audit Efficiency ◽  
Financial Statement Audit ◽  
Legal Expertise ◽  
Practical Implications

Purpose Using 5,055 sample firm-years in Korea between 2009 and 2013, this paper aims to examine the association between the characteristics of the internal audit and the number of external audit hours as a proxy for audit efficiency. Design/methodology/approach This study is motivated by the International Standard on Auditing No. 610: “Using the work of internal auditors”. This auditing standard guides external auditors in using the work of internal auditors to obtain audit evidence and consult internal auditors for direct assistance. The authors expect that external audit efficiency will increase when the work of competent internal auditors is used. Findings The authors find that the number of internal auditors relative to the number of employees is associated with the number of external audit hours. This result suggests that the greater the availability of internal auditors, the greater their contribution will be to the financial statement audit and the more efficient the audit. The authors find evidence that external auditors use the work of internal auditors with accounting and legal expertise to improve audit efficiency. They also find some evidence that the work of internal auditors with greater availability is more effective during initial external audit engagements. Originality/value This study adds to the extant literature on the contributions of internal auditors to external audits by using archival data and by measuring audit effort using a large database of audit hours. In addition, our findings have practical implications for firms and external auditors who are evaluating the role and value of using the work of internal auditors. The authors also believe that the findings will be of interest to regulators or auditing standards boards.

Time to take negotiation seriously

2006 ◽  
Vol 38 (5) ◽  
pp. 238-241
Author(s):  
Steve Gates
Keyword(s):  
Skills Development ◽  
Skills Gap ◽  
Senior Managers ◽  
Bottom Line ◽  
Content Type ◽  
Significant Difference ◽  
The Difference ◽  
Key Staff ◽  
First Time ◽  
Practical Implications

PurposeThe aim of this paper is to provide an overview of the skills needed for successful negotiations. It seeks to identify the benefits of training key staff in negotiations skills, including the difference it can make to a company's bottom line. It also aims to look at the risks to business of not developing these skills.Design/methodology/approachThe paper uses a mixture of case studies, examples, quotes and opinion.FindingsThe paper finds that only 5 per cent of the UK's training budget is spent on negotiations skills development. However, developing negotiation skills makes a significant difference to the performance of all staff, both in internal and external negotiations. Many big companies now appreciate the value of negotiation skills development and are leading the way in developing all staff in this way.Practical implicationsAll businesses should think about investing in negotiation skills development. Otherwise they are at risk of costing their company a significant margin.Originality/valueThis paper looks for the first time at the skills gap in UK businesses in terms of negotiation skills development. It will be of value to anyone involved in internal and external negotiations, including sales and buying teams, Human Resources staff and senior managers and directors. It will be of value in helping them decide how to make the best use of training.

scholarly journals A sociology for other animals: analysis, advocacy, intervention

2016 ◽  
Vol 36 (3/4) ◽  
pp. 242-257 ◽  
Author(s):  
Erika Cudworth
Keyword(s):  
Animal Studies ◽  
Actor Network Theory ◽  
Political Agenda ◽  
Political Strategy ◽  
Advocacy Groups ◽  
Content Type ◽  
Secondary Sources ◽  
Central Argument ◽  
Practical Implications

Purpose – The purpose of this paper is to map the field of sociological animal studies through some examples of critical and mainstream approaches and considers their relation to advocacy. It makes the argument that while all these initiatives have made important contributions to the project of “animalising sociology” and suggest a need for change in species relations, the link between analysis and political strategy is uncertain. Design/methodology/approach – The paper develops its argument by using secondary sources, reviewing sociological positions and offering illustrations of possible interventions. Findings – Sociological interventions in the field of animal studies have been informed by critical perspectives, such as feminism and Marxism, or taken less critical routes deploying actor-network theory and symbolic interactionism. Whilst those working in critical traditions may appear to have a more certain political agenda, an analysis of “how things are” does not always lead to a clear position on “what is to be done” in terms of social movement agendas or policy intervention. In addition, concepts deployed in advocacy such as “liberation”, “quality of life” or “care” are problematic when applied beyond the human. Despite this, there are possibilities for coalition and solidarity around certain claims for change. Research limitations/implications – If the central argument of the paper were taken seriously by general sociologists, then sociology may be more open to “animal studies”. In implications for exisitng sociological animal studies scholarship is to trouble some of the certainties around advocacy. Practical implications – If the central argument of the paper were taken seriously by advocacy groups, then the hiatus between “welfarism” and “liberation” might be overcome. Originality/value – There have been recent attempts to map the field of scholarship in animal studies, but surprisingly little consideration of how different emergent positions inform questions of advocacy and the possibilities for political intervention.

The impact of audit reforms on objectivity during the performance of non-audit services

2014 ◽  
Vol 29 (3) ◽  
pp. 222-236 ◽  
Author(s):  
Richard G. Brody ◽  
Christine M. Haynes ◽  
Craig G. White
Keyword(s):  
Audit Quality ◽  
Content Type ◽  
Auditor Liability ◽  
Internal Auditors ◽  
External Auditors ◽  
Regulatory Perspective ◽  
External Auditor ◽  
The Impact ◽  
Practical Implications ◽  
Non Audit Services

Purpose – This research aims to explore whether recent audit reforms have improved auditor objectivity when performing non-audit services. Design/methodology/approach – In two separate experiments, the authors tested whether external and internal auditors' inventory obsolescence judgments are influenced by their client's (or company's) role as the buyer or seller in an acquisition setting. Findings – External auditors assessed the likelihood of inventory obsolescence objectively, regardless of their consulting role in the acquisition setting. Internal auditors assessed the likelihood of inventory obsolescence as higher when consulting for the buyer than when consulting for the seller, consistent with the supposition that the buyer would prefer to write-down inventory and negotiate a lower purchase price, whereas the seller would prefer the inventory not be written down. Practical implications – From a regulatory perspective, external auditors may be relying too much on the work of internal auditors if internal auditors' lack of objectivity as consultants extends to their assurance role. Originality/value – This paper extends prior research in the area of internal and external auditor objectivity and is the first paper to include both subject groups in the same experiment. It also addresses the current policy issues that may have a significant effect on audit quality and auditor liability.

Sustaining corporate culture in a world of hybrid work

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Peter Buell Hirsch
Keyword(s):  
Corporate Culture ◽  
Current Literature ◽  
Design Methodology ◽  
White Collar ◽  
Subjective Assessment ◽  
Social Implications ◽  
Content Type ◽  
The Subject ◽  
The Impact ◽  
Practical Implications

Purpose This paper aims to examine the challenges to sustaining corporate culture in a world of hybrid working. Design/methodology/approach This paper is a review of current literature on the impact of remote and hybrid working on white-collar employees. Findings There is little consensus on whether remote/hybrid working will harm or strengthen corporate culture. Research limitations/implications The viewpoint is a subjective assessment of a limited number of articles on the subject Practical implications It is not entirely clear how those responsible for corporate culture can act on the findings. Social implications In a world in which corporations are experiencing a shortage of talent, how they handle corporate culture will be increasingly important. Originality/value While much has been written on the impact of remote working, this viewpoint takes the original view that strong corporate cultures rely more on the attitudes and actions of individual employees that company programs or initiatives.

Do donors respond to discretionary accounting information consolidation?

2018 ◽  
Vol 30 (1) ◽  
pp. 16-39
Author(s):  
Benedikt Quosigk ◽  
Dana A. Forgione
Keyword(s):  
Charitable Giving ◽  
Accounting Information ◽  
Performance Measure ◽  
Financial Accounting ◽  
Financial Statement ◽  
Financial Accounting Standards Board ◽  
Content Type ◽  
Segment Reporting ◽  
Allocation Decisions ◽  
Practical Implications

Purpose The purpose of this paper is to investigate donor responses to discretionary accounting information consolidation. Nonprofit (NP) financial statement consolidation discretion significantly impacts program ratio reporting, the primary NP performance measure. Stakeholders are misled to allocate limited resources inefficiently. While some NPs file group Internal Revenue Service (IRS) Form 990 returns with their affiliates, effectively providing consolidated statements, others choose to file independently of their affiliates. Design/methodology/approach The authors use OLS regression analysis and panel data for 5,697 NP-year observations for the period 2009-2011 retrieved from the National Center for Charitable Statistics Form 990 database. Findings The authors find evidence that consolidation discretion substantially impacts donor decisions. NP managers have incentive to utilize consolidation discretion to influence charitable giving. Practical implications The authors urge the IRS and the Financial Accounting Standards Board to reconsider the consolidation guidance for NP organizations, to develop performance measures beyond the widely used program ratio, and to require program ratio segment reporting to allow for better comparability among NPs irrespective of consolidation status. Further, the authors caution stakeholders to consider supporting organization transactions in their resource allocation decisions. Originality/value The authors are the first to use NP supporting organization information to investigate consolidation discretion and its impact on donor responses.

Sustainable development and the circular economy in Greece: case examples from Costa Navarino and Grecotel

2020 ◽  
Vol 12 (5) ◽  
pp. 609-621
Author(s):  
Justin Darayus Khodaiji ◽  
Dimitra Christopoulou
Keyword(s):  
Sustainable Development ◽  
Circular Economy ◽  
Tourism Industry ◽  
Local Economy ◽  
Third Party ◽  
Bottom Line ◽  
Content Type ◽  
Case Examples ◽  
Secondary Sources ◽  
Development Goals

Purpose This paper aims to identify and analyse sustainable development in the Greek hospitality industry. Drawing on an evaluation of two leading hotel groups in Greece, TEMES S.A. and Grecotel Hotels and Resorts and their respective landmark hotels Costa Navarino and Grecotel (Lux Me) Rhodos, the authors focussed on the role that the United Nations (UN) Sustainable Development Goals (SDGs) have played in the industry and in a country heavily reliant on its tourism industry. Additionally, this paper examines and assesses the concepts of the triple bottom line and the circular economy and suggests practical approaches by which hotels may achieve sustainability. The recommendation relies on the belief that the two concepts are interconnected in tackling and achieving a successful vision of the future of sustainability through until 2030. Design/methodology/approach The case study focus with regard to the two hotel groups relied heavily on their respective 2018 sustainability reports. Additionally, further secondary research was conducted via several journal databases from 2013 to 2020. Third-party sites were also leveraged including the UN and Forbes. Findings It is evident that hotel companies often highlight their sustainability programmes online so that they are accessible to consumers and other stakeholders – including investors. This enables companies to create and close business loops in innovative ways. Their actions on sustainable development help the local economy and in turn help the country. This paper showcases examples of two leading Greek hotel groups, TEMES and Grecotel already working towards a more sustainable operating future. Originality/value In spite of research that was limited to secondary sources, the topic of sustainability in Greece is of great value as it is yet to be fully explored. This paper does yield some practical insights that will be of interest to the industry as to how to use the UN’s SDGs as pathway drivers for a successful circular economy.

The patterns of the numbers used in occupational fraud schemes

2019 ◽  
Vol 34 (5) ◽  
pp. 606-626 ◽  
Author(s):  
Mark J. Nigrini
Keyword(s):  
Internal Control ◽  
Classification Scheme ◽  
Fraud Detection ◽  
Financial Statement ◽  
Future Research ◽  
Research Papers ◽  
Content Type ◽  
Court Records ◽  
Occupational Fraud ◽  
Practical Implications

Purpose This study aims to classify the numbers used in recent financial statement, corruption and asset misappropriation fraud schemes in such a way that these classes can be used to design effective proactive analytics-based fraud detection tests. Design/methodology/approach The data sources for the classification scheme include the court records of fraud prosecutions, investigative reports and research papers related to fraud cases. Findings Fraudulent numbers are most often amounts that are round, have a strong period-over-period growth, are just above or below internal control thresholds or other targets, are deviations from Benford’s Law, are purposeful duplicates of authentic transactions, are outliers due to being excessively large and are excessively rounded up or down. The study includes several examples of fraudulent numbers. Research limitations/implications The fraudulent number types are based on a sample of fraud-related court documents, and the sample might not be representative of the population of detected and undetected frauds. Further research is needed into the detection of corruption/bribery schemes. Practical implications The results are important for auditors and forensic accountants running proactive fraud detection tests. The discussions emphasize that the analysis should include refining and rerunning the tests, and then using groupings and filtering to deal with false positives. The importance of an effective audit of the notable transactions is stressed in the concluding section. Originality/value The study is an original in-depth coverage of the patterns found in fraudulent numbers. The discussion sections review implementation issues and considerations for future research.

Sign in / Sign up

Export Citation Format

Share Document