PRINCIPLES OF ACCOUNTING

Principles of Accounting



Principles of Accounting

Fraud: Financial Cost and Ethical Training

There has been much talk lately about ethics, governance, fraud ... you name them, and we have them. What is the role of leader in reducing these types of risks in an organization? (Albrecht, 1992).

Well, start with a basic overview, ironically, the success is the source of risk. More success means more money, which means more fraud. So the best way, to reduce fraud is to reduce business. That is what most of the financial and human resources people do unintentionally. Some heads of finance / human resources are so over-zealous in reducing the risks of fraud (especially when the KPI for this is set at 80% of their performance), they will everything in their power to put in all sorts of ridiculous policies and procedures to a degree that it kills all the flexibility and success factors of a company (Albrecht, 1992).

The fight against fraud is a growing concern for companies. Acts of accounting and financial crime, beyond their often very high financial costs were mostly indirect consequences dramatic damaged reputation, loss of motivation, falling stock prices, etc.

A program of fight against fraud is an aims to:

1.Minimize opportunities for fraud by strengthening control mechanisms.

2.Reduce stressors by reflecting on the constraints on employees and company executives.

3.Reduce the potential for self-justification by creating the conditions for accession to the collective values of the company.

As part of a true, "project approach" promoted by senior management, following are the stages of implementation:

1.Implementation of training and workshop to educate stakeholders and identify the scenarios of possible fraud within the company.

2.Design, validation and implementation of a procedures manual.

3.Setting up an early warning.

4.Drafting a code of ethics.

5.Assistance in the implementation and execution of compliance audit.

Red Flags of Financial Statements

Fraud in financial statements can take many forms, but there are several that are more common. Include, among other things, revenue recognition fictitious, moving the timing of recognition, concealment charges or liabilities, inaccurate information, related party transactions and the mispricing assets. From an accounting perspective, revenue, profits or assets are generally overstated, while the losses, expenses or liabilities are generally underestimated. The overstatement of revenue, profits or assets, give a better picture of the financial situation of the company. The undervaluation of losses, expenses and liabilities and net position, improves equity. The undervaluation or overvaluation of goods charges is indicative of a company who wants to reduce its tax burden. It appears from the case revealed that the finding of Unsuitable products, including that of fabricated products, and moving the time of finding accounts for about half of all frauds in the financial statements. This article focuses on maneuvering the most commonly used to commit this type of fraud and discusses how they occur and what you can do to detect or prevent them. It aims to make you aware of these maneuvers to you are better able to spot fraud if you suspect something (Allen, 1999).

The affected products result mainly from the recognition of ...