ACCT 2013 Lecture Notes - Lecture 7: Internal Control, Financial Statement, Mci Inc.
10 Feb 2017
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Document Summary
Accidental errors (in recording transactions/ applying acct principles: fraud. For personal gain/ to damage that person: occupational fraud. Use of one"s occupation for personal enrichment through deliberate misuse/ misapplication of employer"s resources. Give friend free product, bring supply home from office etc: fraud triangle, 1) opportunity. Situation allows fraud to occur: 2) motivation. Feels the need to commit fraud (need money etc. : 3) rationalization. Justification for deceptive act by once commuting fraud. Attempt to eliminate opportunity element of fraud. Improve accuracy & reliability of acct info. Accounting scandals & responses by congress: managers= entrusted w. resources of both company"s lenders & owners, managers act as stewards/ caretakers of company"s assets, some managers= shirked their ethical responsibilities. Accounting fraud in us history: enron. Avoided reporting billions in debt & losses: worldcom. Misclassified expenditures to overstate assets & profitability. Sarbanes-oxley act (2002: sarbanes-oxley act (sox) = known as public company accounting reform & investor protection act.
