Audit committees should consider the following questions when assessing the design effectiveness of a hotline: Does the hotline have a dedicated hotline number, fax number, website, e-mail address, and regular mail or post office box address to expedite reports of suspected incidents of misconduct? Does the hotline demonstrate confidentiality,
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Forensic services
A Snapshot of Workplace Fraud
The 2010 Report to the Nations on Occupational Fraud and Abuse takes a comprehensive look at workplace schemes, their perpetrators, how the crimes were ultimately detected and their estimated cost. The report, released this month by the Association of Certified Fraud Examiners, is based on data compiled from a study
Keeping Fraud in the Cross Hairs
Five percent of annual revenue—that’s the estimate of how much money the typical organization loses to fraud, according to participants in the 2010 Report to the Nations on Occupational Fraud and Abuse. The report, prepared by the Association of Certified Fraud Examiners, an international organization of more than 50,000 fraud
What’s Your Fraud IQ?
Although the required knowledge, expertise, and roles of auditors and fraud examiners differ, CPAs occasionally find themselves in situations where evidence of fraud is right in front of them. Without a basic understanding of some methods for identifying and analyzing suspicious transactions, unsuspecting accountants might let the red flags of
PCAOB Reminds Auditors of Requirements Related to Unusual Transactions
The PCAOB on Wednesday issued an alert reminding public company auditors of their responsibilities related to the risk of material misstatements stemming from error or fraud associated with significant unusual transactions. “The PCAOB’s message to auditors, in this challenging economic environment, has consistently emphasized attention to audit risk and adherence
Director Sought for Fraud Center
The PCAOB has begun the search for a director to run the planned Financial Reporting Fraud Resource Center. The center is expected to maintain and develop information related to financial reporting fraud. It will publish public reports on financial reporting fraud risks. Its creation is in response to a recommendation
SBA Warns Small Businesses of Scams to Help Obtain Government Loans
The U.S. Small Business Administration (SBA) warned that the agency has received several complaints from small businesses about abusive marketing practices, scams and exorbitant fees charged by companies offering to help businesses get a loan, grant or other federal funds from the SBA. Complaints received by the SBA’s Office of
Applying Forensic Skepticism to Lost Profits Valuations
Forensic accountants are frequently engaged to review insurance claims for business interruption or lost profits. Owners of privately held companies may inflate loss claims since they have control over the books and records. Business interruption (lost profits) insurance is intended to restore the claimants, not reward them with excess reimbursement.
U.S.-Switzerland Protocol Will Allow Handover of UBS Account Holder Information
The United States and Switzerland announced a new protocol, amending the income tax treaty between the two countries to allow the Swiss government to provide information to the IRS on U.S. account holders of Swiss bank UBS. The protocol has been approved by the Swiss Federal Council and was signed
IRS Issues 2010 List of “Dirty Dozen” Tax Scams
The IRS released its annual list of scams that taxpayers should watch out for. The IRS uses the list to alert taxpayers both to potential swindles as well as areas where the IRS is aware that taxpayers will try to cheat. The list, which the IRS dubs the “dirty dozen,”
Guidance Intended to Help Institutions Fight Money Laundering, Terrorist Financing
The Financial Crimes Enforcement Network (FinCEN) and several other financial institution regulators issued guidance to clarify and consolidate existing regulatory expectations for obtaining beneficial ownership information for certain accounts and customer relationships—information that the agencies said can help financial institutions better understand and address money laundering and terrorist financing risks,
More Red Flags for Detecting Circular Cash Flow
In the article “Detecting Circular Cash Flow” (Dec. 09, page 26), I found the facts of the case study using Moxie Alloys to be extremely interesting and thought provoking. I thought the authors did a nice job explaining the exposure to a lender as well as the auditor’s risk surrounding
Appeals Court Upholds Return Preparer’s Conviction in RAL Wire Fraud Case
The Fourth Circuit Court of Appeals upheld the conviction of a Maryland tax return preparer for preparing false tax returns and for wire fraud, where the preparer used interstate wire communications to secure refund anticipation loans (RALs) for his customers based on the false tax returns (U.S. v. Mehta, docket
Fraud
The Financial Crimes Enforcement Network’s semiannual SAR Activity Review: Trends, Tips & Issues says mortgage loan fraud suspicious activity reports (MLF SARs) increased less than 1% for the six-month period ended June 30, 2009, compared with the prior-year period. This is a sharp decline in the rate of increase after
What’s Your Fraud IQ?
Cooking the books. Fudging the numbers. Taking a big bath. Thanks to myriad high-profile cases of financial statement fraud, phrases like these have become familiar jargon for the investing public. Likewise, most CPAs are acutely aware of the fine line separating aggressive earnings management from earnings manipulation. But how well-versed
Get Credentialed in Forensics
Dr. Robert L. O’Block is the founder of the American College of Forensic Examiners Institute (ACFEI), an independent scientific and professional association providing education, certification and representation for forensic examiners worldwide. This Q&A was prepared by AICPA Editor-at-Large Rick Telberg. What makes forensic accounting such a hot career choice right
Selecting the Right Investigative Resource
It’s Friday at 4 p.m., seven days before the filing deadline for an SEC registrant’s annual financial statements. The general counsel has just received a detailed but anonymous email alleging improper revenue recognition at the company’s Chinese subsidiary and must decide what to do next. This scenario, enough to panic
Detecting Circular Cash Flow
Following an initial customer confirmation request with no response, a first-year auditor mails a second and third request, all under the supervision of the auditor-in-charge assigned to the account. Field work begins on the audit, but there is still no response from the customer. Another auditor scanning the cash journal
UBS Targets Come Into Focus
The IRS has released the selection criteria for identifying holders ofaccounts with Swiss bank UBS under a U.S. settlement agreement with the Swiss government negotiated in August. Under the agreement, UBS will turn over information concerning approximately 4,450 accounts for investigation. IRS Commissioner Doug Shulman also recently announced that about
AICPA Files Suit Challenging Identity Theft Rule
The AICPA filed a lawsuit on Tuesday seeking to bar the Federal Trade Commission from applying its so-called Red Flags Rule to CPAs. The Institute says the rule, which is designed to help prevent identity theft, would “impose onerous and unnecessary requirements on AICPA members.” The lawsuit, filed in U.S.
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