Internal Accountant Report

Week 1

Internal Accountant Report

Dawn Rouse

ACC556

June 9, 2014

Robert Minniti

Internal Accountant Report

Accounting fraud is a serious issue for all companies. According to a survey by PricewaterhouseCoopers, more than half of U.S. companies that experienced fraud in the past two years reported an increase in the number of occurrences (Cohn, 2014). This increase is in part attributable to more frauds being detected because of companies implementing and enhancing internal controls. In light of this information, I feel it would be of benefit to our company to perform a full financial status review. The following paragraphs discuss the effect of occupational fraud on the company, the effect of U.S. governmental oversight of accounting fraud and abuse, potential corruptions schemes, and a recommendation of types of accounting evidence and methods of gathering such evidence.

Occupational Fraud

Occupational fraud and abuse is defined as “The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets” (Wells, 2011). Six types of occupational fraud exist: employee embezzlement, management fraud, investment fraud, vendor fraud, customer, fraud, and miscellaneous fraud.

It is difficult to measure the cost of fraud. Occupational fraud can be devastating to small businesses that cannot afford the losses associated with fraud. Nearly half of the companies victimized by fraud do not recover any losses they suffer. The higher the level of authority of the perpetrator, the larger the loss. Most perpetrators have clean employment histories and are first-time offenders.

Besides the obvious monetary loss, the company could lose its reputation as well. This could cause investors to sell stocks and the public to lose faith in the company and its ability to remain in business. This could potentially lead to the closure of the company.

U.S. Governmental Oversight

The...