Internal Accountant's Report to Management

Internal Accountant's Report to Management

The company is preparing for an upcoming government contract bid and it is necessary to perform a full financial status review prior to releasing the bid. The reasons for review will be discussed in this report including the impact of occupational fraud and abuse on the company and potential corruption schemes to look for within the company. The report will provide information on U.S. governmental oversight and the effects on the company. Recommendations will be made on the types of evidence and how it is gathered to support the financial status review.

Impact of Occupational Fraud and Abuse

Occupational fraud and abuse causes companies to lose six percent of their revenue per year (McDonald, 4/29). It also attacks small businesses more frequently because of the amount of trust placed in employees which allows the company to be more vulnerable to the crime. Fraud and abuse not only places a financial burden on the company it also can affect their reputation. A company’s reputation is important to continuing their business and if it is compromised, bankruptcy and closing their doors may be imminent.

US Governmental Oversight

US Government oversight has been difficult over the years and scandals ensued affecting many large corporations some of which had to close their doors. The Sarbanes-Oxley Act of 2002 (SOX) was enacted as a result of those scandals with the hope that the law would deter this type of accounting fraud. Provisions of SOX include the assessment and divulgence of public companies’ effectiveness of their internal financial controls of which independent auditors must assess for quality control. Financial reports must be certified by the company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO) so they are held accountable for the information contained in the company’s financial reports. Personal loans to directors and executive officers are absolutely not allowed as per SOX. The Act...