Capstone Research Project Paper Example | Topics and Well Written Essays - 1500 words

Capstone Project - Research Paper ExampleThe foremost factor that has to be understood before representing the misstatement as a travesty is the nature of misstatement. Nature represents as to whether the misstatement has been made intentionally or unintentionally. According to the specifications within SAS No. 82, fraud is an action that is conducted intentionally and as a result of which material misstatements occur within a firms financial statements (American Institute of CPAs, 2011). There atomic number 18 several indicators of fraud that have been represented within the SAS No. 82. These are also considered as factors of risk, few of which have been listed below. The consideration of these cases will definitely encourage in identifying fraud in the given five scenarios within the case. Indicators of Fraud in Relation to Financial Reporting (a) A massive amount of recompense for the management has been stated to be in structure of bonuses. (b) The management of the firm is do minated by an only individual or a very delicate group without allowing any role of the board of directors. (c) Involving into regular disputes with the present or previous management or attenders on issues related to auditing and news report. (d) Limitations imposed on the auditor for improperly restricting activities related to key information and people. (e) Failure to pay the bills while at that place is reportedly huge earnings. (f) Transactions within related fellowship apart from the normal courses of business. Indicators of Fraud in Relation to Assets Misappropriation (a) Inadequacy of management supervision (b) Massive amount of cash is in hand or are processed on a regular basis (c) irrelevant screening of the applicants for job (d) Inappropriate activities of record keeping (e) Inappropriate isolation of duties (f) Inappropriate process of approval of transactions (g) Non compliance with the time limit for presenting documents related to transaction (h) Inadequacy i n controlling physical assets (i) Inappropriate provision of unequivocal vacations for the employees (Porter & Pope, 2011). The fraud indications described under SAS No. 82 can well be compared with that of the given company for identifying whether fraud is taking place or not. If it is effectuate that the management is guilty of the above fraud indications, the SAS specifications provide that the auditor can undertake the following activities (1) Acquire a clear and concise understanding of the accounting process being carried out within the company along with verification of journal entries along with adjustments. (2) Categorize and choose particular journal entries along with adjustments for verifying. (3) make up ones mind on the verification timing. (4) Investigate the individuals associated with activities in relation to financial reporting and make inquiries regarding lack of appropriation in journal entries as well as adjustments. (Public Company Accounting Oversight Boar d, 2011). Effectiveness of SAS No. 82 towards Minimization of Organizations Fraudulent Activities After the incorporation of the standards under SAS No. 82, the sundry(a) companies have started evaluating the impact of the rules to reduce frauds within the organizations. An internal analyst of financial activities can become successful through following the rules mentioned under SAS No. 82. However, there is requirement through the rules that the assessment of risk has to be conducted by an external auditor (Public Oversight Board, 2