Concept explainers
a.
Introduction: Fraud refers to an intended attempt to misrepresent the financial statement of an entity in order to attain some personal gain or advantage.
To explain: The management commits of fraud.
b.
Introduction: Fraud refers to an intended attempt to misrepresent the financial statement of an entity in order to attain some personal gain or advantage.
To explain: The management’s incentive to commit the fraud.
c.
Introduction: Asset misappropriation fraud refers to the fraud where third-parties or workers of the entity misuse their position for pilfering or exploitation the assets of the organization. It includes embezzlement of cash, assets stolen, and various other related losses.
Fraudulent financial reporting refers to manipulations of income earned by the management in order to have personal gains or to prevent an organization from bankruptcy or any other negative financial results.
To state: The case is related to asset misappropriation or fraudulent financial reporting.
Trending nowThis is a popular solution!
Chapter 2 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
- Refer to Exhibit 2.1 a. What is a Ponzi scheme? b. Describe the key elements of the Bernie Madoff fraud. c. Is this fraud primarily a case of asset misappropriation or fraudulent financial reporting?arrow_forwardWhat advantages would motivate management to conduct fraud related to financial capital processes?arrow_forwardHow is net worth analysis used to prove fraud?arrow_forward
- Which of the following is not a purpose of internal controls? Guarantee profits Protect assets Adherence to company policies Make fraud more difficult Accurate accounting recordsarrow_forwardIn what ways might accounting frauds be similar to casesof academic dishonesty?arrow_forwardWhich of the following would a fraudster perceive as a pressure? A. lack of management oversight B. everyone does it C. living beyond ones means D. lack of an internal audit functionarrow_forward
- Why would a financial institution’s PEP customers be required to provide documentation to evidence their source of wealth and/or income? In other words, what type of fraud would PEP clients more likely be associated with than the non-PEP customers? Why would they need to launder their money?arrow_forwardWhat is the relationship between CSR and accounting fraud?arrow_forwardWhat are the most common approaches that perpetrators use to commit fraudulent financial reportingarrow_forward
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage LearningAuditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College PubPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
- Business/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage