Premium Essay

Case 1 - Exercise 1 Abernethy and Chapman Fraud Risk Factors

In: Business and Management

Submitted By ilovedreem
Words 647
Pages 3
Case 1 - Exercise 1
Abernethy and Chapman
Fraud Risk Factors

Client: Lakeside Company
Prepared by:
Date: 09/12/2015

List the fraud risk factors that the CPA firm might encounter if they accept this audit engagement. Be sure to include a discussion of all items that will probably require special attention during the audit. For each of these fraud risk factors, indicate how the auditor should follow up on each potential problem if the engagement is accepted. Use the following format:

|Fraud Risk Factors |Auditor Follow Up |
|Managements have incentive to overstate income with cash |If the engagement is accepted, the auditor should perform testing |
|bonuses tie to revenue. |and review in all areas within the balance sheet, income statement, |
| |and other financial statements. |
|Rogers has an incentive to hire Abernethy and Chapman as their|If the engagement is accepted, Abernethy and Chapman should consider|
|auditor, because they audit the primary bank that he does |all independence and related party issues that may arise. By |
|business with. This is a fraud risk factor because it may |checking the primary bank for Rogers, Abernethy and Chapman may not |
|cause an independency issue with the auditor and client. |accept the engagement due to the possibility of independence issues.|
|Lack of expertise by Abernethy and Chapman may be another risk|Abernethy and Chapman should consider hiring a skilled personnel or |
|fraud factor for Rogers. Manager hopes that the auditors are |training their staff to be proficient in auditing the industry. |
|not skilled enough to find the fraud.…...

Similar Documents

Premium Essay

Lakeside Company: Case 1

...Lakeside Auditing Case Study Case 1 Prepared by: January 27, 2011 1: An independent annual audit can provide credibility to information, and this could be very helpful for decision making. In this specific case, the owner of the Lakeside requires an independent CPA firm to perform an annual audit because the owner wants to show the public a “good-look” of its financial statements; since he would like to receive more capital by making his company public. In addition, good-looking financial statements of the company could provide good credit from the bank. To the lakeside company, the owner would like to provide audited financial statement to the bank to obtain the loan and receive the best possible interest rate. On the other hand, a decision by a bank loan officer about whether to make a loan to Lakeside Company and what rate of interest adequately compensates the bank for the level of risk assumed depends on an independent auditing report about lakeside’s financial reports. An auditing report about the company is reliable for the bank; it can significantly reduce the level of information risk. If the loan officer has assurance from the auditors that the company’s financial statements are prepared in accordance with GAAP, he or she will have more confidence in his or her assessment of business risk. By reducing information risk, the audit reduces the overall risk to the bank. 2: According to GAAS, the auditor must obtain a sufficient understanding of the entity......

Words: 1450 - Pages: 6

Premium Essay

Unit 1 Exercise 1

...NT1310 Unit 1 Exercise 1 6/17/14 The world is connected more than ever through the use of the internet. From paying bills to shopping or enjoying leisure time on the web; taking advantage of the internet has become second nature to society. Focusing in on one specific type of networking entertainment, online gaming has become a major league sport in its own right. Online gaming allows people from all around the world to connect together to team up or fight against one another. Behind the scenes is where the real magic happens. Between the gamers sits countless devices and hardware not to mention miles and miles of land. Using Call of Duty as an example, each gamer has a copy of the map being played on installed onto their local computer. Every time the gamer moves the direction of their character, their data is sent from their machine to their router, and then out past the demarc point. On the other side of the demarc is where the service provider picks up the data and moves the data from local network to the central office (better known as the local exchange). The central office then sends the data over the MAN (metro area network) or WAN (wide area network) to continue the data to game server. If the data hasn’t reached the server yet (for example the gamer lives in Michigan and the server is in California) the data will be passed over the core (also known as long-haul) network which connects MANs and WANs of different geographies together. On the off......

Words: 398 - Pages: 2

Premium Essay

Unit 4 Exercise 1

...1. The basic format for a proposal includes the following steps: Introduction Problem Analysis; major causes, Evidence and Effects of the probem. Plan for solving the problem: Major steps, Support and Deliverables. Benefits of the Plan: Costs-benefits analysis Conclusion 2. Proposals are used in college, in the workplace and anywhere you want to pitch a proposal or new project idea including grant writing. 3. The steps for inventing your proposal’s content are defining the problem, analyzing the problem, researching, inquiring, and finding similar projects. 4. The three primary sources of information for proposal writing are online, print, and empirical sources. 5. The steps to planning to solve the problem are map out the plan, explore each major step, figure out costs and benefits, and finding similar projects. 6. Costs and benefits should be listed to prove to the readers that the benefits of their investment are worth the risks. 7. In choosing an appropriate style, the steps are creating an Authoritative Tone, use metaphors and similes, pay attention to Sentence Length, and minimize the jargon. 8. Three tips for designing the proposal are creating a look, create white space and use meaningful headings. 9. The four steps in revising and editing a proposal are looking for inconsistencies in content, getting rid of extra stuff, tweaking the design and proof reading. 10. Five major problems listed are students are “paid to play”, have out......

Words: 302 - Pages: 2

Free Essay

Nt1420 Unit 1 Exercise 1

...Unit 1 Exercise 1 An analog signal is any continuous signal which the time varying feature (variable) of the signal is a representation of some other time varying quantity, i.e., analogous to another time varying signal. A digital signal is a physical signal that is a representation of a sequence of discrete values (a quantified discrete-time signal), for example of an arbitrary bit stream, or of a digitized (sampled and analog-to-digital converted) analog signal. Half-duplex data transmission means that data can be transmitted in both directions on a signal carrier, but not at the same time. Full-duplex data transmission means that data can be transmitted in both directions on a signal carrier at the same time. A ring network is a network topology in which each node connects to exactly two other nodes, forming a single continuous pathway for signals through each node - a ring Long-distance telephone company, such as MCI (before its absorption by Verizon), Sprint and the former AT&T Corporation (before its merger with SBC in 2005). In the United States, it is defined as any carrier that provides inter-LATA communication, where a LATA is a local access and transport area. Long Distance central office, central office (CO) is an office in a locality to which subscriber home and business lines are connected on what is called a local loop. Tandem, telephone switch is a U.S. telephone company central office telephone exchange used to interconnect local exchange......

Words: 263 - Pages: 2

Free Essay

Unit 1 Exercise 1

...Composition 1 Composition 1Composition 1didnt didn’t didn’t didn’t did nt didi did did did did did did did did did did did did did did did did did idid id idi did idid did did did dmdidi didid idid idid didid didid didi didididid didiid dididid iediddjiiiiiiiiiii did did didi did idid didi dd didi didii didid didid dddid didid didid diid idid idid idid ididididi did ididi idid ddi didi didi didi idid didid did dididi didid didid didi diid didid didi did idi did id id id I I did id id id id id I ii ii I I I I j j j j j j j d djdjd jdj du dudu dudu dud dud ud dudu dudud dudu dudud dud didi didi diid did idid didi didi did did idd didi diid d idid idi didi idi diid idi did did did id did did id di did did idid ddi didi didi didi did did did did did did did did didid didid didid didid didid did did did dd did id did did did di did di did did did did didi did didid did didid didi did d did did did dd didid did did did did di did did did did did did did did did did did did did did did didid did id did did did did dd did did d did did did did did did did did did did ddid did di didid id diidi di did idid dd ...

Words: 253 - Pages: 2

Premium Essay

Case 1

...Shehzad Chowdhury Don Taylor Seminar: Issues in Corp Finance 01/31/2015 Warren Buffet Case This case study talks about Warren Buffets’s Berkshire Hathaway company; initially, it discuses regarding the possible meaning of the alters in stock price for Berkshire Hathaway and Scottish Power plc on the day of the acquisition announcement is for the reason to the truth that the deal formed value for both consumers and suppliers; In addition, Berkshire was extra expanded subsequent to the acquisition. The $2.55 billion gain in Berkshire’s market value of equity oblique that the basic value of PacifiCorp was fine since it cut down within the range of challengers supported on the subsequent result, which is $2.55 billion divided by 312 and 312 again divided by 18 million gives $8.17.Next, Berkshire is keen to give this premium for every share of PacifiCorp 5.1 billion divided by 312.18 million that results $16.30 per share of PacifiCorp $8.17 plus 16.30 equals $24.47. Later, we discover the range of likely values for PacifiCorp in Exhibit 10 as follows: Revenue median of $6.252 Billion, average of $6.584 Billion, EBIT median of $8.775 Billion, average of $9.289 Billion, EBITDA median of $9.023 Billion, average of $9.076 Billion, Net Income median of $7.596 Billion, average of $7.553 Billion, EPS median of $4.277 Billion, and a mean of $4.308 Billion and Book value median of $5.904 Billion, mean of $5.678 Billion. The Question about income; the implied worth of PacifiCorp is......

Words: 1449 - Pages: 6

Free Essay

Exercise #1

...1) If 5 times the value of a number is increased by 3, the result is 28. What is the number? * 5x + 3=28 5x = 25 x = 5 2) If 4 times the reciprocal of a number is 3 more than 5/2 times the reciprocal of that number, find the number. * 4 × 1x=52×1x + 3 4 = 52+3x→ 82=52+3x 32=3x ½ = x 3) John had $30,000 to invest. He invested part of this money in bonds paying 12% annual simple interest and the rest of the money in a savings account giving 4% annual interest. At the end of the year, he received $2,400 as extra income. How much money did John place in each investment? .4x + 12(30000 – x) = 2400 8x/8 = 1200 .04x + 12(30000) - .12x = 2400 x = 1500 .04x + 3600 - .12x = 2400 15000-30000=15000 .12x - .04x + 3600 = 2400 Total invested at .12 = $15,000.00 .08x + 3600 = 2400 At .04= $15,000.000 .08x + 3600 – 3600= 2400 – 3600 15000 x .04 = $600.00 8x = 1200 15000 x .12 = $1,800.00 1,800.00 – 600.00 = $2,400.00 4) The length of a football field is 180 feet more than its width. If the perimeter of the field is 1,060 feet, find the length of the field. x = y + 180 2x + 2y = 1060 x = 175 + 180 2(x+180) + 2y =1060 x = 355 2y + 360 + 2y = 1060 y = (1060 -360) / 4 y = 175 5) At a school choir concert, 256 students are standing in rows. If the number of students......

Words: 672 - Pages: 3

Free Essay

Week 1 Exercise 1

...1) Describe a local land line phone system based on the following Landline Telephone Components: a. Local Loop - is the physical link or circuit that connects from the demarcation point of the customer premises to the edge of the common carrier or telecommunications service provider's network. b. Central Office - is an office in a locality to which subscriber home and business lines are connected on what is called a local loop. The central office has switching equipment that can switch calls locally or to long-distance carrier phone offices. c. Local Exchanges - is a regulatory term in telecommunications for the local telephone company. In the United States, wireline telephone companies are divided into two large categories: long distance (interexchange carrier, or IXCs) and local (local exchange carrier, or LECs). d. POP - is an artificial demarcation point or interface point between communicating entities. It may include a meet-me-room e. Long Distance System - a network of terminals and servers over a long distance, for example if your company has two different offices on the other side of the country, then you would have a long distance system. f. Fixed Line - denoting or relating to telecommunications systems using cables laid across land, as opposed to cellular radio systems. 2) Define and describe the following Telecommunications Network Components: a. Cellular Telephones: i. Voice - a telecommunication device that......

Words: 758 - Pages: 4

Free Essay

Exercise 1

...Exercise 2 Worksheet: Explain Classroom Interactivity Save this worksheet to your computer with the filename "Your_Name_Exercise_2." Complete the table below by doing the following:

Fill in the table by adding your answer to each question. Submit the completed worksheet as an attachment via the Assignment tab. Question about Classroom Interactivity Your Answers Why is it important for you to check your UOPX email account regularly as a student?
 By checking my UOPX account regularly I am able to stay up to date with all notifications and become aware of any upcoming or missed events. I plan to port forward all of these emails to my main email that way I can even receive these notifications on my phone as well What is the difference between the activity stream and Classroom Discussion?
 Everything that happens in the classroom is displayed within the activity stream, meaning all messages and and assignment discussions. In the Classroom Discussions page, only class messages and private messages are showed. There is also no filter to sort your messages. How do you respond to Learning Activities?
 By clicking on the “Write a Message” icon you can start a new thread containing a message about your learning activities. You can also simply post on already created threads How do you attach and submit assignment files?
 Next to the “Instructions” tab is an “Assignments” tab in which assignments can be submitted with the correctly stated titles Which of the......

Words: 449 - Pages: 2

Premium Essay

Lakeside Case Book

... The Lakeside Company Case Studies in Auditing Twelfth Edition John M. Trussel Dalton State College J. Douglas Frazer Millersville University Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Editor in Chief: Donna Battista Acquisitions Editor: Stephanie Wall Editorial Project Manager: Christina Rumbaugh Senior Managing Editor: Cynthia Zonneveld Production Project Manager: Carol O'Rourke Senior Operations Supervisor: Diane Peirano Printer/Binder: BindRite Graphics, Robbinsville Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within text. Copyright © 2012, 2008, 2005, 2003 by Pearson Education, Inc., publishing Prentice Hall. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458, or you may fax your request to......

Words: 48183 - Pages: 193

Free Essay

Fraud Examination Chapter 1

...1 of 6 TEST BANK > CONTROL PANEL > POOL MANAGER > POOL CANVAS Pool Canvas Add, modify, and remove questions. Select a question type from the Add Question drop-down list and click Go to add questions. Use Creation Settings to establish which default options, such as feedback and images, are available for question creation. Add Creation Settings Name Chapter 3--Fighting Fraud: An Overview Description Modify Instructions Add Question Here Multiple Choice 0 points Modify Remove Question Research has shown that ______ detect most frauds. Answer Auditors Customers Vendors Employees Add Question Here Multiple Choice 0 points Modify Remove Question All of the following are methods that organization can adopt to proactively eliminate fraud opportunities EXCEPT: Answer Accurately identifying sources and measuring risks. Implementing appropriate preventative and detective controls. Creating widespread monitoring by employees. Eliminating protections for whistle blowers. Add Question Here Multiple Choice 0 points Modify Remove Question Audits, public record searches, and net worth calculations are used to gather what type of evidence in fraud investigation? Answer Testimonial Forensic Documentary Observational Add Question Here Multiple Choice 0 points Modify Remove Question Which of the following is NOT a part of the evidence square? Answer Management evidence Documentary......

Words: 2155 - Pages: 9

Free Essay

Exercise 1

...court cases may not necessarily be more tedious. He said that most likely, a state or local courts will be created and administered by the various component states in accordance with their own laws. “The independence that each component state will likely be granted in making laws effective within their jurisdiction will affect not only the variety of the judicial structures and systems across states,” he said. “But, more important the state laws that each Filipino will have to deal with in going from one state to another.” He added that there will also be a federal system of laws and courts that would be distinct from those of the component states, adding another layer of complication. “So, in many instances, one has to deal with both federal and state laws,” he pointed out. But, he noted that not all court matters should be brought before both the state and federal courts. “Most cases would usually end within the state judicial system and should not be allowed to cross over to the federal judicial system,” he explained. Vistan said if the state judicial system is simple and not as multi-layered as what we have under the unitary-presidential form of government, then the disposition of cases may be hastened. He said it would be ideal to three levels of courts at the most. “Efficiency, however, would ultimately be affected by how the state courts are administered, the procedures they adopt in handling and deciding cases, and how these courts would actually handle cases......

Words: 11531 - Pages: 47

Premium Essay

Case Study 1 and the Fraud Continues

...companies used to protect themselves such as: Segregation of duties, asset purchases, supervisor review, internal audits and adequate documents and records. This paper will discuss several topics from a case study about And the Fraud Continues; it’s basically about a Fraud case with MCI. The following questions will be answered below 1) Discuss the internal control weaknesses that existed at MCI that contributed to the commission of this fraud, 2) Identify and justify the approach you would take if you suspected fraudulent activity within an organization where you work, 3) Critique the ethical nature of Pavlo’s actions in the case and 4) Apply one (1) theory related to crime causation to this case. The internal control weakness that exists at MCI was Pavlo; he was able to manipulate the AR (Accounts Receivable) system because he was the creator and developer. The lack of segregation of duties takes please here because the same employee is able to receive payments, update accounts receivable records and/or reconcile the company’s bank account. This gives the opportunity to be able to embezzle money from the company (http://smallbusiness.chron.com/strengths-weakensses-accounts-receivable-35111.html). Pavlo performed fraudulent activities at MCI by doing the following: 1. Identifying Accounts receivables as write off and converted them into notes receivables so that expenses are not touched and an Asset is credited in the balance sheet. 2. Unapplied cash was used......

Words: 1125 - Pages: 5

Premium Essay

Acc 571 Case 1: and the Fraud Continues

...Case Study 1: And the Fraud Continues Forensic Accounting July 22, 2012 Abstract This case represents features of organized crime, occupational fraud and abuse. Most of these crimes involve many individuals and organizations as well as management and/or co-workers that are in a lot of social and financial pressures. Some of the crimes related with organize crime will be money laundering, mail and wire fraud, conspiracy and racketeering. With an internal control weakness employees would always look for opportunities to commit fraud or use company assets without permission. Within this case, we will see multiples internal control weaknesses that allowed Pavlo to perpetrate the fraud and how he used the tricks to mask the whole scam. We also are going to think on what was Wanserski position when Pavlo was performing the fraud. We will explore the investigation process and what type of procedures the auditor/investigator needs to follow in order to gather all the evidence. We will have the opportunity as readers to determine if MCI also had a fault by permitting or putting the pressure on his employees to comply with some guidelines instead of looking for ways to help employees to improve their work areas. Internal control is the method intended to ensure dependable financial reporting, effective and efficient department operations, and business compliance with related laws and regulations. Not having an effective internal control process will allow fraudsters......

Words: 2024 - Pages: 9

Premium Essay

Case 1 and Fraud Continues

...Bill MakkawiJuly 22, 2012 | Case 1 And Fraud Continues Forensic Accounting A company can’t work with a strong and secure accounting system. The accounting system should include strong internal controls to make sure financial statements and data are accurate and valid. Strong internal controls can prevent a company from providing false data to make their company look more profitable and steal funds from the investors and stockholders. There are several internal control weaknesses that existed at MCI that contributed to the commission of the fraud acts. One major internal control weakness was that Pavlo was able to manipulate the accounts receivable system and the changes he made to the system was not reviewed or approve by anyone. Another weakness was that Pavlo helped create the accounts receivable process and therefore knew the strengths and weaknesses of the process. This allowed Pavlo to manipulate the records to his advantage. The lack of segregation of duties takes place here because one employee was able to receive payments, update accounts receivable records and reconcile the company’s bank account. In addition to the duties listed above Pavlo was also able to write off receivables without review which played a major role in his act to commit fraud. Pavlo used his position to his advantage and was able to come up with tricks to help him steal millions from this employer. This gave Pavlo the opportunity to be able to embezzle money from the company and was......

Words: 1410 - Pages: 6