Most common audit deficiencies that generate ethics violation investigations

Leave a Comment / Audits, Peer Review /

The AICPA’s Professional Ethics Division has published their report on most common ethics violations in the last year.

About 40% of the cases investigated by the Division deal with audits of government agencies and NPOs.  That’s a depressing portion of ethical issues arising from those two areas. I doubt that is reflective of portion of total audits performed.

That statistic should end the perception that audits of government agencies and NPO don’t have risk. If there is a disproportionate possibility you will wind up in front of an AICPA Ethics hearing, you are not dealing with a low risk audit.

Their report provides a good survey of the major issues.

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Most common audit deficiencies that generate ethics violation investigationsRead More »

Most common audit deficiencies that generate ethics violation investigations Read More »

Fraud Triangle – a case study

1 Comment / Accounting, Fraud /

Amy Wilson’s story of her embezzlement and the journey she has taken since then provides insight to the fraud triangle.

That’s the concept which says for a fraud to flourish, three factors need to be present:

  • Opportunity – the ability to do something wrong. Usually this is accompanied by the ability to hide doing so or get away with it undetected.
  • Motivation – the need to do something wrong.
  • Rationalization – the ability to persuade oneself that this isn’t fraud.  This isn’t wrong. In fact, taking this money is perfectly okay.

In this situation, her opportunity to commit fraud is quite visible. 

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Fraud Triangle – a case studyRead More »

Fraud Triangle – a case study Read More »

Lighten up on the IRS training videos

Leave a Comment / Other stuff /

The political class is in horror that videos are used in training events and that it costs money to produce training videos. How frightening! How wasteful!

The furor coming from DC and the media would have you think spending 60 grand for two videos is the crime of the century.

If you’re looking for waste in federal spending, search the Internet for 60 seconds and you will find dozens of examples each of which is thousands of times bigger than this fabricated fiasco.

Time to lighten up folks.

Check these out:

[youtube=https://www.youtube.com/watch?v=VxU6n4pAnrU]

 

[youtube=http://www.youtube.com/watch?v=CBq8yzLObGg]

(links – https://www.youtube.com/watch?v=VxU6n4pAnrU and http://www.youtube.com/watch?v=CBq8yzLObGg)

Is the Star Trek video roll-your-eyes and groan out loud funny? Yes.

Is it an entertaining spoof of the Star Trek series? Yes.

Cheesy? Yeah.

Campy? You bet.

Are the inside jokes good? Yes. Very good.

At the same time, is it a lighthearted way to open a training session for a few hundred people per event? Yes.

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Lighten up on the IRS training videosRead More »

Lighten up on the IRS training videos Read More »

Are balance sheets unauditable? 2

1 Comment / Accounting, Audits /

Previous post raised the question whether it is possible that current accounting rules make a modern balance sheet so complex that it is essentially unauditable.

Another item described by Grumpy Old Accountant Anthony Catanach’ column Is FASB Killing the Auditing Profession? is the PwC audit tool of cumulative audit knowledge and experience.

Audit team experience as substantive assurance?

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Are balance sheets unauditable? 2Read More »

Are balance sheets unauditable? 2 Read More »

Tragedy of fraud – another case study – 2

1 Comment / Accounting, Fraud /

Previous post started a discussion of the consequences of Amy Wilson’s embezzlement story told here. These two posts are another case study of the tragedy of fraud.

I’ve discussed the consequences of fraud extensively on my blog. Even compiled those posts into a book, available at Amazon.

Let’s wrap up a review of the consequences earned by Mrs. Wilson and the impact on innocent people she loves.  Here are more things visible in her article:

I’m guessing this covers sentences a lot of ground: …

Tragedy of fraud – another case study – 2Read More »

Tragedy of fraud – another case study – 2 Read More »

Are balance sheets unauditable?

1 Comment / Accounting, Audits /

Is it possible that current accounting rules make a modern balance sheet so complex and judgment filled that it is essentially unauditable?

The answer is a hesitant yes, if I’m correctly reading Grumpy Old Accountant Anthony Catanach’s column Is FASB Killing the Auditing Profession?

He contrasts two parts of the PCAOB reports on inspections of PricewaterhouseCooper (PwC).  The PCOAB released two consecutive inspection reports for the firm.

My understanding is the confidential portion gets released if you don’t fix the issues by the next inspection. That means to get two consecutive reports released means the problems identified during inspection one weren’t fixed before inspection two and still had not been resolved during inspection three. Ouch.

Reduce partner time on complex audits

Prof. Catanach combines two issues.

First, the firm’s response says the issues involved are …

Are balance sheets unauditable?Read More »

Are balance sheets unauditable? Read More »

Tragedy of fraud – another case study – 1

2 Comments / Accounting, Fraud /

Let’s look at Amy Wilson’s embezzlement story, explained here, as another case study of the tragedy of fraud.

I’ve discussed the consequences of fraud extensively on my blogs. Check out the tags here and here . Even compiled those posts into a book, available at Amazon.

Let’s look at some of the consequences Mrs. Wilson has endured and the impact on innocent people she deeply cares about.  Here are some things visible in her article:

She is a convicted felon. I doubt that record will ever go away. Accountants rarely have the political juice to persuade a governor or president to grant a full pardon.

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Tragedy of fraud – another case study – 1 Read More »

Suggestions from two Fed officials on reducing the dangers of Too-Big-To-Fail banks

Leave a Comment / Pondering /

The president and EVP of the Dallas Federal Reserve Bank have three suggestions in the Wall Street Journal on How to Shrink the ‘Too-Big-To-Fail’ banks.

The problem

Only 0.2% of the US banks control 70% of the assets in the industry. Those few banks are two-big-to-fail, too-big-to-jail, and even too-big-to-prosecute. They get special treatment from the federal government, specifically an explicit guarantee they won’t be closed, which gives them lower borrowing costs which means they have a government-sponsored competitive advantage.

Why that matters

Here are a few consequences mentioned in the article: …

Suggestions from two Fed officials on reducing the dangers of Too-Big-To-Fail banksRead More »

Suggestions from two Fed officials on reducing the dangers of Too-Big-To-Fail banks Read More »

Anyone want to make a real movie about the cheaters who made a fake movie to cheat the British tax authorities?

Leave a Comment / Fraud /

Here’s a fraud story to tickle an accountant’s funny bone…

A team of five in England are on their way to jail after making a low-budget real movie to cover up that a high-budget fake movie was nothing other than an excuse to rip off the government for $4.2 million. Check out 5 convicted of inventing movie to hide tax fraud from the AP. (Link goes to boston.com but story was picked up by lots of news outlets.)

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Anyone want to make a real movie about the cheaters who made a fake movie to cheat the British tax authorities?Read More »

Anyone want to make a real movie about the cheaters who made a fake movie to cheat the British tax authorities? Read More »

2 questions for those advocating mandatory auditor rotation. My research on the issue

Leave a Comment / Audits /

The post “Re-Structuring the Audit Profession: The UK’s Competition Commission Hunts the Woozle” by Jim Peterson discusses weaknesses in research behind the Commission’s conclusion that mandatory auditor rotation is necessary. He says:

Diligent digging through the Commission’s augean piles of paperwork makes clear that its ostensibly supportive “research” ranges from the shallow and irrelevant to a results-driven reflection of its confirmation bias.

Wow. Let’s unpack that:

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2 questions for those advocating mandatory auditor rotation. My research on the issueRead More »

2 questions for those advocating mandatory auditor rotation. My research on the issue Read More »

Trust is not an internal control

1 Comment / Accounting, Fraud /

It is just a feeling.

That is Amy Wilson’s explanation as she describes her journey through embezzlement into recovery as told in this earlier post. Thanks to Mrs. Wilson for granting me permission to reprint her article.

Her article is very good. It is so well constructed that we can analyze it in detail. I’ll have several posts to draw out my reactions to her article.

Trust is not an internal control

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Trust is not an internal controlRead More »

Trust is not an internal control Read More »

Compilation and Review CPE courses by James Ulvog

Leave a Comment / Compilations & reviews /

Looking for on-line CPE courses on compilations and reviews? I’ve written or revised a series of courses for CCH which you can find linked below. I’ve quoted liberally from the CCH site. Here is a list of courses with descriptions to follow:

Course summaries:

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Compilation and Review CPE courses by James UlvogRead More »

Compilation and Review CPE courses by James Ulvog Read More »

One accountant’s journey through fraud, jail, and rebuilding

7 Comments / Accounting, Audits, Fraud /

The following article is by Amy Wilson, speaker and staff accountant. It is printed with permission of Mrs. Wilson.

For ease of reading, I won’t put the full article in quotes. Here is her story:

My name is Amy Wilson. I am a wife, a mother, an accountant — and an ex-convict.

Early on as a struggling single mother, I wanted a better life for my children, so I went to night school at the University of Indianapolis and earned my bachelor’s degree. For the next 16 years, I worked hard to achieve a respected position in the corporate world. I started in my teens as a cashier at a car dealership. Next, I worked as a payables clerk for a major hospital in Indianapolis. Finally, degree in hand, I became a staff accountant for a large manufacturing firm. Seven years later, I was hired as an office manager for a small manufacturing business.

For most of my life, I was an overachiever, an attribute that eventually led to my downfall and put me behind bars, a convicted felon.

My slow decline into theft

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One accountant’s journey through fraud, jail, and rebuildingRead More »

One accountant’s journey through fraud, jail, and rebuilding Read More »

Double check your revised audit opinions with the AICPA Peer Review checklist

Leave a Comment / Audits /

You recall that your audit opinions will be completely revised starting with December 31, 2012 financial statements. The opinion is completely different.

I’ve discussed that here and here with sample reports.

After you draft your reports with the practice tools used by your firm, it would be wise to double-check them. What to use?

Check out Charles Hall’s article – The Clarity Project – Vetting Your Clarity Opinions with the AICPA Peer Review Checklist.

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Double check your revised audit opinions with the AICPA Peer Review checklistRead More »

Double check your revised audit opinions with the AICPA Peer Review checklist Read More »