Evaluate the impact of fraud detection on an organization

Reference no: EM131174406

Final Project Guidelines-

Overview

The final project for this course is the creation of a financial statement fraud case study analysis. The final product represents an authentic demonstration of competency because cases of financial fraud continue to be exposed, and it is important for auditors to analyze these types of fraud schemes to increase their awareness when performing audits. This will increase the probability of discovering fraud in financial statements and avoiding the harmful effects of fraud to society.

For the final project, you will be provided with a case study to analyze through the Harvard Business Review, called Crisis at the Mill: Cash Flow Forecasting Exercise. You are encouraged to put yourself in the place of the auditor as well as the stakeholders. You will consider the theoretical models of fraudulent behavior, evaluate internal controls, assess fraud risk factors, and apply prevention and detection techniques. You will also analyze the overall responsibilities of the auditors to organizational stakeholders while considering applicable auditing standards.

The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Three, Five, and Seven. The final product will be submitted in Module Nine.

In this assignment, you will demonstrate your mastery of the following course outcomes:

Evaluate the impact of fraud detection on an organization
Evaluate internal controls for their role in maintaining reliability of financial reporting, compliance with regulations, and operating efficiency
Examine how financial statement fraud schemes are carried out for informing detection and prevention methods
Assess risk indicators for determining the occurrence of fraud in an organization
Apply appropriate analytical, nonfinancial, and other fraud detection procedures for preparing recommendations to stakeholders

Prompt

Evaluate the Crisis at the Mill: Cash Flow Forecasting Exercise case of financial statement fraud to determine why it occurred, how it was carried out, how it was discovered, what the auditor's role was in the case, and what preventive controls could reduce the risk of this type of fraud.

Specifically, the following critical elements must be addressed:

I. Introduction: What company is the subject of the case? Describe the type of fraud that occurred.

II. Analysis of Fraud Scheme Type

A. Explain the process behind how frauds of this type are carried out. Provide a specific example illustrating fraud of this type.

B. In this type of fraud scheme, how and where do internal controls break down? Provide examples of specific internal controls needed to reduce this type of fraud.

C. What are the risk factors when assessing this type of fraud? Consider classifying the risk factors using the theoretical model such as the Fraud Triangle.

D. How can analytical procedures and other detection methods be applied to assess the risk of this type of fraud? Provide specific examples of the analytical procedures and what they indicate.

E. Discuss the professional responsibilities of auditors in detecting fraud. What sort of impact can an audit have on an organization?

F. What evidence is needed to prove the fraud? Why?

III. Analysis of Fraud That Occurred

A. Who were the main participants? Why did the fraud occur? Be sure to discuss this in terms of theoretical models of fraudulent behavior.

B. Evaluate the company's internal controls for their effectiveness in preventing fraud. Where were the weaknesses?

C. What were the red flags that signaled fraud was occurring? How did you discern whether or not these occurrences were legitimate transactions?

D. Through an examination of the case study, explain how the fraud was discovered. How could the methods used in this discovery inform future investigations?

E. Discuss evidence that was gathered to support proof of the fraud and to comply with the auditing standard for gathering sufficient competent evidence.

F. Examine the company's financial statements. Perform ratio analysis and explain which results may indicate fraud.

G. Examine the company's nonfinancial information, such as the management discussion and analysis (MD&A) section of the annual report.

Identify the possible presence of fraud and provide rationale for your findings.

H. What was the outcome of the fraud case and what happened to the key players? How could this inform stakeholders in preventing future instances of fraud?

I. What preventive controls can be put in place to prevent this type of fraud from happening again? Why would these be the most effective controls?

J. As an auditor, what recommendations would you make to company management to strengthen their internal control system? Be sure to support your recommendations.

IV. Impact and Auditor Responsibility

A. What was the impact of this fraud case on the auditing profession (regarding each of the following perspectives)?

1. Professional (auditing standards)

2. Legal

3. Social

4. Economic.

Attachment:- Assignment.rar

Reference no: EM131174406

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