Showing posts with label Fraud; Auditing ; Risk Assessment Standards. Show all posts
Showing posts with label Fraud; Auditing ; Risk Assessment Standards. Show all posts

Saturday, August 25, 2012

Bad Grades Are Rising for Auditors


Bad Grades Are Rising for Auditors


As reported by the New York Times on August 23, 2012 by , it becomes clear that this is only one facet of the audit industry failure. This is a really disturbing news report supported by a recent report of the PCAOB. It is an alarming report not only for the regulators in the USA, but also to each country's regulators regarding the audit industry in each respective country. 

It is globally accepted that once the public no longer trust the output of an auditor, the auditor or the audit firm loses any justification to continue in business. Should not each country have a regulatory agency that is mandated to do a similar work like that of the PCAOB? I think the answer is yes it should. In my opinion, corruption is one reason, among others, that prevents too many countries from devoting sufficient and  appropriate attention to the audit profession despite the strategical value of this industry. 


Friday, December 23, 2011

Don't Mention It: How 'Undiscussables' Can Undermine an Organization

Article Image


These are parts of an article that was published December 20, 2011 in Knowledge@Wharton. My comments follow in red.

"After everything falls apart, the failures to act become obvious: Why didn't somebody at Penn State do more to pursue allegations that former assistant football coach Jerry Sandusky was sexually abusing young boys? Didn't anybody at MF Global Holdings notice that something was wrong before $1.2 billion in customer cash disappeared? Why, decade after decade, didn't anyone at Olympus protest $1.7 billion in accounting irregularities?

"Why was there almost a conspiracy of silence?".......

Most experts agree that leaders must set the tone for the entire organization, work to elicit discussion about taboo topics and maintain transparency about how they respond to any concerns........Companies should also establish metrics, routines, audits and incentives to help identify problems and suggest areas of change, says Wharton management professor Lawrence G. Hrebiniak, who has acted as a consultant to dozens of companies such as General Electric, AT&T, Microsoft and DuPont. When top management diligently works to measure performance, elicit feedback and respond openly to problems when raised, it can usually make progress, Hrebiniak has found. "Control systems are important to implementing strategy and identifying problems," he says.

The caveat, of course, is that leaders need to pay attention to the facts. "In two cases, I've reported data to top management and they disinvited me from a strategic session," Hrebiniak recalls. "Some of the problems that were identified seemed to suggest poor leadership from the top.... They didn't want it to come out on their watch."

When companies have a culture in which managers are "more interested in hiding things than solving problems," there is little anyone can do to help, Hrebiniak says. "You need top management to react strongly. If they bury the stuff, they're dead.""

It is unfortunate that management usually discusses the undiscussables too late. It is evident that it will always be true that tone prevailing at the top is what sets other tones across each layer in any entity. 

Top management will always be responsible and accountable about the culture and ethical values in their entities. I would like to reiterate the fact that controls in general and internal control systems in specific will be of no value when top management does not support such control systems. Mere compliance with all kinds of polices, rules, and regulations is not enough. Great leadership is an ethical leadership that has no taboos when it comes to group politics and internal politics. Group loyalty may sometimes be a sort of collusion rather than any thing else. 

I do believe that unless top management leads by example at the highest ethical standards and supports each member their staff to speak up about each and any suspected immoral, unethical or corrupted acts, the collapse of such entities will be devastating and a matter of time. 




Friday, December 02, 2011

Analysis: MF Global proves Enron-era accounting lives on

The sign marking the MF Global Holdings Ltd. offices at 52nd Street in midtown Manhattan is seen in New York November 2, 2011.  REUTERS/Shannon Stapleton

Thu Dec 1, 2011 5:09pm EST
Like its predecessors, the bankrupt brokerage formerly run by Jon Corzine took advantage of an accounting maneuver to keep certain financial obligations off its books, making the firm look less indebted and thus less a risk than it really was.
On Thursday, Mary Schapiro, chairman of the Securities and Exchange Commission, told a committee of Congress the SEC was investigating the accounting treatment that helped mask MF Global's exposure to risky foreign sovereign debt.


Monday, August 29, 2011

Birzeit Consulting Partners in the 4th Forensic Conference For Africa - Accra - Ghana

Birzeit Consulting will be participating as a partner in the 4th Forensic Conference Fro Africa titled " Fighting Fraud  / Corruption and Money Laundering in Africa Using Investigative Accounting Skills to enhance Operating efficiency"  in Accra - Ghana during the period  December 5 - 9, 2011. Birzeit Consulting will be participating by several of its associates and experts coming from the United States of America, the United Kingdom, and Jordan. The chief international speaker at the conference would be Mr. Mohammed J. Masoud, CPA, CFE, CICA, MBA, co-founder and managing director of Birzeit Consulting. He is an adjunct professor at the Arab American University, serves as an ACFE advisory board member, and a board member of the Arab Accountants Union (AAU) in Egypt.   Participants will be from several African, Middle Eastern, and European countries.
The guest of honor of the conference would be Mr. Adu Anane Antwi, BSc, LLB, MBA, CA, Director General of the Securities & Exchange Commission-Ghana.
The conference detailed brochure and its condensed one can be found when you click on each of them. For registration, please contact O'Sullivan Associates Ltd, our partner in Kenya. 

Friday, June 03, 2011

James R. Doty Says Audit Firms May Have to Be Rotated - NYTimes.com

James R. Doty Says Audit Firms May Have to Be Rotated - NYTimes.com

"Financial statements often include many estimates, and auditors now simply conclude whether an estimate is or is not reasonable. That has been a problem in valuing some securities that rarely trade, with the same audit firm approving widely varying estimates by different clients. One possibility may be for disclosures to be made on the range that the auditor deemed reasonable, and where the estimate fell within that range"

In my opinion, The problem is more complex than it seems. changing auditors is good but not enough. The issue is what are the motives and incentives that drives audit firms' negligent behavior, conflict of interest, and fraudulent acts.

Sunday, October 03, 2010

PACPA in Cairo -The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements-

See more photos when you click here.











Thursday, September 09, 2010

Risk Assessment Standards in Action

By Paul Kiel, Jennifer Carney, Carla A. Gogin and David A. Johnson
january 2008


ight standards rolled out in 2006 by the Auditing Standards Board are sparking a cultural shift for auditors.
The standards—Statement on Auditing Standards nos. 104–111—are designed to enhance auditors’ responses to audit risk and materiality and encourage them to focus on areas with the greatest risk of misstatement. The standards are effective for audits of private company financial statements for periods beginning on or after Dec. 15, 2006.
The JofA asked partners at three accounting firms to write about how the new guidance has affected their work. In their first-person accounts, beginning below, the partners share their experience with putting the guidance into action and offer practical advice for tackling some of the common challenges of implementation.




Money Laundering


tinyurl.com/ybp7k3q.