Weekly
Blog 1:
I disagree with the statement that fraud is out of the control of
management. From my experience in working in a small business, it was found
that an employee had been stealing money from the register for many months. She
stole the money when completing the cash-in procedure at close. It was not
until openers did a reconciliation of cash in the morning that these
discrepancies were discovered.
Larger organisations face the same risk of fraud, but on a greater
scale. As shown by Halbouni,Obeid and Garbou (2016), internal and external
auditors noticed that corporate governance is significant in preventing and
detecting fraud. It
was discovered that corporations that had comprehensive internal controls and
effective auditing procedures had less instances of fraud and were further
equipped at preventing and managing fraud.
COBIT 5 is a tool that organisations can use to ensure they have
adequate control over their business operations , in particular battling issues
related to IT and other technologies, while addressing the requirements of internal
and external stakeholders (ISACA, 2012). COBIT 5 has five
principles, that should assist management control of fraudulent situations. As
my personal experience of fraud occurred in a small business it is unlikely
COBIT 5 would have prevented the fraud. However, better internal control
measures would definitely have picked up on these discrepancies sooner.
Reference
List:
Halbouni, O., & Garbou, A. (2016). Corporate Governance
and Information Technology in Fraud Prevention and Detection Evidence from the
UAE. Managing Auditing Journal, 31(6) 589-628.
ISACA. (2012). COBIT 5 A Business Framework for the
Governance and Management of Enterprise IT. ISACA .
Weekly
Blog 2:
I agree with the statement that with the increase of mobile
devices created greater fraud threats and risks for organisations. I had a
friend who left her desk unattended in the library with an assignment opened
and someone inserted their usb and copied the entire assignment and had
disappeared by the time she returned. This incident was unknown to her until
she was questioned for plagiarism after submitting the assignment.
Situations like this occur in an organisation context as well, to
a much larger extent. “Business is the largest victim of crime and economic
espionage perpetrated through cyberspace” (Renaud, 2013) . Data loss has the
ability to seriously affect a business’ competitiveness and reputation and can
potentially lead to civil penalties. Data is lost because devices uses
infrastructures that are uncontrolled and cannot be monitored by individual
organisations. Another risk is information leakage caused by people who have
damaging intensions and agendas.
An information security and risk assessment is created and has a
few key features; tone from the top, board of directors, internal controls,
internal/external audit function and an audit committee. These elements are
designed to address IT threats to an organisation (ISACA, 2017) . An internal control
to solve my friends problem would be to always ensure a computer is locked and
external devices are always removed.
Reference
List:
Renaud, K. (2013). The Risk of Mobile Information Leakage. International
Journal of Cyber Warfare and Terrorism , 3 (4).
ISACA. (2017). CIO Strategy for Mobile Security. Retrieved from
ISACA: https://www.isaca.org/CIO/Pages/CIO-Mobile-Security.aspx
Weekly
Blog 3:
I agree with the statement that Forensic Accountants must be
familiar with the law to protect the public interest. As learned in a university lecture in the
case of ASIC v Rich it was made very clear how forensic accountants should
behave and what the repercussions are if they do not have a good understanding
of the law in the presentation of an expert report. It was found that crucial evidence presented
in the Carter report were reliant on assumptions which were difficult to prove and
were rejected due to inadmissibility in court. This case wasted court time, the
client’s money and tarnished the reputation of forensic accountants who produce
expert reports.
APES215 is a framework that sets out mandatory requirements for professionals
who provide forensic accounting services. The main provision in this standard
is for protecting public interest by addresses the following; integrity,
objectivity, professional competence and due care, confidentiality and conflict
of interest (CPA Australia, 2017) .
Forensic examiners have utilised a variety of different
expressions to represent and support the conclusions they have provided,
however these are usually opinions (Edmond, 2013) . The revised APES215
has a stronger emphasis on protecting public interest and would have reduced
the impact of the ASIC v Rich case as it is a mandatory standard and does not
accept evidence based on assumptions.
Reference
List:
CPA Australia. (2017). APES215: Forensic Accounting Services.
Retrieved from CPA Australia: https://www.cpaaustralia.com.au/professional-resources/accounting-professional-and-ethical-standards/apes-215-forensic-accounting-services
Edmond, G. (2013, March 25). Expert Evidence in Reports and Courts. Australian
Journal of Forensic Sciences .
Weekly
Blog 4:
I agree with the statement to a large extent that
strict or vicarious liability is the only way to make directors and senior
management serious about minimizing fraud, bribery and corruption. As learned
from the Bitcoin case, where two people who ran a company where money
laundering occurred were charged, thus imposing strict liability.
As stated by (Shiffrin, 2016) “strict liability for performance
represents an interesting division of moral labour in the practice of taking
and assigning responsibility”. There are four categories of crime in the
business world; white-collar crime (embezzlement), organized crime (illegal
drugs), computer crime (computer fraud) and regulatory, corporate and
compliance offences (cartel conduct) (CCH, 2014) .
While courts have issues imposing strict liability
provisions due to their belief that liability of employers requires participation
or negligence, I support the approach in the Corporations Act. This is where a
director may be held personally liable unless proven that due diligence was
exercised as they should be taking an active role in ensuring that employees
comply with the law. It is hoped from steps taken in the Bitcoin case that
corporations will become more vigilant in the prevention, detection and
reporting of fraudulent acts to reduce incidences of fraud, thus becoming more
serious about minimizing fraud, bribery and corruption.
Reference
List:
Shiffrin, S. V. (2016). Enhancing Moral Relationships through Strict
Liability. University of Toronto Law Journal , 66 (3).
CCH. (2014). Crime in the Business World. In Australian Business Law.
Weekly
Blog 5:
Specialised
knowledge is vital in the forensic accounting role when considering civil
action law suits, due to the many complexities involved. As seen in the case of
Labelmakers Group Pty v LL Force Pty Ltd it is evident that there is not a
clear way to establish the exact figure of damages that should be awarded, due
to the different assumptions made by the prosecution and defence.
In
particular, I would like to focus on the complexities within valuation and
taxation. The valuation of damages is complex due to the fact that they are
awarded in a lump sum, with no future payments allowed. Forensic accountants
have to estimate the value of future losses that are expected to continue at
the time of the civil action which is difficult. To do this the FA should
understand the nature of dispute and events that have occurred to obtain an
accurate loss figure (DiGabriele, 2008) .The tax position is
also important to consider as to place a successful plaintiff in the same
position as if the violation of rights had not occurred, the tax effect must be
considered (Australian Competition and
Consumer Commission, 217) .
In
the Labelmakers case, the calculation of a profit margin and the discount rate
were the issues in calculating damages. This shows the amount of information
that needs to be considered when calculating damages and why specialised
knowledge is crucial.
Reference List:
DiGabriele, J. (2008). Litigation Support and the Forensic Accountant. Forensic
Examiner , 17 (2).
Australian Competition and Consumer Commission. (217). Compensation for
Damages and Loss. Retrieved from Australian Competition and Consumer
Commission: https://www.accc.gov.au/consumers/consumer-rights-guarantees/compensation-for-damages-loss
