The Auditor and Fraud Essay Example

The Auditor and Fraud Essay EXPLAIN THE RESPECTIVE ROLES AND RESPONSIBILITIES OF MANAGEMENT AND AUDITORS IN THE PREVENTION AND DETECTION OF FRAUD. The primary responsibility for fraud detection lies with management. This arises due to a contractual duty of care. Directors are able to discharge their duty toward prevention and detection of fraud and error in many ways, for example: * Complying with the Combined Code on Corporate Governance * Developing a code of conduct, monitoring compliance and taking action against breaches * Emphasising a strong commitment to fraud prevention. This involves establishing a culture of honesty and ethical behaviour within the organisation with clearly communicated policies. * Establishing an internal audit function * Having an audit committee The role of the auditor is with assessing the effectiveness of the internal controls. Auditors should appraise the risk of misstatements due to errors and fraud. The role of the auditor in the detection of fraud is appraised within case law, for example: Re Kingston Cotton Mill (1896) – An auditor â€Å"is a watchdog not a bloodhound†. According to Melville (2007), this judgement set the tone for the audit profession for a century. Auditors were to be passive checkers rather than be proactive in searching out errors, misstatements and fraud. This statement may no longer have the force it once did in the light of ISA 240 The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements. Auditor’s are now expected to recognise at least the possibility that fraud may exist and, consequently, adopt an attitude of professional scepticism in their approach to audit work. Re Thomas Gerrard Son (1968) highlighted the negligence of auditor in overlooking fraudulent activities committed by directors. We will write a custom essay sample on The Auditor and Fraud specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on The Auditor and Fraud specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on The Auditor and Fraud specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Auditors relied on stock certificates given to them by the managing director, a person who they trusted. This was supported by the decision in Re Kingston Cotton Mill whereby an auditor is ‘justified in believing tried servants of the company in whom confidence is placed by the company’. It was held that their responsibility was to investigate the matter fully once their suspicions had been aroused. If they had done so, the fraud would have been revealed. This is supported by the content of ISA 240 which requires auditors to follow up anomalies. Once suspicions have been aroused, tests designed specifically and uniquely to detect and establish the extent of fraud will be performed. Auditor’s should plan and conduct their audit tests to limit the possibility that material fraud and irregularities go undetected. Certain assets such as cash are more susceptible to fraud than others and audit planning should take account of this. Tests are mainly carried out due to the need to assess whether a matter is material before reporting it. If the matte proves to be material, it should be first reported to management (unless management are implicated in the fraudulent activity themselves). Auditors cannot guarantee the detection of all frauds and errors because they are not able to spend the time searching for frauds as they only analyse a sample. A guarantee cannot be made as auditors provide an opinion. IDENTIFY AND DISCUSS BOTH THE ORGANISATIONAL AND PERSONAL FACTORS WHICH MIGHT CONTRIBUTE TO AN ENVIRONMENT WHERE FRAUD IS MORE LIKELY TO OCCUR. The integrity of the individual and whether they seem to have a strong sense of ethics. Although a difficult characteristic to assess, the behaviour of individuals and their opinions on issues may provide important evidence to assist the auditors in assessing this characteristic. Personal integrity may well be a key if not the most important factor in keeping a person from committing fraud. There are many cases in which individuals with severe financial or personal pressures and the opportunity to engage in fraudulent activity do not do so because they have a strong personal moral code. Some fraud investigators believe that a strong moral code can prevent individuals from using rationalisations to justify illicit behaviour. Typical rationalisations include: I am only borrowing the money and will pay it back Nobody will get hurt (perception of fraud as â€Å"victimless† crime The company treats me unfairly and owes me Its only temporary until my financial position improves Everybody’s at it!! The extent to which individuals appear to be motivated by greed. Again, a difficult characteristic to assess but the individual’s concern with money and consumer goods may provide some clues about this. If someone starts turning up to work in a brand new Ferrari, they may have won the lottery, or benefited from the demise of a loving relative, or they could be up to no good!! The degree of loyalty exhibited by an individual. If the individual has been with one firm a long time, this may indicate a certain level of satisfaction with their employment and perhaps reduce the likelihood of them committing fraud. You should, however, also be aware that experienced employees, because they are trusted, might have a greater opportunity to commit fraud. Ernst Young Survey (2000) found that nearly half of the employees who defrauded their firms had been employed for over five years. Also bear in mind that opportunities to commit fraud can arise when an employee reaches a level of trust in an organisation or when internal controls are weak or nonexistent. Then the employee if he or she is so motivated will perceive that there is an opportunity to commit fraud, conceal it, and attempt to avoid detection and punishment Also, recent research undertaken by the Wharton School at the University of Pennsylvania suggests that in order to make it to the top ranks of corporate management you of course have to be very self-assured, but this can turn into overconfidence which can lead you to â€Å"cross the line† and commit fraud. For example, a senior manager believes that his firm is experiencing only a bad quarter or patch of bad luck. He believes it is in the best interests of everyone involved – management, employees, customers, creditors and shareholders to cover up the problem in the short term so that these constituents do not misinterpret the current poor performance as a sign of the future. In addition, he is convinced that down the road the company will make up for the current period of poor performance. It is the optimistic executive or overconfident executive who is more likely to have these beliefs. May stretch the rules a little or engage in earnings management ploys, but what if things don’t turn around as expected? Then he has to make up for the prior period and that requires continuing fraudulent behaviour. There appears to be a belief that overly optimistic executives can turn their firms around before fraudulent behaviour catches up with them, at least according to the US research. Jordan (2002) as cited in Quirke (2008) reaffirms this attitude by quoting a communist era Czech axiom â€Å"If you do not steal from the state, you rob your family† Antonio Birritella; â€Å"All these funds from the EU were seen as a gift to the Mafia, easy pickings†

Spinal Cord Injuries Essays - Neurotrauma, Motor System, Free Essays

Spinal Cord Injuries Essays - Neurotrauma, Motor System, Free Essays Spinal Cord Injuries As an Emergency Medical Technician (EMT), when someone has a spinal injury, additional movement may cause further damage to the spine. EMTs must always immobilize the patients head and torso in the position found. The purpose of an EMT is to prevent further harm to the patient until more professional medical help can be obtained. If in doubt about whether a person has received a spinal injury, always assume he or she has. A spinal cord injury (SCI) is very serious because it can mean the loss of sensation and function in the parts of the body below the site of the injury. SCIs are caused in many different ways. Some of the most common ways a person may obtain a SCI are- motor vehicle accidents, bullet or stab wound, diving accidents, electric shock, awkward positioning of the body, falls, sports injuries (such as football or diving), industrial accidents, assault and gunshot wounds. Polio, Spina Bifida and Friedreichs Ataxia are some of the frequent diseases that cause SCI. SCI may also be know in other names such as spinal cord compression (SCC) and spinal cord trauma (SCT). According to an article in , SCIs occur in approximately 12,000 to 15,000 people per year in the U.S. About 10,000 of these people are permanently paralyzed, and many of the rest die as a result of their injuries. Most spinal cord trauma occurs to young, healthy individuals. Males between the ages of 15 and 35 are most commonly affected. The spinal cord is about 18 inches long and extends from the base of the brain, down the middle of the back, to about the waist. It is composed of 33 bones called vertebrae, 31 pairs of nerves, 40 muscles and numerous connecting tendons and ligaments running from the base of the skull to the tailbone. Between the vertebrae are fibrous, elastic cartilage called discs. These absorb shock and keep your spine flexible and cushion the hard vertebrae as it moves. The nerves that lie within the spinal cord are upper motor neurons (UMNs) and their function is to carry the messages back and forth from the brain to the spinal nerves along the spinal tract. The spinal nerves that branch out from the spinal cord to the other parts of the body are called lower motor neurons (LMNs). These spinal nerves exit and enter at each vertebral level and communicate with specific areas of the body. The sensory portions of the LMN carry messages about sensation from the skin and other body parts and organs to the brain. The motor portions of the LMN send messages from the brain to the various body parts to begin actions such as muscle movement. The brain and the spinal cord both make up the Central Nervous System. Motor and sensory nerves outside the central nervous system make up the Peripheral Nervous System and another diffuse system of nerves that control involuntary functions such as blood pressure and temperature regulation are the Sympathetic and Parasympathetic Nervous Systems. Rings of bone called vertebra surround the spinal cord, and these bones make up the spinal column or backbones. Most often, the higher in the spinal column the injury occurs, the more dysfunction a person will experience. The vertebras are named according to their location. The 8 vertebra in the neck are called the Cervical Vertebra. The top vertebra is called C-1; the next is C-2, and etc. Cervical SCIs usually cause loss of function in the arms and legs, resulting in quadriplegia. The 12 vertebra in the chest are called the Thoracic Vertebra. The first is called the T-1 and its where the top rib attaches. Injuries to this region usually affect the chest and the legs and result in paraplegia. The vertebra in the lower back between the thoracic and the pelvis, are called the Lumbar Vertebra. The sacral vertebras run from the pelvis to the end of the spinal column. Injuries to the 5 Lumbar vertebra and similarly to the 5 sacral vertebra generally result in some loss of functioning in the hips and legs. The effects of SCI depend on the type of injury and the level of the injury. SCI can be divided into two types of injury- complete and incomplete. A complete injury means that there is no function below the level of the injury, no sensation and no voluntary movement. Both sides of the body are equally affected. An incomplete injury means that there is some functioning below the primary level