Sarbanes-Oxley Act of 2002 in reducing fraudulent financial reporting
Introduction to Fraudulent Financial Reporting
Available research on financial statement fraud relies mostly on anecdotal evidence (for example, Wells, 2001, 2002, 2004a, and 2004b; Rezaee, 2003). This evidence offers advice on how mechanisms related to the fraud triangle can be curtailed. It leads to theoretical sense to reduce factors which lead to more instances of fraud. However, deterrence and established deterrence methods in place within organizations have not been examined in proper detail. Neither have the secondary issues which can influence a person’s chance of committing financial statement fraud. But there are multiple researches where deterrence models have been tested on other types of fraud e.g. tax fraud, fraudulent reports of environmental violations etc. Generally speaking, a clear consensus regarding the level of effectiveness of prevention mechanisms, such as those stated in GDT, is not present. There are two key parts of GDT: certainty and the intensity of punishment.
Under audit regulation, the auditor is interested in corporate and accounting fraud. Fraud is defined in SAS No. 99 (AICPA, 2002, Para. 5) as intentional misstatement of financial statements on which the audit takes place. There are two forms of misstatements as far as audit consideration is concerned; one is the misstatement that occurs due to deceptive financial reporting and the other by misuse or stealing of assets (AICPA, 2002, Para. 6; Cohen, 2010).
As per the statement on Auditing Standards (SAS) No. 99, fraud within financial statements takes place due to three major conditions. The first condition is the pressure or the motivation to commit fraud. The second condition is the availability of an opportunity, which means that whenever there are weak controls in the organization or the management does not abide by strict rules and regulations then there are chances for the fraud to take place. The third situation behind the fraudulent activities is the attitude to commit fraud. These three conditions are commonly known as fraud triangle. We have gone through the research work which showed the existence of these three conditions in fraudulent activities related to financial statements.
Supporting researches include the one conducted by Bell and Carcello (2000) where they examined the presence of fraud triangle for a specimen of financial fraud entities. The two of them have designed a logic regression model; this model has predicted the occurrence and frequency of occurrence of fraud and has also indicated numerous risk factors which are linked with fraud. Risk factors include the presence of weak internal controls, growth at a faster pace, ownership status, and management’s attention increasingly focused on the anticipated forecasts and misstatement of facts to auditors by the management.
In addition to this, dealings of control environment with that of management’s outlook towards financial reporting is also a risk factor contributing to fraud which will increase the percentage of negativity on corporate earnings as well as decrease shareholder confidence. The work of Bell and Carcello (2000) has failed to reveal the relationship between the financial fraud and few of the conventional risk factors, like; fast growing industry or dilapidated state of the industry, rapid turnover of management, unusual related party transactions which are also of significant amount and even the arrangements related to compensation in connection with reported earnings. As per the conclusions of Hernandez and Groot (2007b), it is assessed by the audit partners that the usage of incentive systems and existence of opportunities result in much advanced fraud hazards. However, the factors that contribute to the greatest extent towards fraud are the attitude of the senior management and transference of dishonest facts to the auditor by the management. Within his scrutiny of five fraud cases, Rezaee (2005) found the existence of the fraud triangle inside the audit firms. There are many other research works which have focused each of the components of fraud triangle. These works are brought is discussion below.
Earnings are misstated in order to meet the predicted forecasts; or to meet the need of outer financing; or to hide the poor performance that has taken place in the mean time and even the incentive structure propels the related persons to perform fraudulent activities. There was a research conducted by Dechow et al. (1996), where he used a sample ninety two firms, who were subject to accounting enforcement release throughout the phase of 1982-1992. Through this research he found out that manipulation of figures is done in order to attract external finance at a relatively lower cost. There was an investigative study carried out by Erickson et al. (2006) as well. The purpose of this work was to investigate as to whether the equity incentives are linked with accounting fraud or not. A sample was examined by them in the period of 1996-2003 but they did not find any link between financial reporting fraud and equity incentives. On the contrary, Efendi et al. (2007) work on the samples of entities that reaffirmed their financial statements showed that the chances of misstatement of finances increase when the CEO has a substantial stock options amount. They also discovered that the firms which are undergoing fraudulent activities are those who are in need of some external finance, or are under huge debts or have a person who is playing the role of both CEO and Chairman of the board.
Stock options serve as a very attractive feature due to which fraudulent misrepresentation takes place because option turns CEOs wealth into a convex function of stock price. Beneish (1999a) researched on a group of firms who were subject to accounting enforcement proceedings by SEC. Through the research it was found out that the managers tend to sell equity and also exercise rights during the periods when the earnings are inflated. This suggests that the insider trading actions will possibly be helpful about matters related to income overstatements. Similar findings related to the connection between fraud and insider trading was reported by Summers and Sweeney (1998). Recent studies have revealed that a number of firms have been mixed up in intentional backdating of stock options (Lie 2005). Thus, revealing the fact that stock options reward works as an incentive for the deceptive behavior. A report submitted by Glass Lewis & Co. (2006) clearly mentions that almost half of the entities which have backdated their stock options have even restated their statement of financial position.
Rosner (2003) carried out research on unsuccessfully performing entities to find out whether the companies manipulate their earnings because they are on a declining phase or whether the auditors are more likely to find fraud in companies which they recognize to be deteriorating. The results of Rosner’s research indicate that the performance of deteriorating firms do not appear distraught on the foundation of accrual data. While on the other hand, significantly reduced cash flows are seen to be consistent with the material income overstatements during the time when the company is not in a risky situation, while in the upcoming years, the reversal of overstatements is seen when the company is in a risky situation. These entities accrual behavior is similar to that of the firms which were sanctioned by SEC due to fraud. Hence, the wrong incentives can and do increase the percentage of negativity on corporate earnings as well as decrease shareholder confidence.
Examples of risk factors which enhance the chances to commit fraud are provided in Statement on Auditing Standards No. 99 (AU Section 316) (AICPA 2002). Nature of industry, related party transactions, company’s operations, in effective controls, lack of supervision on the part of management and complex structure of the organization, which for example involves a number of legal entities are some of the risk factors which will increase the percentage of negativity on corporate earnings as well as decrease shareholder confidence. The factors which enhance the chances for the commencement of fraud are discussed by Albrecht and Albrecht (2003) as well. The point to remember is that the chances of fraud can only be minimized when there are strong controls in existence within an entity.
There are a number of researches that have revealed that a company is under the influence of fraud mainly because of poor corporate governance, which exist in the company in the form of managements’ monitoring or supervision. The research done by Dechow et al. (1996) clearly indicates that fraud takes place more frequently and openly in those firms which have one individual who plays the role of chairmen as well as CEO (and/or is the founder), or in those firms which have directors who are not at all independent or in other words are under the influence of seniors. It also shows the same patterns for those firms which do not have audit committees or external auditors to keep a check on their work. The firms which have non-independent board of directors are more likely to be found conducting fraud than those firms whose directors’ are independent, narrates Beasley (1996). Farber (2005) further supports the above mentioned fact by stating that the firms with poor corporate governance are found more involved in fraud. These firms have very few meetings of audit committees, they have very few directors who are independent, their audit committees have very few experts present, and they have CEOs who are also the Chairmen of the boards. While on the other hand the firms with strong corporate governance are prone to have consistent as well as positive results.
Abbott et al. (2004) have presented the impact of the characteristics of audit committee on the financial statements. This means that the more the audit committee is competent, independent, and full of experts, the lesser would be the chances of fraud to occur which will decrease the percentage of negativity on corporate earnings as well as increase shareholder confidence. The authors worked on two different groups, one group comprised of eighty eight firms which had undergone restatement of statement of financial position while the other group included forty four firms which have reported fraudulently. With the restatement, the independence of audit committee is negatively assessed. There is also a negative association flanked by an audit committee that comprises of at least one financial expert and incidence of restatement. This means that, in both aspects, there was an increase the percentage of negativity on corporate earnings as well as decrease shareholder confidence. The result of the two groups is similar, as the company with only one financial expert is less expected to file deceitful statement of financial position. McMullen and Raghunandan (1996) further added that companies having no audit committees and independent directors are more likely to commit fraud. Moreover, it has been proved by the research that the auditing and financial literacy of the members of the audit committees perk up the eminence of financial reports and hence increase the percentage of negativity on corporate earnings as well as decrease shareholder confidence.
It’s a fact that accounting standards can be very helpful in decreasing the incidents of deceitful financial reporting by minimizing the prospects of frauds which decrease the percentage of negativity on corporate earnings as well as increase shareholder confidence. The managers can effectively manage their funds owing to the efficiency provided by these standards. As per the opinion of Nelson et al. (2002), when the accounting format is easy to follow, the managers’ core function of revenue administration becomes smoother owing to structured transactions. Like, in the case of lease, if there is a proper structure for providing or avoiding a given lease/sale of securities that can be quickly managed. Additionally, this structured process saves the auditors’ effort to correct the errors.
In the presence of such structure, the managers put their major focus on the shrinking revenue and non-traditional transactions (like; estimation of judgment and its increase or decrease on the basis of analysis) where the process and standards don’t provide clearer insight. Primarily, managers are more concerned with the size of the income, while the auditors are more interested in the management and correction, particularly in the case of material.
In short, while finding the probability of frauds in reporting, researches have indicated multidimensional relationships among opportunity, income and various personal psychological factors. Hence, using checklist to identify the incentives and prospects of frauds can be helpful in overall auditing job and decreasing the percentage of negativity on corporate earnings as well as increasing shareholder confidence.
Financial Statement Fraud Deterrence Mechanisms
Available corporate standards and administrative guidelines provide essential insight about ensuring the error freeness of any financial statement whether they are done intentionally or mistakenly. The phrase ‘reliable assurance’ has been debated vehemently in the finance literature and professional accounting bodies (PCAOB 2005; Rezaee 2004; Harrington 2003).
This absence of a clear definition of reliable assurance along with certain procedural limitations to find the frauds, expenditures of audit process and investors’ ever increasing hopes have crippled the ability of a professional auditor to do his job. According to the CEO forum of world’s 6 largest International Audit Networks, a conversational dialogue is required to reduce this heap of expectations showed by the investors and other stakeholders (International Audit Networks 2006).
AICPA issued SAS No. 82 in 1997 and then SAS No. 99 in 2002 (i.e. The ‘Auditors’ Consideration of Fraud in a Financial Statement Audit) in order to provide greater help to the professionals and offer supportive advice to the auditors. In these standards, the auditors are given a checklist, where he could analyze the risk from various angles. This section is dedicated to find and discuss the checklist and research findings about SAS No. 82 and SAS No. 99. Finally, the conclusion will be made by highlighting few other helpful techniques like regression and analytical applications to detect frauds (Hogan, et al. 2008).
Professionally, the signs of financial fraud are described as ‘red flags’. As per SAS No. 99 the term ‘red flags’ has been defined along with categorization of risk and factors in three areas, particularly fraud triangle, that is pressures/inducement, chance, and attitudes/rationalizations. As per Albrecht and Albrecht (2003), the fraud signs are divided into six categories: 1) accounting anomaly; (2) internal administrative weaknesses; (3) analytical irregularities; (4) overgenerous lifestyles; (5) abnormal behaviors; and (6) tips and objections.
While it’s a fact that the listed signs of frauds (red flags) are logical divisions of the numerous factors involved, yet it’s still debated that their presence might not indicate the fraud sometimes (Albrecht and Romney 1986) and after thorough study of the case, the objective of irregularity comes out to revolved around reasons that are not necessarily related to financial fraud. Formulating an auditing plan, combining the prospect and weight of risk by integrating these factors and developing a fraud detection system are all quite difficult activities to achieve and sustain (Patterson and Noel 2003). Additionally, sometimes, fraud executors suspend their activities; hence, the assessment becomes difficult, particularly in the initial stages of deceitful financial recording and statements (Hogan, et al. 2008).
Studies that focused on survey and checklist formulas have also produced mixed results; where one of the studies conducted by Pincus (1989) was conducted on the population of 137 auditors to observe the effectiveness of questionnaire methodology. As per the study, the questionnaires were not helpful in fraud inspection because users could understand and assess the risk of financial irregularity but non-users couldn’t.
The Sarbanes-Oxley Act
In spite of their importance, there is hardly any audit and processes of internal control which can give an absolute guarantee that all fraudulent behavior can be found out or prevented (Albrecht and Albrecht, 2004). It is easy enough to avoid or bypass audits and internal controls, and just the threat of being found out is not enough to prevent fraud without tough consequences (Beccaria, 1963; Williams and Hawkins, 1986). Because of these reasons, fraud researchers have suggested other methods which could affect a person’s chances of committing fraud. These include lessening pressure on employees to show profits, upping the severity of punishments and understanding that personal traits could increase the chances of someone committing fraud (Wells, 2004a, 2004b). SOX takes many of these measures into account (e.g. Sections 802, 906, and 304), which raises civil and criminal punishments for illegal activities. Section 404 raises the prerequisites for internal controls assessment about financial reporting by the management and external auditors. Auditing Standard Number 5, issued by the PCAOB, amplifies the expectations from auditors along with their appraisal of internal controls (Public Company Accounting Oversight Board, 2007; Sarbanes and Oxley, 2002).
As far as financial reporting is concerned the regulators and law makers are of the view that it would be better off to implement imposed sanctions. By giving a glance to the fraud cases linked to financial statements that occurred in the last decade, it would not be wrong to say that self-regulation alone cannot fight with these frauds. In 2002, SOX was introduced whose aim was to act as a deterrent to fraudulent activities. But still, we are short of practical evidences and there is still a question in existence as to whether these deterrent activities including SOX are of any good? Or are successful in minimizing the fraud related to financial statements?
SAS No. 99
The main prevention strategy that an organization can make use of is the external audit. External audits have been fortified by the Statement on Auditing Standards (SAS) No. 99 (issued in 2002 by the AICPA-s Auditing Standards Board). The SAS No.99 consists of seven important parts: (1) SAS No. 99 requires the auditors to have “brainstorming” sessions to determine if the company could be at risk towards financial statement fraud; (2) it is required of the auditor to gather information necessary towards identifying potential exposure towards financial statement management, by questioning the management, internal auditors, audit committee, and other employees working in the company, and perform analytical processes; (3) auditors are expected to make use of the collected information and determine the risks which could result in a significant misstatement, and they are also given the instructions regarding how to do this; (4) the auditor is expected to examine the company’s internal control processes and all associated risks; (5) the auditor has to check the risk of significant misstatement because of fraud in the audit, and then reevaluate it in the end stage of the audit; (6) auditors are guided on how to inform the management and audit committee about fraud and its associated risks; and (7) the auditors’ documentation prerequisites have been described (Ramos, 2003). The audit acts as deterrence because it gives oversight and sends a message to any potential perpetrators that their illegal activities could be found out by a third-party. In this study we will highlight how auditing and other deterrence efforts can help identify the specific problems that occur with financial fraudulent reporting, especially those which increase the percentage of negativity on corporate earnings as well as decrease shareholder confidence (and vice versa).
Impact of Sarbanes-Oxley Act on Fraudulent Financial Reporting
Researchers have tried to gauge the effect of fraudulent auditing benchmarks on the practices of auditors. Shelton et al. (2001) explore the audit guidebooks as well as practice assistances and discover that despite the fact every firm under study contained the entire SAS No. 82 aspects in their firm’s audit practice assistances. Several other risk factors discovered in educational studies are not part of the firm’s practice aids. These include: (1) risk assessments are associated with distinct fraudulent activities; (2) the scheduling of the risk assessment related to fraudulent activities; and (3) the technique of estimating the incidence of a fraud. The results indicate that auditors pay less attention to red flags than to those which are a part of the survey which is what leads to decreased shareholder confidence in the company.
Taking an investigational method involving 52 audit managers as respondents, Wilks and Zimbelman (2004a) explored the usage of the fraudulent triangle decomposition in SAS No. 99. They particularly examined whether distinct evaluations of behavior, chance and inducement risk preceding the complete risk of fraud makes the understanding of the auditor towards the inducement, or prospect risks, even better. The researchers discover that auditors who break risk assessments of fraud are more prone to signs of inducements or chance while preparing the entire assessment report rather than those auditors who only prepare a complete assessment of the fraud risk. But the exposure to signs of inducements and chance is apparent only when the signs point out to a low degree of fraud risk. Whenever inducement and signs of opportunity indicate greater risk of fraud, the auditors are likewise responsive towards those signs irrespective of whether they make use of a well-rounded or decomposition approach.
Another research by Wilks and Zimbelman (2004b) suggest that due to the strategic aspect of fraud, officials must change those standards which constrain an auditor’s judgment regarding standards that promote such thinking. Detailed results include: (1) auditors who make use of lengthy checklists have a tendency to be incorrect during assessment of a fraud risk; (2) auditors usually incorrectly assume certain aspect about the administration; (3) auditors are usually unresponsive towards new proofs related to risk of fraud; and (4) usage of processes based on previous audits make them foreseeable and less operational. Wilks and Zimbelman (2004b) recommend that (1) audit benchmarks must be developed to reflect upon the way management might handle the signs of fraud; (2) benchmarks must motivate auditors to collect new, uncommon or accidental audit proof; and (3) auditors must design audit strategies which are unforeseeable.
Carpenter (2008) investigates the gatherings (as per the requirements of SAS No. 99) and the subsequent decisions taken by the auditors regarding the frauds. It was interesting to note that the findings of the thinking sessions indicated a decline in the amount of ideas generated. It, however, resulted in a better quality of ideas pertaining to fraud risk assessment. Carpenter et al. (2006) discover that during the incidence of a fraud, a group which brainstorms together performs way better than the auditors doing the thinking process separately and also to those who do not think at all; giving additional proof of the advantage of sessions of collective brainstorming. The findings of this study are mostly related to the results obtained through the PCAOB inspection groups. These include the incidents where audit groups never carried out or put in writing the proceedings of a brainstorming session, carried out the brainstorming session subsequent to the basic testing or did not contain all the main members of the team of auditors present while the session was in progress (PCAOB 2007b).
It is the aim of SOX to bring about improvement in the internal control system of a listed company. A good internal control system improves the accuracy and quality of financial reporting. It is the requirement of SOX that all the listed companies should disclose the balance sheet items, the special purpose entities and cumulative contractual obligations within their financial statements. The presence of an effective internal control system is another essential requirement of SOX. It is compulsory on the part of management to assess the efficacy of internal control system within their annual reports. SOX have placed very strict standards for the audit committees of companies. Like for instance, as per the principles of SOX an audit committee should comprise of independent directors who should be headed by an expert to keep an eye on their audit work (He and Ho, 2011).
SOX have even laid down strict principles for the audit industry. Audit industry has the duty of supervising the external control. Like for instance, Public Company Accounting Oversight Board (PCAOB) has been created. The duty of this association is to look after the audit industry and to make sure that the audit firms are abiding by the laws and are being disciplined. It is strictly prohibited for the auditor company to perform any non-audit service, like book keeping or providing consultation because such activities would impair the independence of the auditors. Even the audit engagement partners should be rotated at regular intervals to prevent the independence from undergoing impairment (He and Ho, 2011).
In addition to the above mentioned laws, SOX also imposes penalties on the management for committing any kind of fraud or misconduct. It is the duty of the CEO and CFO to certify the system of internal control as well as the financial statements of the entity. Those individuals who do not perform their duties with honesty or carry out work with a careless attitude, if caught, could be liable to pay fines of up to $5 million; even a twenty year criminal sentence can be expected. The wrong doers are even asked to submit all of the bounties or proceeds they have acquired for personal means from the unlawful acts or misbehavior (He and Ho, 2011).
Despite of all the positive impacts of SOX existence, there is one major criticism related to SOX, and that is the heavy cost of implementation and compliance. Particularly, the cost related to the evaluation of internal control system as mentioned in section 404 is very expensive. The American Institute of Certi-ed Public Accountants (AICPA) has showed in a report that organizations are expected to spend sixteen percent more on information systems for SOX fulfillment. As far as internal audits are concerned, thirty two percent is expected by the companies to spend on it (He and Ho, 2011).
On the other hand, it is criticized that SOX treats the small firms in the same manner as it treats the large firms and as a result disproportionately burdens small firms. For instance, the requirements of Section 404, which are mentioned earlier, do not discriminate firms on the basis of size and are designed to affect to all public companies. Due to this, many adverse affects of SOX on small firms are observed by the researchers. According to Kamar et al. (2008), due to the high cost of SOX, many small firms deregister and leave the public market as compared to the large firms which have little effect of SOX. According to Gao et al. (2009), small firms intentionally keep them under the market size entrance of $75 million to meet the criteria for the exclusion from expensive SOX regulation (He and Ho, 2011).
A report of 2010 by The Association of Certified Fraud Examiners’ (ACFE) on Abuse and Occupational Fraud to the Nations showed that while showing less than five percent of the fraud cases in report, the most expensive is the financial statement fraud with a $1.7 million median of loss per occurrence (ACFE, 2010).
According to the ACFE Report in 2010 and PricewaterhouseCoopers Survey conducted in 2009, titled as Economic Crime in Downturn, attaining tips is the best method of detecting the fraud rather any other means. Approximately half of the tips on Frauds were recorded by hotline (at the time of its availability) and sixty-three percent (63%) of these reports involved the frauds at manager or executive level. The PricewaterhouseCoopers survey reports that forty-eight percent (48%) of discovered frauds are due to hotline reports or tips. The Survey concluded that a best example is whistle blowing, which can be a benefit for the companies having a non-tolerable culture towards frauds and those who report it; they are not afraid of retaliation (ACFE, 2010).
COSO Fraud Study
The Fraudulent-Financial Reporting: January 1998- December 2007, an Analysis of U.S. Public Companies is an important study that was conducted by COSO. This study provides a complete analysis of financial frauds reporting incidences, which were investigated by U.S. SEC (Securities and Exchange Commission) during Jan 1998 till Dec 2007 (COSO, 2010). COSO’s Fraudulent-Financial Reporting further updates our thinking about frauds. Few of the critical conclusions of the current study are:
â€¢ In 1987-1997, there are 294 assumed cases of the public companies’ fraudulent-financial reporting but these cases increased to 347. The total increase in the magnitude of fraudulent-financial reporting with increased misstatement and misuse is about $120 billion from the 300 cases of frauds (nearly $400 million per case). The companies like WorldCom, Enron, etc., have the high profile frauds. In COSO’s 1999 report, the mean was $25 million per fraud sample. The largest and biggest fraud in early 2000 raised the mean and total growing misappropriation or misstatement and the medium fraud of the $12.05 million in current study was three times greater than the fraud of the $4.1 million in COSO’s 1999 study (COSO, 2010).
â€¢ The companies that have revenues and medium assets below $100 million are more likely to engage in financial-statement fraud. These are larger companies than those fraudulent companies mentioned in COSO Study (1999). These smaller fraud companies had median revenues and assets less than $16 million (COSO, 2010).
â€¢ The SEC figured out that from 89% of fraud cases in 1987-1997, 83% cases of frauds have some involvement at CFO and/or CEO level. In the 2 years of SEC’s investigation completion, 20% CFOs/CEOs had been accused and more than 60% were actually found guilty (COSO, 2010).
â€¢ The inappropriate recognition of revenue, overstating capitalization of expenses or current assets, is a common technique of fraud. About 60% are the Revenue Frauds in the 2010 study among all of the fraud cases against the 50% in 1987-1997 (COSO, 2010).
â€¢ Characteristics of the ‘Board of Directors’ of both, the firm engaging in fraud and the one not engaging in fraud, are almost the same. In some cases, it was ascertained that wrong decisions were being taken. Thus, in the light of above results, we can suggest that there is a need of research on the processes of governance and interaction between their mechanisms (COSO, 2010).
â€¢ Sixty percent firms involved in fraud changed their auditors during the period of fraud, while the 40% changed their fiscal period prior to the beginning of fraud period. Regarding fraud firms, twenty-six percent of them changed their auditors from the last neat and clean financial statement and the previous fraudulent financial statements. While only twelve percent of non-fraud organizations changed their auditors during this period (COSO, 2010).
â€¢ There was enormous decline of 16.7% in stock price the two days when the news declaration came. This news in the press alleged fraud case and resulted in this decline. Moreover, there was 7.3% stock price decline after the news of investigation from the Department of Justice and SEC report (COSO, 2010).
â€¢ There are very apparent long-term consequences of fraud activities. It is observed that organizations involved in fraud activities very often face delisting of the stock exchange, bankruptcy, or sale of material assets after the fraud discovery. Impact of these consequences is much more than those of the organizations who are not involved in the fraud activities (COSO, 2010).
Abbott, L.J., S. Parker, and G.F. Peters. 2004. Audit committee characteristics and restatements. Auditing: A Journal of Practice & Theory 23 (1): 69-88.
AICPA: 2002, Statement on Auditing Standards (SAS) No. 99: Consideration of Fraud in a Financial Statement Audit (American Institute of Certi-ed Public Accountants, Durham).
Albrecht, W. And Albrecht, C. (2004). Fraud examination and prevention. South- Western, Mason Ohio.
Albrecht, W.S. And M.B. Romney. 1986. Red flagging management fraud: A validation. Advances in Accounting 3: 323-333.
Albrecht, W.S., and C.O. Albrecht. 2003. Fraud Examination and Prevention. (March 21). Mason, OH: Thompson-Southwestern.
Association of Certified Fraud Examiners. 2010 Report to the Nations on Occupational Fraud and Abuse. 2010.
Beasley, M.S.: 1996, ‘An Empirical Analysis of the Relation Between the Board of Director Composition and Financial Statement Fraud’, The Accounting Review 71(4), 443 — 465.
Beccaria, C. (1963) On Crime and Punishment. Bobbs Merril: Indianapolis, IN. Becker, G. (1968) Crime and punishment: an economic approach. Journal of Political Economy, 76, 169-217.
Bell, T.B., and J.V. Carcello. 2000. A decision aid for assessing the likelihood of fraudulent financial reporting. Auditing: A Journal of Practice & Theory 19(1): 169-184.
Beneish, M.D. 1999a. Incentives and penalties related to earnings overstatements mat violate GAAP. The Accounting Review 74 (4): 425-457.
Carpenter, T.D. 2008. Audit team brainstorming, fraud risk identification, and fraud risk assessment: Implications of SAS No. 99. The Accounting Review 82 (October): 1119-1140.
Carpenter, T.D., J.L. Reimers, and P.Z. Fretwell. 2006. Improving auditors’ fraud risk assessments: The benefits of brainstorming in groups. Working paper, University of Georgia.
Cohen, J. Ding, Y., Lesage, C. And Stolowy, H. (2010). Corporate Fraud and Managers’ Behavior: Evidence from the Press. Journal of Business Ethics: 95:271 — 315.
Committee of Sponsoring Organizations (COSO). 1999. Fraudulent Financial Reporting: 1987-1991- An Analysis of U.S. Public Companies. Available at: http://www.coso.org.
COSO. (2010). Fraud Study. www.coso.org
Dechow, P.M., R.G. Sloan, and A.P. Sweeney. 1996. Causes and consequences of earnings manipulation: An analysis of firms subject to enforcement actions by the SEC. Contemporary Accounting Research 13 (Spring): 1-36.
Efendi, J., A. Srivastava and E.P. Swanson: 2007, ‘Why do Corporate Managers Misstate Financial Statements? The Role of Option Compensation and Other Factors’, Journal of Financial Economics 85(3), 667 — 708.
Erickson, M. Hanlon, and E.L. Maydew. 2006. Is there a link between executive equity incentives and accounting fraud? Journal of Accounting Research 44 (March): 113-144.
Farber, D.B.: 2005, ‘Restoring Trust After Fraud: Does Corporate Governance Matter?’, The Accounting Review 80(2), 539 — 561.
Gao, F., J. Wu and J. Zimmerman: 2009, ‘Unintended Consequences of Granting Small Firms Exemptions from Securities Regulation: Evidence from the Sarbanes-Oxley Act’, Journal of Accounting Research 47, 459 — 506.
Glass Lewis & Co (GLC). 2006. Stock Option Backdating Scandal. Yellow Card Alert. (November) Available at: http:/ / www.glasslewis.com.
Harrington, C. 2003. The new accounting environment: Companies face a paradigm shift in how they conduct business. Journal of Accountancy 196 (August): 28-33.
He, L. And Ho, S.K. (2011). Monitoring Costs, Managerial Ethics and Corporate Governance: A Modeling Approach. Journal of Business Ethics (2011) 99:623 — 635.
Hernandez, J.R., and T. Groot. 2007b. Corporate fraud: Preventive controls which lower fraud risk. Working paper, Free University of Amsterdam.
Hogan, C.E. et al. (2008). Financial Statement Fraud: Insights from the Academic Literature. Auditing 27. 2: 231-252.
International Audit Networks. 2006. Global Capital Markets and the Global Economy: A Vision from the CEOs of the International Audit Networks (November). Available at: http://www.globalpublicpolicysymposium.com.
Kamar, E., K. Pinar and E. Talley: 2008, ‘Going-private Decisions and the Sarbanes-Oxley Act of 2002: A Cross-Country Analysis’, Journal of Law, Economics and Organization 25, 107 — 133.
Lie, E. 2005. On the timing of CEO stock option awards. Management Science 51 (5): 802-812.
McMullen, D.A., and K. Raghunandan. 1996. Enhancing audit committee effectiveness. Journal of Accountancy 182 (August): 79-81.
Nelson, M. W, J.A. Elliott, and R.L. Tarpley. 2002. Evidence from auditors about managers’ and auditors’ earnings management decisions. The Accounting Review 77 (Supplement): 175-202.
Patterson, E., and J. Noel. 2003. Audit strategies and multiple fraud opportunities of misreporting and defalcation. Contemporary Accounting Research 20 (Fall): 519-549.
Pincus, K.V. 1989. The efficacy of a red flags questionnaire for assessing the possibility of fraud. Accounting, Organizations and Society 14(1-2): 153-164.
Public Company Accounting Oversight Board (2007) PCAOB Release No. 2007-005 Rulemaking Docket Matter No. 021
Public Company Accounting Oversight Board (PCAOB). 2005. PCAOB Standing Advisory Group Meeting: Reasonable Assurance (October 5-6). Available at: http://www.pcaobus.org/News_and_Events/Events/2005/10-05-06.aspx.
Public Company Accounting Oversight Board (PCAOB). 2007b. Observations on Auditors’ Implementation of PCAOB Standards Relating to Auditors’ Responsibilities with Respect to Fraud. PCAOB Release No. 2007-001. (January 22). Available at hrtp://www.pcaobus.org/Inspections/Other/2007/0-1 -22_Release_2007-001.pdf.
Ramos, M. (2003) Auditor’s responsibility for fraud detection. Journal of Accountancy Online Issues. Found at http://www.aicpa.org/pubs/jofa/jan2003/ramos.htm.
Rezaee, Z. (2003) Causes, consequences, and deterence of financial statement fraud. Critical Perspectives in Accounting.
Rezaee, Z. 2004. Restoring public trust in die accounting profession by developing anti-fraud education, programs, and auditing. Managerial Auditing Journal 19 (1): 134.
Rezaee, Z. 2005. Causes, consequences, and deterrence of financial statement fraud. Critical Perspectives on Accounting 16 (April): 277-298.
Rosner, R.L. 2003. Earnings manipulation in failing firms. Contemporary Accounting Research 20 (Summer): 361-408.
Sarbanes, P. And Oxley, M. (2002) The Sarbanes-Oxley Act of 2002. Washington, D.C.: U.S. Congress (http://www.sarbanes-oxley-101.com).
Shelton, S.W., O.R. Whittington, and D. Landsittel. 2001. Auditing firms’ fraud risk assessment practices. Accounting Horizons 15 (1): 19-33.
Summers, S.L., and J.T. Sweeney. 1998. Fraudulently misstated financial statements and insider trading: An empirical analysis. The Accounting Review 73 (January): 131-146.
Wells, J. (2001) “Why ask?” You ask: Because its part of your job — and it may uncover fraud. Journal of Accountancy Online Issues, found at http://www.aicpa.org/pubs/jofa/sept2001/wells.htm.
Wells, J. (2002) Let them know someone-s watching. Journal of Accountancy Online Issues, found at http://www.aicpa.org/PUBS/jofa/May2002/wells.htm.
Wells, J. (2004a) Corporate Fraud Handbook: Prevention and Detection. John Wiley & Sons, Inc. Hoboken, New Jersey.
Wells, J. (2004b) New approaches to fraud deterrence. Journal of Accountancy Online Issues, found at http://www.aicpa.org/PUBS/jofa/feb2004/wells.htm.
Wilks, T.J., and M.F. Zimbelman. 2004a. Using game dieory and strategic reasoning concepts to prevent and detect fraud. Accounting Horizons 18 (3): 173-184.
Wilks, T.J., and M.F. Zimbelman. 2004b. Decomposition of fraud-risk assessments and auditors’ sensitivity to fraud cues. Contemporary Accounting Research 21 (Fall): 719-745.
Williams, K.R. & Hawkins, R. (1986). Perceptual research on general deterrence: a critical review, Law and Society Review, 20(4), 545-572.
Get Professional Assignment Help Cheaply
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Why Choose Our Academic Writing Service?
- Plagiarism free papers
- Timely delivery
- Any deadline
- Skilled, Experienced Native English Writers
- Subject-relevant academic writer
- Adherence to paper instructions
- Ability to tackle bulk assignments
- Reasonable prices
- 24/7 Customer Support
- Get superb grades consistently
Online Academic Help With Different Subjects
Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.
Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.
While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.
Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.
In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.
Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.
We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!
We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.
Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.
What discipline/subjects do you deal in?
We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.
Are your writers competent enough to handle my paper?
Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.
What if I don’t like the paper?
There is a very low likelihood that you won’t like the paper.
- When assigning your order, we match the paper’s discipline with the writer’s field/specialization. Since all our writers are graduates, we match the paper’s subject with the field the writer studied. For instance, if it’s a nursing paper, only a nursing graduate and writer will handle it. Furthermore, all our writers have academic writing experience and top-notch research skills.
- We have a quality assurance that reviews the paper before it gets to you. As such, we ensure that you get a paper that meets the required standard and will most definitely make the grade.
In the event that you don’t like your paper:
- The writer will revise the paper up to your pleasing. You have unlimited revisions. You simply need to highlight what specifically you don’t like about the paper, and the writer will make the amendments. The paper will be revised until you are satisfied. Revisions are free of charge
- We will have a different writer write the paper from scratch.
- Last resort, if the above does not work, we will refund your money.
Will the professor find out I didn’t write the paper myself?
Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.
What if the paper is plagiarized?
We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.
When will I get my paper?
You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.
Will anyone find out that I used your services?
We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.
How our Assignment Help Service Works
1. Place an order
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
2. Pay for the order
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
3. Track the progress
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
4. Download the paper
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!