Forensic Accounting and Fraud Examination – Assignment Example
Fraud Examination Forensic Accounting and Fraud Examination Post Adrienne has given a concise and reliable explanation regarding how the problem of management override and collusion can be addressed in an organization. I support the argument that there should be procedures designed by the auditors, as well as professionals dealing with fraud. In my opinion, the examining of journal entries in the books, as well as records, plays a crucial role in addressing any form of fraud that may be related to collusion and management override. An understanding of the internal processes in the organization plays a central role in identifying and dealing with any form of fraud. An external auditor ought to have knowledge on the operations of the organization, which can be done through interviewing employees at all organizational levels.
I am also in agreement that the examination of all the essential accounting estimates plays a role in identifying fraud related to collusion and management override. In my opinion, objectivity forms a crucial part of fraud examination. As such, the auditor should deal with bias in the reporting of financial statements. Adrienne has comprehensively discussed how the examination of “one time” transactions helps in detecting fraud. In reality, financial statements may be manipulated through transactions that tend to be “one time.”
I agree with Marcela’s post regarding the role of the external auditor when it comes to financial reporting. An external auditor has an obligation to provide users of financial statements with true information regarding financial statements. The main aim of relying on the external auditor is to ensure that the information, which they provide, is not influenced by the management. External auditors are expected to provide objective and unbiased information about the financial statements of the organization. They should conduct their own independent research in an organization, and not entirely depend on the information provided by the management. I approve the discussion given by Marcela regarding the determination of materiality. It is true that issues to do with materiality in an organization can be determined by looking at the financial statements and information such as assets, revenues, as well as gross profit accrued during a certain financial period. Marcela has given a worthwhile explanation about what can be regarded as material in an organization. There are good explanations of what can be regarded as material or immaterial in an organization.
Chastity’s explanation about whether earnings management can be considered fraud constitutes a reliable explanation about the issue of earnings management. The discussion gives the reader an insight into what earnings management is; I am in agreement with the discussion that earnings management cannot be considered as fraud under some circumstances. The fact that Chastity contends that earnings management can be considered a fraud, when it does not become material for those using the financial statement of an organization, helps in understanding the circumstances under which earnings management becomes fraud. Chastity gives the reader a convincing explanation, which the reader can use while classifying earnings management in an organization. With such an explanation, the reader is well equipped with knowledge about earnings management.