Overviewwhy Audit We Will Either Be The Auditor Or Be Audited We Mus ✓ Solved
Overview Why audit? We will either be the auditor or be audited. We must understand internal control and the management of risk. The management of risk is everyone's responsibility. Report Requirements Report Content 1.
This report fulfills the request of your supervisor who is completing a project on these key issues, including certifications and the roles fraud detection and deterrence, as well as internal control serve, to meet the goals of the organization. 2. Following your review of course materials in Week 8, use the websites below to create a report of at least one page for each of the three topics: fraud detection and deterrence, internal control, and certifications. 3. Relate these topics to our course material for Principles of Accounting I.
4. The goal is to research, consider, and report what you know about these topics. 5. Consider the question and decide: what would you want to know? Report Topics · Fraud Detection and Deterrence · Internal Control: COSO · Certifications: CFE, CIA, and CISA Report Layout 1.
Always include your name and a descriptive title in the file name. 2. Create, save, and submit a Microsoft Word document that covers the topics listed below and consists of one page (one page usually has at least 300 words) for each topic. 3. Your report should be adequate.
Fewer than three pages is not long enough; seven pages is too long. Ideally, you will end up with a three-page (three pages usually have at least 900 words) report not including the title or reference page. 4. Report is expected to have at least three-pages not including the title or reference page. Fewer than three pages is not long enough; seven pages is too long.
5. Include your name and a descriptive title in the file name. 6. Your report should be single-spaced, with double spacing between paragraphs. 7.
Use headers within the document. Report Structure 1. You are writing a business report, not double-spaced academic papers. 2. This is not a business proposal, and it is not a casual reflective report.
3. Tell a story. 4. Explain the concepts. 5.
You are building your vocabulary. 6. Spell check. Write, read, and edit. Take care with word selection and sentence structure.
7. Use APA style for citations and create a works cited list. Include website references. 8. You can use the above concepts, particularly the paragraph on "Why audit?" without reference.
A good item for your works cited list: UMUC ACCT 220 Course Materials. 9. Similar to all submissions for this class, use your own words. 10. Show what you know!
Paper for above instructions
Your Name
Submitted to: [Supervisor's Name]
Date: [Enter date]
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1. Fraud Detection and Deterrence
Fraud is a significant threat to organizations globally, costing businesses billions of dollars each year in losses and diminishing stakeholder trust. The essence of fraud detection and deterrence lies in identifying fraudulent activities and establishing measures to prevent such activities from taking place. According to the Association of Certified Fraud Examiners (ACFE, 2022), organizations with robust anti-fraud programs are more effective in detecting and preventing fraud. This impact underscores the importance of both proactive and reactive strategies in fraud management.
Fraud detection refers to the processes or activities that come into play to identify and investigate suspicion of fraudulent behavior. Techniques include data analytics, whistleblower hotlines, and regular audits. For instance, using data analytics tools can help organizations detect anomalies in transaction patterns that may indicate fraudulent activities (Bhasin, 2021). The role of internal auditors is paramount in this respect; they not only detect fraud but also assess the company's vulnerability to fraudulent activities.
Deterrence, on the other hand, involves creating an environment where the risks of committing fraud outweigh any potential benefits. This is achieved through a combination of policies, training programs, and a strong ethical culture. Employees must understand that fraud has severe repercussions, both personally and professionally. Implementing codes of conduct and conducting frequent training on ethics can foster an environment of integrity (Cressey, 1953; Trompeter, et al., 2013).
Incorporating fraud detection and deterrence as a part of corporate governance aligns with the Principles of Accounting, particularly in safeguarding assets and ensuring corporate compliance (UMUC ACCT 220 Course Materials). When companies prioritize fraud prevention and awareness, they enhance not only their financial integrity but also their overall reputation, thereby promoting sustainability in their operations (Zhao & Kessler, 2018).
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2. Internal Control: COSO Framework
Internal control systems are vital for safeguarding a company’s assets, ensuring the integrity of its financial reporting, and supporting the compliance to laws and regulations. The Committee of Sponsoring Organizations of the Treadway Commission (COSO, 2013) has developed a framework that emphasizes five interconnected components of internal control: Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring Activities.
Firstly, the Control Environment sets the tone of an organization, influencing how employees view their roles and responsibilities regarding internal controls. This includes the company’s culture, governance structure, and management’s philosophy (COSO, 2013). Next, Risk Assessment involves identifying and analyzing risks that could prevent an organization from achieving its objectives. Companies must establish effective processes for risk management, as it directly affects their ability to comply with regulations.
The Control Activities component entails the actions taken to mitigate risks. This may include approval processes, reconciliations, and other operational controls that help in the actual performance of the controls designed (Woods & Dyer, 2022). Information and Communication ensure that pertinent information is disseminated timely, promoting effective decision-making. Finally, Monitoring Activities involve ongoing evaluations of the internal control components to determine their effectiveness.
Implementing the COSO framework supports organizations in establishing a comprehensive and effective system of internal control, which is an integral part of the accounting principles taught in the Principles of Accounting I course (UMUC ACCT 220 Course Materials). Effective internal controls can deter fraud and increase the reliability of financial reporting, ultimately enhancing stakeholder confidence and organizational performance (Zhou, et al., 2019).
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3. Certifications: CFE, CIA, and CISA
Certifications in auditing and internal controls serve to enhance professionals' skills and knowledge, positioning them to effectively manage risks and ensure compliance. The Certified Fraud Examiner (CFE), Certified Internal Auditor (CIA), and Certified Information Systems Auditor (CISA) designations are among the most recognized certifications in the field.
The CFE credential is awarded by the ACFE and focuses on fraud prevention and detection, emphasizing the critical competencies necessary to uncover financial crimes (ACFE, 2022). CFEs are equipped with skills in financial transactions, fraud prevention, and investigation techniques. Their expertise is vital in organizations that prioritize the detection and deterrence of fraud.
The CIA certification, governed by the Institute of Internal Auditors (IIA), focuses on internal auditing practices and standards. CIAs possess a comprehensive understanding of risk management, control processes, and governance, making them essential in evaluating the effectiveness of internal control systems (IIA, 2021). Becoming a CIA confirms that an auditor is knowledgeable about best practices in internal controls, aligning closely with the principles in the Principles of Accounting I course.
Lastly, the CISA certification is tailored for IT audit professionals, focusing on information systems controls and management. Given the increasing reliance on technology in financial operations, CISAs play a crucial role in ensuring that information systems are secure, reliable, and align with business objectives (ISACA, 2022). The expertise gained through CISA is directly beneficial for organizations wanting to minimize technology-related risks.
Collectively, these certifications enhance the audit profession's credibility, ensuring that auditors are well-equipped to detect and prevent fraud while also implementing robust internal controls. In light of the principles discussed, such qualifications are essential for anyone seeking to understand and influence the audit landscape effectively (UMUC ACCT 220 Course Materials).
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References
- Association of Certified Fraud Examiners (2022). Report to the Nations: Global Fraud Study. Retrieved from [www.acfe.com](https://www.acfe.com)
- Bhasin, M. (2021). Fraud Detection Techniques: A Review. International Journal of Finance & Banking Studies, 10(1), 40-56. doi:10.20525/ijfbs.v10i1.601
- Committee of Sponsoring Organizations of the Treadway Commission (2013). Internal Control – Integrated Framework.
- Cressey, D. R. (1953). The Selling of the Fraud. In Principles of Criminology (pp. 436-447).
- Institute of Internal Auditors (2021). CIA Certification. Retrieved from [www.theiia.org](https://www.theiia.org)
- ISACA (2022). CISA Review Manual. Retrieved from [www.isaca.org](https://www.isaca.org)
- Trompeter, G., & et al. (2013). The Impact of Corporate Governance on Internal Control. Auditing: A Journal of Practice & Theory, 32(1), 55-85.
- Woods, M., & Dyer, D. (2022). The Role of Control Activities in Internal Control Systems: Effective Design and Implementation. International Journal of Business Administration, 13(2), 20-30.
- Zhao, X., & Kessler, A. (2018). Auditing and Organizational Performance: The Importance of Integrity. Journal of Business Ethics, 150(2), 373-389.
- UMUC ACCT 220 Course Materials.
This report provides insight into the significance of audit processes, emphasizing the interplay between fraud detection, internal controls, and certification in ensuring organizational sustainability and effectiveness.