Fraud, Errors and Illegal Acts Term Paper Example | Topics and Well Written Essays - 1250 words

Fraud, Errors and Illegal Acts - Term Paper Example Internal control, proper reporting mechanism and the implementation of sound accounting policies and procedures shall rest with the management due to which, role of management has increased. A forensic accountant must have an in-depth study of the documents presented and should have the command to use computer software and so on. Forensic auditors must have excellent written and oral communication skill. Auditors must be aware of IT application and business processes to have a grip on IT related frauds. To nab the tax dodgers, Internal Revenue Service has number of trained people who gather information from different sources / channels to be used to detect tax frauds. IRS has the power to confiscate property of the tax defaulter / tax dodger in order to pressurize them to clear their tax liabilities. FRAUD, ERRORS AND ILLEGAL ACTS The Auditors’ Responsibilities to Detect Fraud, Errors and Illegal Acts The basic responsibility of an auditor is to detect fraud, errors and illega l acts that takes place in an organization and report it to the competent committee for audit to take appropriate measures to prevent fraud, errors and illegal acts (Alleyne & Howard 2005). ... controls, absence of controls, ineffective controls and overriding of controls by the management that culminates fraudulent expenses and skimmed of assets; to pinpoint the individual(s) that are involved in fraudulent transaction, their attitude and past history; identify the loopholes attracting fraud(s) and to suggest management / competent committee of the Board to plug in the identified loopholes (AICPA 2002). After the debacle of Enron and World Com, the American legislatures drafted and promulgated an act named as â€Å"Sarbanes Oxley Act-2002† just to restore the investor’s confidence. The act sets the new pattern of accountability and imposition of penalties for the wrongdoers (Alleyne & Howard 2005). According to laid down criteria, auditors have to take into account the mentioned criterion while auditing an enterprise. Auditors who have conducted audit of an organization shall keep audit reviews for a period of five years. Auditors are to certify the effective ness of internal controls of an entity wherein they conducted audit. They have to advise the management to form a team of experts from finance, audit, information technology, operation, risk management and legal to evolve comprehensive procedure for an effective control on financial transactions (Alleyne & Howard 2005). The team of experts should directly be reporting to the CEO/CFO of the company for necessary guidance and instructions in light of the audit reports. Management should bear the cost of compliance to improve / revamp existing system for an effective internal control. Auditors should not encroach upon the discretions of management for implementation of comprehensive procedure concerning effective internal controls or overcome the internal control deficiencies.