What social responsibilities, if any, did Kachina Petroleum Equipment Company have in reporting the fraud discovered after Marsh resigned?
Social responsibility requires individuals to fulfill their civic duty to benefit society by striking a balance between economic growth, the welfare of the society and the environment. In this regard, Kachina Petroleum Equipment Company had a legal and ethical responsibility to report the fraud discovered after Marsh resigned. Under the Consumer Protection Act of 2009 was created to improve accountability and transparency the company was legally responsible to report the crime. Kachina is expected to safeguard the interests of the stakeholders which is this case would require Management to report fraudulent
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Effective internal control would have detected the fraud the in its initial stage. The most common internal controls that is evidently missing is segregation of duties which is the concept of having more than one person completing a task, therefore, with Marsh being the Chief Financial Officer (CFO), he should not be allowed to write, and sign checks especially without a second authority figure approval (segregation of duties, n.d.). Proper documentation and reconciliation of monthly transactions which are critical internal control that help to reduce fraud was evidently not in place or was not a separate duty. Management must ensure that all documents and transactions such as sales receipts, bank deposits and payments to vendors are monitored and reconciled weekly or monthly. Companies without internal control process or fraud prevention mechanisms will provide opportunities for fraudulent activities, hence the reason Marsh was able to setup and make payments to families and …show more content…
To this end, he might have become very confident of the way he tactfully conducted his fraudulent activities, which gave him the urge to continue with the practice at Weststar.
Should Kachina Petroleum Equipment Co. be held somewhat responsible for not formally reporting the fraud to the authorities when they knew Marsh was a crook? Explain.
Kachina Petroleum Equipment Co. should be held responsible for not formally reporting the fraud to the authorities. Management is responsible for the long-term success of the company and as such must act in the best interests of the company and ensure that the company’s assets are not misused or mismanaged. No company is immune to embezzlement, it is therefore important for management to report incidences of fraud to show that they are operating legally, ethically and transparently and is not engaged in conspiracy. While it can be argued that divulging too much information may put the company in a questionable light, not reporting the matter send a negative message to employees, stakeholders and customers when the scheme is eventually
Ans. 7 From my point of view I would have reported the scheme to senior management. The scheme would have proved very harmful for the whole company and the harm of the company is bad for each and every employee of the company. Many people may have lost their jobs due to this scheme.
I believe that asset misappropriation by accounts payable fraud is occurring at Wayland Manufacturing Company due to a lack of proper internal controls. Making the company’s Chief Accountant responsible for additional day-to-day functions provides him with opportunity to commit by creating fictitious vendors with his information and then creating fictitious invoices. Newbaker can then conceal his fraud by approving the invoices for payment. Employees working at an organization for more than five years are more likely to commit fraud. Therefore, Newbaker’s six-year history with the company has made him trustworthy and very knowledgeable, which could indicate involvement in asset misappropriation. The high employee turnover could represent a past fraudster leaving before getting caught or employees refusing to continue with the asset misappropriation. In addition, the varying monthly accounts payable transactions ranging from the lowest being April 2014 and
An Organization’s Corporate Social Responsibility (CSR) should promote ethical and social standards throughout its overall mission. There will be a summary of the Folole Muliaga case. There will be an assessment of the consequences of the victim, Folole Muliaga and the actions of Mercury Energy, the energy company that disconnected Folole’s electricity. This paper will also present a discussion of the reforms and guidelines adopted as a result of this tragedy and the importance supported by the research.
Many other businesses may not want to do business as the company was involved with immoral behavior. The unethical business practices of the company will also gain exposure in the media and to the public (Nicol, 2015, n.p). Employees no longer keep unethical activities of the company to themselves. As a whistleblower, they may be perceived as a traitor, but in this case the senior executives are being traitors. They are taking money from immoral behavior and tarnishing the name of the company (Nicol, 2015, n.p).
Phar-Mor was known as one of the major discount chain retailers in the late 1980’s - early 1990’s. It was founded by Mickey Monus, a gambler in nature, who with the help of senior management was “cooking the books” for years to cover up his loses. The reason why senior management agreed to do this fraud is the belief in unique ability of their leader to fix everything later on. This case is known as one of the biggest accounting frauds in the corporate history of the U.S. This paper will analyze who was affected by this fraud, the motives behind it and what systems of control failed to prevent it.
But in order the books should look a little acceptable and no one should come up on their fraud instantly and specially the lower level bookkeeping team by doing their day to day entries and knowing that utility expenses is not a capital improvement they had to do it in a professional way
The law requires auditors to report any fraudulent activities discovered during the course of an audit to the SEC. This is when Article I of Section 51 of the AICPA Code of Professional Conduct comes into play. The auditor may uncover illegal acts or fraud while auditing the financial statements of a company. In such instances, the auditor must determine his or her responsibilities in making the right judgment and report their discovery or suspicions of the said fraudulent activities. Tyco International is an example of the auditors’ failure to uphold their responsibilities. Tyco’s former CEO Dennis Kozlowski and ex-CFO Mark Swartz sold stocks without investors’ approval and misrepresented the company’s financial position to investors to increase its stock prices (Crawford, 2005). The auditors (PricewaterhouseCoopers) helped cover the executives’ acts by not revealing their findings to the authorities as it is believed they must have known about the fraud taking place. Another example would be the Olympus scandal. The Japanese company, which manufactures cameras and medical equipment, used venture capital funds to cover up their losses (Aubin & Uranaka, 2011). Allegedly, thei...
Due to such lack of monitoring, management continued to be unaware of such transactions that continued to impact the company negatively. This provided the Rigas family many opportunities to override controls since the lack of corporate governance enabled the decisions to be made by Rigas family without oversight. For example, the article “Adelphia Officials are Arrested, Charged with ‘Massive’ Fraud” discuses how Timothy Rigas had to limit himself to $1 million a month of compensation that was withdrawn from the company for personal use. All decisions were continuously made by such members of the family, in which case for Adelphia, was the team of management. With the lack of controls creating opportunity, they were free to do what they wished- which is something they took incredible advantage
Thai Oil Limited Company is a subsidiary company of PTT Thai group Limited Company which is a corporate company established in Thailand. Moreover, PTT Thai group is the biggest shareholder (49.1% of shareholder ratio) of the issued and paid-up capital of the company. Thai Oil is the firm of petroleum refinery specifically in Complex Refinery produced in high modern tech-nology and relevant to involved chain petrochemical firm. The major market is the national market guaranteed with one of the most efficient oil refinery companies in South-east Pacific. Presently, the oil refinery produce capacity is approximately 275,000 barrel per day (25% of the whole nation oil refinery). Additionally, Thai Oil also involves in the other kinds of the business by the shareholder, for example, power producing business, fundamental petroleum business, Paraxylene producing business, petroleum and chemical petroleum products marine transportation, chemical petroleum pipe transportation, as well as the consulting of energy. Thai Oil Group’s integrated business com-prise of the following sectors; Petroleum Refinery Business (TOP), Petrochemical Business(TPX), Lube Base Petroleum Business, Solvent and Chemical Products Business(TOS/TS/SKAV/TSV), Power Generation(TP/TOPSPP/GPSC), Transportation Business(TM/THAPPLINE), and Manufacture of Ethanol Business(TET). Therefore, Thai Oil also has managed the concept of CSR principle into business strategy. Apart from running business by taking the safety of society
The Hollate Manufacturing case provided by Anti-Fraud Collaboration has well illustrated how several common issues in an organization contributed to the fraud’s occurrence. These issues can be categorized into two major groups: ethical culture (internal aspect) and internal control system (external aspect). By taking effective actions to enhance these two aspects, an organization can protect itself against the largest frauds, which result in financial and reputational damage.
ABSTRACT: The quantity of accounting fraud cases keeps on rising. Fraud is a consistent thing that will reliably be around, and in a bigger number of routes than just a single. An extensive apportionment of organizations out there fighting fraud, either from within the organization, or from outside the organization. Knowing how to manage this is essential for an organization to be productive over an extended period of time. The investigation regarding the matter of accounting fraud will utilize sources from the web and the DeVry School Library.
In today’s day and age, there is a lot of news that is related to corporate accounting fraud as companies intentionally manipulate their financial statements to show a better picture of their financial health. The objective of financial reporting is to provide financial information about a company to its various stakeholders such as investors and creditors so that these stakeholders can make decisions accordingly. Companies can show a better image of their financial well being by providing misleading information. This can be done by omitting material information from the books or deceitful appropriation of assets such as inventory theft, payroll fraud, check forgery or embezzlement. Fraudulent financial reporting will have an effect on the This includes but is not limited to; check forgery, inventory theft, cash or check theft, payroll fraud or service theft.
There has a certain situation that will occur this opportunity such as monitoring of management is not effective, complex organisation structure, and internal control components are deficient. In Cendant case, the CUC made various adjustments to incorporate the misstatement into the general ledgers and this causes the opportunity to fraud happens.
They were committing fraud by creative accounting, acting illegally when using insider trading and shredding their documents relevant to the investigation. Next, consider the stakeholders. Anyone who owns stock in the company would suffer, along with every employee. Under the values bullet we can assume that they have none. Greed and power got the better of every one of them.
Tyco provides products and services across the world. The company is global and diversified providing a variety of products including electronics, healthcare, fire and security services and engineered products and services. While employing over 250,000 people worldwide they grossed approximately $40 billion in revenue in the year 2005. In 2002 Tyco was involved with the corporate scandal where the management mis-appropriated corporation funds. The previous CEO Dennis Kozlowski was convicted in 2005 on 22 counts of the 23 that he was charged with. This is an example of not only a legal issue of responsibility but also one of an ethical issue that the Tyco Corporation has had to face. In the face of the legal and ethical issues that this mishap had placed the corporation in, Tyco placed Ed Breen in as chairman and CEO. Mr. Breen joined the company in 2002 after the scandal and immediately began the rebuild of the company’s name. With the appointment of Ed Breen and his changing of the company’s ethical standards (to be discussed in the next portion of the paper) he promotes the legal responsibilities of not only the company’s employees but the responsibilities of the suppliers and buyers to report any wrong doing. This reporting also speaks to the ethics of the Tyco corporation employees as well as those of the companies th...