Discussion Questions: Accounting, Finance, SPSS

Accounting, Finance, SPSS
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Discussion Questions
Do you think accounting principles deter fraud or do they merely prompt entities to follow procedural guidelines? Explain your answer.
Depending on the corporate ethics adopted by a business, financial and accounting regulations could either mean mere stipulated procedures to be followed to avoid sanctions by regulators or could be perceived as principles of prudence and sincerity. Businesses that are keen on upright moral ethics will adopt the latter to enhance accountability, trust and competence. Full disclosure requirement in financial institutions has been enacted especially for the former kind of companies who are modest in business ethics and provide safe havens for fraudsters (Verschoor, 1998). Such companies' mere goal is to make maximum profits for their stakeholders and easily compromise on ethics. They follow regulations for mere stipulations. Ethics and values are not created for expedience. They articulate behavioral examples that should be adopted and applied even in other realms.
What is the motivation for concealing liabilities and expenses?
It is currently quite frequent to read headlines companies entangled in court cases muddled with issues of fraud, corruption and unaccountability. The commonplace illegal business practices have resolved researchers to seek motivational factors to the menacing trend. According to research, the highest rate of fraud is asset misappropriation and monetary larceny that involve tampering of ledgers, billing and receipts. The core motivation for concealing expenses and liabilities is to maintain unduly high stock prices and to keep low the cost of input capital. Customer returns are protracted to uphold a perceived sense of high revenue report into the next financial year (Well, 2013). Low expenses, overstated assets, trivialized liability leads to high value assets from non-expensed capitalized costs. This creates the impression of a successful management thus ensuring the directors are maintained in the office unduly.
What are the four common forms of improper asset valuation?
The four common modes of improper asset valuation that are intended to shroud in secrecy any cases of fraud include (Stuart, 2006);
Inventory fraud that include;
Disregarding obsolete inventory results,
exaggerating assets,
deliberately mismatching sales cost with appropriate revenue and
Inflating the physical inventory count and unit value of inventory.
Fraud on Receivable Accounts;
Creating fabricated or overstating received sales, falsely aging debt using receivables to cover up those overdue (Well, 2013).
‘Bill and Hold Sales'
Manipulations in business amalgamation;
During merger and acquisition, fraudsters overstate or create immoderate levels of reserves then later converting the surplus reserves to future earnings after signing of an agreement.
Failing to vitiate goodwill that are loss making
Fixed asset fraud
False capitalization of disbursals
Disregarding and non-disclosure stating leased versus owned assets in audits
Assigning unjustified market value to assets by exploit...