Scandals of Auditing

Scandals of Auditing
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Scandals of Auditing
Introduction
Ethical auditing ensures that organizations present accurate financial statements to stakeholders. In that vein, investors and other financial information users are not mispresented and misled by the annual reports. Audits should be performed independently and systematically to present the company’s fair and accurate value and prevent fraud or unethical reporting. Auditing plays a critical role in ensuring that the firm enhances stakeholder’s confidence about its numerical figures and information. From a societal viewpoint, firms must integrate ethical practices within the business success via prudent decision-making processes. This report evaluates Fuji Xerox New Zealand’s (FXNZ hereafter) auditing scandal via various critical lens including a discussion of the organization, what transpired, one example of fraud within the company and consequences to various stakeholders, the involved auditors and their role within the scandal, and the perpetrators’ current situation.
The Organization: Fuji Xerox New Zealand
FXNZ is a consolidated subsidiary of FUJIFILM Holdings Corporation (FH). It is a global brand synonymous with business leadership and document services. In terms of its mission, the company provides state-of-the-art business processes and enterprise document solutions, digital printing technologies, as well as outsourced services. The firm is committed to facilitating customers in solving complex document-related challenges and streamline their processes and workflows. Fuji Xerox Co., Ltd was founded in 1962 as a joint venture between Xerox Limited (25 percent) and FH (75 percent). FXNZ is part of the global enterprise group offering market-leading business as well as document management services. Accordingly, FXNZ forms part of the Asia-Pacific region, and thus its operations are coordinated from Singapore.
The Events in General
When closing its fiscal year accounts culminated in March 2017, FH discovered that two of FX’s overseas sales affiliates, FXNZ and Fuji Xerox Australia Pty. Ltd, has participated in accounting malpractices in its previous business dealings. An inquiry into the matter by the Independent Investigation Committee indicated that FXNZ had engaged some accounting malpractices in the financial period for 2015 and 2010. In September 2009, an internal audit by FX’s Asia Pacific Operations (APO) noted some lease contracts at FXNZ that failed to meet appropriate accounting practice criteria. In July 2015, an email contending accounting irregularity, in addition to overstated revenues for the firm’s leased equipment, was shared with executives and other parties at FX. A special audit revealed inappropriate transactions, but this did not make it to the FH’s annual reports. In September 2015, APO notified FXNZ that it had prohibited the employment of inappropriate lease contracts, but the latter failed to revise its accounting handling related to signed contracts. In Feb 2016, FXNZ Chief Executive Officer was replaced, and the incoming Chief Finance Officer (CFO) reported FXNZ’s ambiguous accounting activities and bad debts. In September 2016, a Ne...