Introduction
• Freescale Semiconductor Inc. (FCI) is a global leader in embedded processing solutions, providing industry leading products that are advancing the automotive, consumer, industrial and networking markets.
• From microprocessors and microcontrollers to sensors, analog integrated circuits and connectivity – FCI’s technologies are the foundation for the innovations that make the world greener, safer, healthier and more connected.
Continued from previous slide
• Some of Free scale’s key applications and end-markets include automotive safety, hybrid and all-electric vehicles, next generation wireless infrastructure, smart energy management, portable medical devices, consumer appliances and smart mobile devices.
• The company is based in Austin, Texas, and has design, research and development, manufacturing and sales operations around the world.
Regulatory bodies that are involved to eliminate
Financial Fraud
1. COSO And Tradeway Commission: The Bodies are very much involved in establishing an integrated internal system for companies, their managements and their auditors. They are designed to provide reasonable assurance that the company achieve its objectives in the following areas:
– Reliability of financial reporting
– Compliance with applicable laws and regulations
– Effectiveness and efficiency of operations
Continued from previous slide
2. THE SABANES–OXLEY ACT 2002 (SOA): The intent of the SOA is to reduce the likelihood that material fraud will go undetected. The SOA includes the following major provisions – The creation of the Public Companies Accounting Oversight Board (PCAOB)
The Term Paper on Company Description of Dewhirst Group Plc
Dewhirst Group Plc manufactures and distributes clothing and toiletries. Operations are carried out in the United Kingdom, Malaysia, Morocco and Indonesia. Manufacture of clothing accounted for 91% of revenues for the year ended 14th Jan 2000 and toiletries accounted for 9%.Competitor AnalysisDewhirst Group Plc operates in the Diversified Apparel Mfrs. sub-industry, which is a sub sector of the ...
– Rules designed to increase auditor independence
– New responsibilities for corporate directors, chief executive officers and chief financial officers
– Enhanced financial disclosures.
Continued from previous slide
3. PCAOB – The PCAOB is a five-member board of financially literate members. The board has the authority to establish auditing standards, quality control standards, and independence standards for audits of public companies. In addition, the PCAOB has the authority to inspect the work of public company auditors. The PCAOB deliberations result in the adoption of rules that are submitted to the SEC for approval. Prior to the Sarbanes-Oxley Act, the AICPA Auditing Standards Board was responsible for these functions on a self regulatory basis.
Continued from previous slide
It is observed that most of the cases that fraud occurred within the consent and presence of the highest authority of the organization who is basically empowered to monitor the whole process. So, when the authority is guiding to manipulate the accounting information for their personal interest, it is very difficult to resist them by formulating laws.
Insider Trading
Definition of Insider trading:
A crude way of understanding the issue is the “abstain or disclose” rule: You have material non-public information that others don’t have. You either disclose it to the counter-party, or you just don’t trade. That’s actually not really the law; the law is much more nuanced than that. But it’s a healthy attitude to have from an ethics perspective.
Role and Remedy of SEC There are numerous bodies monitoring trades. In-house counsels routinely get requests asking the company to disclose information around particular events. SEC is the vital player to monitor the whole ground. Role of SEC – a. Protecting the whistleblower b. Constant monitoring of every case that have been accused by others. Continued from previous slide c. SEC should focus beyond geography like social networks. A lot information are running in every seconds. d. Specialized knowledge of the business listed in the stock exchange. e. Continuous training program. Continued from previous slide SEC is the most important body to control the stock Exchanges for the Government. Govt. should appoint appropriate person (s) to run this body properly and take quick actions if found irregularities in the process.
The Term Paper on Audit Exam
The understanding, and the letter, should include the auditor's responsibilities, including the fact that an audit is designed to provide only reasonable assurance of detecting material misstatements, and therefore may not necessarily detect all misstatements that exist. 5. Management representation letter. Management's statement that there have been no communications from regulatory agencies ...
Internal Control Tool to avoid a fraud: Under this case • Role of independent Partner – responsible for sharing insider information to anyone. His actions should be monitored by other authorized persons of E & Y company since this is very sophisticated matter and also involved a reputation of the company. • Market reaction after involvement – E & Y should closely monitor the market fluctuations on that specific share after their involvement. Continued from previous slide • Monitor the beneficial – E& Y can ask for the trading report for 2 weeks from the share trading company of that particular entity (Freescale Semiconductor, Inc.) How Murdoch can avoid this allegation • Means of communication – It revealed that Murdoch and Gansman communicated about 400 times via text massage and telephone which is recordable. Physical communication is not recordable with substance. • No. of beneficial – Murdock also leaked the information to her relatives. Continued from previous slide
• Financial Relationship – It was revealed that Gansman and Murdoch had financial relationship which is reasonably understandable to the parties who are questioning that particular leaking. Auditor’s responsibility in terms of consulting and audit engagement • Use – Consulting engagement of the auditor is an internal service to the company whether may be an investment will be feasible or not. But Audit engagement definitely will be more vast and informative to report for the public use. • Scope of audit – Consulting engagement is very specific or can be said for problem solving involvement which is not recurring. Audit engagement is recurring and mandatory for a company. Continued from previous slide • Audit operation – Consulting engagement is very subjective and no specific guidelines for that whereas audit engagement is objective and tight regulations to be followed.
The Business plan on Percieved Value of Mandatory Audits to Small Companies
|Perceived value of mandatory audits of small companies | | |Author(s): |Shifei Chung, (Assistant Professor, Department of Accounting & Finance, Rowan University, Glassboro, New | | |Jersey, USA), Ramesh Narasimhan, (Associate Professor, Department of Accounting, Law & Taxation, Montclair | | |State University, Montclair, New Jersey, USA) | |Citation: |Shifei Chung, Ramesh Narasimhan, ( ...
• Time – Mostly no bar in terms of time to complete in case of consulting whereas specific timeframe is provided to complete an audit engagement. Control corporate Fraud Opinions Morality – Millions of company are operating their businesses under the same rules and regulations and we found a very few are becoming bankruptcy or liquidations, why? A very few executives malfunctioned for their personal interest. So Morality is important. If anyone wants to harm anybody, it will be very difficult to refrain him to doing such thing unless or until his realization on it. Conclusion Fraud has surged as scammers have used different means to solicit large numbers of potential victims with greater ease.
Fraud is expected to continue rising in the future, as the growing population who have substantial assets, increasingly experience cognitive decline. Individuals who are knowledgeable about the standard fraud strategies and are able to recognize some of the disguises used by scammers can better protect themselves. References • Auditing: A business Risk Approach with case written by Rittenberg, Johnstone, Gramling , Knapp • National Fraud Information Center, Fraud Warnings, http://www.isa.net/project-open/pre-warn.html, , February 4, 1997 • www.investopedia.com/university/scams/scams5.asp • www.wsj.com
