关于打击财务报告舞弊的研究外文翻译.docx
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关于打击财务报告舞弊的研究外文翻译.docx
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关于打击财务报告舞弊的研究外文翻译
本科毕业论文(设计)
外文翻译
外文题目FightingFinancialReportingFraud
外文出处InternalAuditor
外文作者Green,Scott
原文:
FightingFinancialReportingFraud
CONGRESPASSEDTHEU.S.SARBANES-OXLEYACTof2002withthegoalofrebuildinginvestorconfidenceandprotectingcapitalmarkets.Itrecognizedthatstronginternalcontrolswereanimportantcomponentofconfidencebuilding.Section404oftheactaddressesthiscomponentbymandatinganannualevaluationofinternalcontrolsandproceduresforfinancialreportingandrequiringmanagementtoassessandcertifytheeffectivenessofthesecontrols.
InadditionSarbanes-Oxleyrequiresacompany'sexternalauditortocompleteaseparatereportthatatteststomanagement'sassessmentoftheeffectivenessofinternalcontrolsandproceduresforfinancialreporting.Inshort,theexternalauditormustperformtestingtovalidatemanagement'sassessmentoftheinternalcontrolstructure.
Astronginternalauditfunctioncanprovidebothmanagementandthepublicaccountantswithcomfortthatthecontrolstructureisbeingevaluatedregularlyandthatdeficienciesareremedied.Documentingandevaluatingacompany'sprocessesandrelatedcontrolstructurearetraditionalinternalaudittasksthatprotecttheenterprise.However,thedegreetowhichinternalauditorsfocusontheaccuracyoftheirorganization'sfinancialreportingpresentationanddisclosure,inadditiontooperationalaudits,isamatterofjudgment.Criticalfactorsthatwilldeterminethescopeofinternalauditinginvolvementinthefinancialreportingprocessincludethestrengthandexperienceoftheexternalauditorsaswellastheextentoftheirrelianceontheinternalcontrolfunctionthetransparencyandcultureoftheenterpriseandauditprioritiesbasedonsolidriskanalysis.
Therearethreestepseveryauditorshouldtake-regardlessoftheirlevelof'involvement-tohelpprotecttheorganizationfromfraudulentfinancialreporting:
*Listentoroguesandwhistleblowers.
*Askfocusedquestionsthatmayleadtoredflagsoffinancialreportingtrouble.
*Watchforfinancialodditiesbybenchmarkingperformance.Investorsdependoninterimfinancialreportsandneedtobelievethesereportsarefairandaccurate.Internalauditingcanprovidevaluableoversighttoorganizationsbyhelpingtoensurethatcommunicationsarcfreefrominappropriatefinancialengineering.
THEARTOFLISTENING
Oneoftheproblemswithfinancialreportingscandalsisthatanunscrupulouschieffinancialofficer(CFO)andmembersofhisorherteamareunlikelytoannouncetheirintentions.Infact,acommonthreadrunningthroughWorldCom,Enron,andotherhigh-profilefinancialsandalsisthateachcompanyhadastrong,respectedCFOwhokeptthenumberofpeopleinvolvedinthescandaltoaminimum,exertedincrediblecontrolovertheworkinggroupandcommandedthegroup'sloyaltyaboveallotherethicalconsiderations.TheseCFOsreportedlyrewardedthosewhosupportedthemandintimidated,excluded,andpunishedthosewhodidnot.NoauditorcanreasonablyexpectsuchIItightlyknitgrouptovolunteerthattheirbossisplayingwiththenumbers.TheCFO'ssycophantswillcourthisorherapprovalattheexpenseofallelseeventhetotaldestructionoftheenterprise.
Thegoodnewsisthat,inrecentcases,therewereoutsiderswhowerewillingtostepforward.AtEnron,forexample,SherronWatkins,acorporatevicepresident,specificallytoldbothAndersenandseniorexecutivesofherconcernsregardingtheconflictofinterestbetweenEnronandthespecialpurposeentities(SPEs)theCFOadministeredaswellastheperceptionofimproperaccountingatmanyoftheSPEshecreated.Shealsoraisedthepossibilityofthecompletefinancialcollapseofthecompany.HadtheylistenedtoWatkins,thefraudmighthavebeenidentifiedearlier,therebylimitingthedamagetothecompanyanditsemployees.
Thelessonforauditorsisclear:
Listentherogueswhocomplain.Particu1arlytowhereconstructivecriticismisviewedasanactofdisloyalty,thosewhoarcnotviewedasapartoftheteamcanbeaterrificsourceinformation.Itisoftentooeasytodismissthegrumblingofthosewhoarcperceivedasoutsidersoronthefasttracktotermination.Internalauditorsshouldresistpassivebehaviorandlisten,evaluate,and,ifwarranted,investigatewhattheyhear.
IDENTIFYREDFLAGS
Althoughthenumberofpossibledisclosureomissionsandfinancialpresentationerrorsaremany,internalauditorscanlookforpatternstohelpfocustheiractivitiestowheretheywillbemosteffective.Uncoveringtheseredflagsmaytakesomediggingandmayrequiretheauditortoasktoughquestions.
AGGRESSIVEREVENUERECOGNITIONPOLICIES
Atypicalredflagisrevenuethatismatchedtofutureperformanceorexpense.QwestCommunicationshasstatedthat,between1999and200l,itincorrectlyaccountedformorethan$1.1billionintransactions.Revenueswerecontingentonthepurchaseoffibercapacityandfutureservices,buttheywereimproperlybookedasearned.
UnifyCorp,aproviderofsoftwareproducts,reportedlywentevenfurtherwhenitboostedrevenuebyloaningmoneytocustomers.ThosecustomersthenboughtUnify'sproductswithnoreasonableexpectationofeverrepayingtheloans.A$15millionprofitwaseventuallyrestatedintoa57millionloss.
Understandingwhenrevenuesarerecognizedisthefirststeptocomprehendingthequalityoftherevenuestream.
Revenuesofthehighestqualityarethosethatarebookedafterthecustomerhasreceived,accepted,andpaidfortheproductorservicewithoutanyfurtherperformancerequirementorcontingency.Toidentifyaggressiveaccountingandcontingencies,auditorscan:
*Makeadirectinquirytomanagementnstotheexistenceofloanstocustomersorasset-swapagreements.
*Conductadetailedanalysisordebtobligations,whichmayuncoverundisclosedcontingencies.
*EvaluatealternativerevenuerecognitionmethodologiesavailabletothecompanyandasktheCFOandexternalauditorswhythesewererejectedinfavorofthecurrentpractice.Suchinquiryisnotasignofignorance,butinsteaddemonstratesprudenceandduediligence.Therevenuepolicyappliedmusthaveasoundbusinessrationalethatiseasilyunderstoodbyseniormanagementanddirectors.Ifitdoesn't,thisissueshouldberaisedwiththeauditcommittee.
EVER-PRESENTNONRECURRINGCHARGES
Companiesarecontinuallymakingprovisionsexpenses,eveniftheyarenotsureoftheirexactamount.Therehasbeenanepidemicofmerger.Productreturn,lawsuit,obsoleteinventory,andbadloanexpensesthatusuallygiverisetoreservesornonrecurringcharges.TheCenterforBusinessInnovationreportsthatthenumberofStandardandPoor's500(S&P500)firmsdeclaringspeciallossesgrewfrom68in1982toZ33in2000.1notherwords,awhopping47percentoftheS&P500hadnonrecurringchargesin2000.
Therearcmanylegitimatenonrecurringexpenses-duetoactsofnature,mergers,andassetsales.Sohowdoesanauditoridentifythemisuseofthisaccountingmethodtohideunderlyingweaknessesinoperatingresults?
Oneclueisifacompanyregularlyreversesreserves,suchasreorganizationexpenses,backintooperatingincome.Thistypeofactivitycreatesinflationinreportedresults.Toidentifysuchactivity,anauditorshouldaskprobingquestionssuchas:
*Whythechargenonrecurringandnotapartofnormaloperatingincome?
*Howwastheamountofthechargedeterminedandhowaccurateisit?
*Whatisthelikelihoodthatalloraportionofthechargeneitherwillnorbeused?
*Whatwillbedisclosedaboutthechargeinthefinancialstatements?
Confusingorhesitantanswersbeinvestigatedfurther.Auditorsshouldhaveresponsesdocumentedandonhandfuturemeetings.Ifnonrecurringforchargesarereversedatalaterdate,auditorsshouldandchallengedetailedexplanationsregardingthistreatment.
REGULARCHANGESTORESERVE,DEPRECIATION,AMORTIZATION,ORCOMPREHENSIVEINCOMEPOLICYFrequentchangesinaccountingguidancecanalsomaskmanipulationofthenumbers.Itistobeexpectedthatthedollaramountofreserveswillchangewiththebusinessc1imare,burthemethodusedtocalculatereservesshouldnot.Ifanincreaseinsalesresultsinanincreaseinaccountsthenacorrespondingandproportionalincreaseinreservesandbaddebtexpenseswouldbeexpected.Iftheredoesnotseemtobeadirectcorrelation;internalauditorsshouldchallengetheconsistencyofthereservecalculation.
Likewise,capitalizedcostsshouldnotincreaseatarategreaterthanrevenueovertime.Theremaybealaginrelatedrevenueuntilaftermajorcapitalizedprojectsarecompleted.Auditorsshouldquestioncapitalizationtechniquesthatappearaggressive.Anychangeinmethodologyshouldbejust;6edbylong-termtrends,notshort-termneeds.
RELATED·PARTYTRANSACTIONS
Relatedpanicsareentitieswhosemanagementoroperatingpoliciescanbecontrolledorinfluencedbyanotherparty.Althoughrelated-parrytransactionsareparticularlydifficulttoidentify,thereareauditorscanregularlyseveralactivitiesundertaketohelprevealthisredflag.Asdiscussedearlier,ongoingcommunicationswithroguescanbeeffective;however,quarterlyproceduresshouldalsoincludeactivitiesdesignedtoconflicts,suchas:
*Maintainingopencommunicationswithoutsideauditors.
*Conductingperiodicbalance-sheetanalyses.
*Schedulingregularmanagementinterviews.
AtEnron,theexternalauditorswereintimatelyinvolvedinthecreationofSPEsandwereawareofthepotentialconflictsofinterestassociatedwiththem.SPEscanbeeffectivefinancingandriskmanagementvehiclesifusedcorrectly.
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