Core concepts in ACCT 807 are internal controls which ensure the integrity of financial reports and business records. Thus, a large portion of time is spent discussing how to prevent fraud by designing and implementing controls, how to detect fraud, and how fraudulent activities affect financial records. Risks borne by the company due to weak internal control: Asset destruction, Asset theft, Corruption of the system, Disruption of the system. We discuss the Sources of exposure: Active and deliberate threats (fraudulent accounting practices, embezzlement, sabotage) and Passive and unintentional threats (erroneous accounting, poor management decision-making, business interruptions). Additionally, two lectures are devoted explicitly to ethical issues (about 2.5 hours per lecture): the history of Sarbanes-Oxley and the large-scale frauds that led to its passage, and comparing and contrasting fraud and earnings management. Both of these lectures involve in-depth discussion of ethical issues in accounting.
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