FUNDAMENTALS OF COST ACCT.-CONNECT CARD
6th Edition
ISBN: 9781260852349
Author: LANEN
Publisher: MCG
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Chapter 12, Problem 26CADQ
To determine
Give examples of the combustible mixture that the T Commission mentioned.
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Research has shown that situational pressures and opportunity are factors that contribute to fraudulent behavior. a. Identify two situational pressures in a public company that would increase the likelihood of fraud. b. Identify three opportunity situations that would increase the likelihood of fraud.
Assume that you are interviewed by a student newspaper regarding the nature of accounting fraud. The reporter says, "As I understand it, asset misappropriations are more likely to be found in small organizations, but not in larger organizations. On the other hand, fraudulent financial reporting is more likely to be found in larger organizations." How would you respond to the reporter's observation?
What are the most common approaches that perpetrators use to commit fraudulent financial reporting?
You are asked to be interviewed by a student newspaper regarding the nature of accounting fraud. The reporter says, “As I understand it, asset misappropriations are more likely to be found are more likely to be found in small organizations, but not in larger organizations. On the other hand, fraudulent financial reporting is more likely to be found in larger organizations.” How would you respond to the reporter’s observation?
The fraud triangle identifies incentives, opportunities, and rationalizations as the three elements associated with most frauds. Describe how each of these elements is necessary for fraud to occur.
Chapter 12 Solutions
FUNDAMENTALS OF COST ACCT.-CONNECT CARD
Ch. 12 - What does decentralization mean in the context of...Ch. 12 - Why is performance measurement an important...Ch. 12 - Prob. 3RQCh. 12 - What does dysfunctional decision making refer to?Ch. 12 - Prob. 5RQCh. 12 - What are the five basic kinds of decentralized...Ch. 12 - What is goal congruence? How is it different from...Ch. 12 - Prob. 8RQCh. 12 - What is relative performance evaluation?Ch. 12 - Prob. 10RQ
Ch. 12 - Prob. 11RQCh. 12 - Prob. 12RQCh. 12 - The management control system collects information...Ch. 12 - Salespeople are often paid a commission based on...Ch. 12 - Prob. 15CADQCh. 12 - Prob. 16CADQCh. 12 - On December 30, a manager determines that income...Ch. 12 - Prob. 18CADQCh. 12 - Prob. 19CADQCh. 12 - The manager of an operating department just...Ch. 12 - In the previous chapters, we considered different...Ch. 12 - A company has a bonus plan that states that...Ch. 12 - Prob. 23CADQCh. 12 - Prob. 24CADQCh. 12 - Prob. 25CADQCh. 12 - Prob. 26CADQCh. 12 - Prob. 27CADQCh. 12 - Prob. 28CADQCh. 12 - Prob. 29ECh. 12 - Evaluating Management Control SystemsEthical...Ch. 12 - Prob. 31ECh. 12 - Management Control Systems and Incentives A...Ch. 12 - Prob. 33ECh. 12 - Prob. 34ECh. 12 - Prob. 35ECh. 12 - Alternative Allocation Bases: Service Bartolo...Ch. 12 - Prob. 37ECh. 12 - Single versus Dual Rates: Ethical Considerations A...Ch. 12 - Single versus Dual Rates
Using the data for the...Ch. 12 - Alternative Allocation Bases Thompson Aeronautics...Ch. 12 - Tone at the Top, Ethics Once upon a time, a major...Ch. 12 - Prob. 42ECh. 12 - Prob. 43ECh. 12 - Internal Controls Commonly in many organizations,...Ch. 12 - Evaluating Management Control Systems SPG Company...Ch. 12 - Analyze Performance Report for Decentralized...Ch. 12 - Divisional Performance Measurement: Behavioral...Ch. 12 - Prob. 48PCh. 12 - Prob. 49PCh. 12 - Cost Allocations: Comparison of Dual and Single...Ch. 12 - Cost Allocation for Travel Reimbursement Your...Ch. 12 - Incentives, Illegal Activities, and Ethics An...
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- Which of the following actions did the Treadway Commission recommend to reduce fraudulent financial reporting? Establish financial incentives that promote integrity in the financial reporting process. Identify and understand the factors that lead to fraudulent financial reporting. Assess the risk of corruption and misappropriation of assets within the company. Design and implement internal controls to provide reasonable assurance of preventing fraudulent financial reporting.arrow_forwardEach of the following scenarios is based on facts in actual fraud. Categorize each scenario as primarily indicating (1) an incentive to commit fraud (2) an opportunity to commit fraud or (3) a rationalization for committing fraud. Also explain your reasoning for each scenario. a. There was intense pressure to keep the corporation’s stock from declining further. This pressure came from investors, analysts and the CEO, whose financial well-being was significantly dependent on the corporation’s stock price. b. A group of top-level management was compensated (mostly in the form of stock options) well in excess of what would be considered normal for their positions in the industry. c. Top management of the company closely guards internal financial information, to the extent that even some employees on a “need to know basis” are denied full access. d. Managing specific financial ratios is very important to the company, and both management and analysts are keenly observant of variability in…arrow_forwardEach of the following scenarios is based on facts in actual fraud. Categorize each scenario as primarily indicating (1) an incentive to commit fraud (2) an opportunity to commit fraud or (3) a rationalization for committing fraud. Also state your reasoning for each scenario. a. There was intense pressure to keep the corporation's stock from declining further. This pressure came from investors, analysts and the CEO, whose financial well-being was significantly dependent on the corporation's stock price. b. Agroup of top-level management was compensated (mostly in the form of stock options) well in excess of what would be considered normal for their positions in the industry. c. Top management of the company closely guards internal financial information, to the extent that even some employees on a "need to know basis" are denied full access. d. Managing specific financial ratios is very important to the company, and both management and analysts are keenly observant of variability in key…arrow_forward
- Each of the following scenarios is based on facts in actual fraud. Categorize each scenario as primarily indicating (1) an incentive to commit fraud (2) an opportunity to commit fraud or (3) a rationalization for committing fraud. Also state your reasoning for each scenario. a. There was intense pressure to keep the corporation’s stock from declining further. This pressure came from investors, analysts and the CEO, whose financial well-being was significantly dependent on the corporation’s stock price. b. A group of top-level management was compensated (mostly in the form of stock options) well in excess of what would be considered normal for their positions in the industry. c. Top management of the company closely guards internal financial information, to the extent that even some employees on a “need to know basis” are denied full access. d. Managing specific financial ratios is very important to the company, and both management and analysts are keenly…arrow_forwardEach of the following scenarios is based on facts in anactual fraud. Categorize each scenario as primarily indicating (1)an incentive to commit fraud, (2) an opportunity to commitfraud, or (3) a rationalization to commit fraud. State your reasoningfor each categorization.a. There was intense pressure to keep the corporation’s stockfrom declining further. This pressure came from investors,analysts, and the CEO, whose financial well-being was significantlydependent on the corporation’s stock price.b. A group of top-level management was compensated (mostlyin the form of stock options) well in excess of what would beconsidered normal for their positions in this industry.c. Top management of the company closely guards internalfinancial information, to the extent that even some employeeson a need-to-know basis are denied full access.d. Managing specific financial ratios is very important to thecompany, and both management and analysts are keenlyobservant of variability in key ratios. Key…arrow_forwardThe following scenarios are taken from actual fraud cases. For each scenario, categorize as primarily indicating (A) An incentive to commit fraud (B) An opportunity to commit fraud or (C) a rationalization for committing fraud. State your reason for your answer in each scenario. 1. Top management of the company closely guards internal financial information, to the extent that even some employees on a "need to know basis" are denied full access.arrow_forward
- See the "Madoff Securities" case for this question. Professional auditing standards discuss the three key "conditions" that are typically present when a financial fraud occurs and identify a lengthy list of "fraud risk factors." Briefly explain the difference between a fraud "condition" and a "fraud risk factor" and provide examples of each. What fraud conditions and fraud risk factors were apparently present in the Madoff case?arrow_forwardJane Ellerby and Sam Callison are discussing the recent fraud that occurred at LowRental Leasing, Inc. The fraud involved the improper reporting of revenue to ensure that the company would have income in excess of $1 million. What is fraudulent financial reporting, and how does it differ from an embezzlement of company funds?arrow_forwardYou are asked to be interviewed by a student newspaper regarding the nature of accounting fraud. The reporter says, “As I understand it, asset misappropriations are more likely to be found are more likely to be found in small organizations, but not in larger organizations. On the other hand, fraudulent financial reporting is more likely to be found in larger organizations.” How would you respond to the reporter’s observation?arrow_forward
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