Nonprofit Administration and Management Commons^™

Standard Costing Variances: Potential Red Flags Of Fraud?, Cecily A. Raiborn, Janet B. Butler, Lucian Zelazny

Accounting Faculty Publications

This article focuses on how standard cost variances can be used in detecting potential fraudulent activities. Each primary type of variance (material, labor, and overhead) is addressed with a discussion of possible inappropriate causal factors. Additionally, internal controls, graphic techniques, and other methods that can be implemented to combat fraud are provided.

The Importance Of Information Integrity: In A Data-Driven World, Unreliable And Inaccurate Information Can Lead To Bad Decision-Making, Sridhar Ramamoorti, Madhavan K. Nayar

Accounting Faculty Publications

What is information integrity? It is the trustworthiness and dependability of information. The credibility of information depends on whether we are getting it from sources we can trust. After all, the value of information to the decision-maker and problem-solver consists first in its integrity, and then in its usefulness and usability. Why? Because, even the best chef knows that you can't make a good omelet out of bad eggs! Consider the emerging trend of big data (see" Big Data" on page 34). According to IBM, people create 2.5 quintillion bytes of data every day (a quintillion is 1 followed by …

Nol Poison Pills: Using Corporate Law For Tax Purposes, Sarah J. Webber, Karie Davis-Nozemack

Accounting Faculty Publications

Hundreds of thousands of corporations report net operating loss (NOL) carryovers every year.1 Corporations, with the benefit of NOL rules, may turn disappointing losses into favorable tax results. During economic recovery, corporations are in better position to fully utilize the benefits of NOLs generated in prior years. NOL usage is not without peril, however. Corporations should carefully monitor corporate ownership changes to ensure that NOLs are not lost to the NOL trafficking rules. Under the NOL trafficking rules, excessive shareholder turnover triggers substantial NOL limitations. Unfortunately, corporations are not in control of their shareholder turnover, and therefore not in complete …

Paying The Irs Whistleblower: A Critical Analysis Of Collected Proceeds, Karie Davis-Nozemack, Sarah J. Webber

Accounting Faculty Publications

Congressional changes to the IRS Whistleblower Program were intended to induce more participation in the program by allowing larger incentives and greater certainty that whistleblowers would be paid. Since the Program was amended, tax whistleblower tips have increased 76 percent1 and revenue collected due to whistleblowers has increased 79 percent.2 Despite a rise in tips and revenue collected, whistleblower payments have not increased. In fact, the number of tax whistleblower awards paid has decreased 44 percent.3 We hypothesize that this trend is due to the administration of the program but also to the interpretation of “collected proceeds.” Collected proceeds are …

The Corporate Ethics Audit: To Prevent And Detect Management Fraud, Internal Auditors Must Have A Sound Understanding Of Human Behavior, Sridhar Ramamoorti, R. Luke Evans

Accounting Faculty Publications

In theory, management is responsible not only for designing and implementing strong systems of internal control but also confirming their continued effectiveness over time through monitoring activities. Yet, management override of these monitoring activities — -Soften described as the Achilles' heel of internal controls — is a growing trend at the executive level, as indicated by both of The Committee of Sponsoring Organizations of the Treadway Commission's fraud studies of 1998 and 2010. When the “overseer” becomes the perpetrator of fraud, how do shareholders protect themselves? Indeed, as the Roman satiric poet Decimus Juvenal wrote, “But who will guard the …

Don’T Burst The Bubble: An Analysis Of The First-Time Homebuyer Credit And Its Use As An Economic Policy Tool, Sarah J. Webber

Accounting Faculty Publications

In 2008, faced with a looming real estate crisis, Congress hastily acted to stabilize the economy by offering a first-time homebuyer credit. This tax credit was trumpeted as a solution to the excess inventory of homes for sale and to stop the free-fall in home values. The credit, however, failed to deliver on its promises. By analyzing the first-time homebuyer credit, its creation, its implementation and its economic impact, this Article concludes that, when compared to alternative policy solutions, Congress erred in using the tax code to implement a first-time homebuyer credit.

The Abcs Of Communicating Results, Deborah S. Archambeault, Morgen Rose

Accounting Faculty Publications

Communicating results is an integral part of the internal auditor's job, and The IIA's International Standards for the Professional Practice of Internal Auditing recognizes its importance by specifying in Standard 2420 that communications should be "accurate, objective, clear, concise, constructive, complete, and timely." In its 2009 survey. The Biggest Internal Audit Challenges in the Next Five Years, Protiviti, a global consulting firm, ranked communication with management and the audit committee as one of the biggest challenges facing internal auditing through 2012. Their subsequent 2010 Internal Audit Capabilities and Needs Survey identified presentation skills as the top "need to improve" personal …

Carrots And Sticks: By Auditing Executive Compensation And Benefits, Auditors Can Help Their Organization Move From Risk To Rewards Management, Sridhar Ramamoorti, Usha R. Balakrishnan

Accounting Faculty Publications

Although the focus of risk management traditionally has been on downside risk, the time is right to focus this dialogue on upside risk — the management of value-creation opportunities through "rewards management." After all, rewards such as bonuses and stock options are typically greater for those who identify and leverage new value-creation opportunities. For-profit organizations favor those individuals who are well-connected and leverage their relationships to bring in clients and attract customers. Their selling ability, revenue-generating strategies, and overall modus operandi quickly earn them the coveted title of "rainmakers."

Nevertheless, rewards and incentives can encourage undesirable behaviors. Executives quickly learn …

Maximized Monitoring, Constance M. Lehmann, Sridhar Ramamoorti, Marcia Weidenmier Watson

Accounting Faculty Publications

During the last few years, global financial companies and investment banks have taken billions of dollars in write-downs owing to exposure in the subprime lending market. Lack of risk function visibility, insufficient communication of risks to top management, and siloed risk approaches have been cited as reasons for these failures. New York University finance professor Nouriel Roubini, one of the few who predicted the crisis, famously observed at the World Economic Forum's 2009 Davos Summit that risk cannot be priced correctly "when the opacity and lack of transparency of financial firms and new instruments lead to unpriceable uncertainty rather than …

Bringing Freud To Fraud: Understanding The State-Of-Mind Of The C-Level Suite/White Collar Offender Through “A-B-C” Analysis, Sridhar Ramamoorti, Daven Morrison, Joseph W. Koletar

Accounting Faculty Publications

In this paper we use a primarily “behavioral lens” (cf. Ramamoorti, 2008; Ramamoorti & Olsen, 2007) to try to understand the state-of-mind and motivations of the C-level suite/white collar offender before, during, and after the perpetration of management fraud. We offer a useful conceptual approach called “A-B-C Analysis” to understand the incidence of fraud from individual and group perspectives, as well as more macro-oriented, cultural/contextual levels. It is our hypothesis that fraud occurs either because of an individual criminal’s calculated/intentional betrayal of trust, a duo or team of “bad boys” who push ethical envelopes, and/or an organizational/social/national culture of passivity, …

Is Something Missing From Your Company's Satisfaction Package?, Deborah S. Archambeault, Richard Burgess, Stan Davis

Accounting Faculty Publications

Conventional wisdom suggests that salary, benefits, and other monetary factors are important aspects of keeping employees satisfied. But which factors have the biggest impact on overall satisfaction? While companies focus on the monetary factors, there are other components of the overall “satisfaction package,” that are just as important, yet often overlooked.

It comes as no surprise that satisfied employees are important to the success of any organization. In short, higher satisfaction increases productivity, improves service levels, and positively impacts a company’s bottom line. While keeping employees satisfied should be an important goal for any organization, a recent job satisfaction survey …

Engineering Value Into Enterprise Risk Management; Six Sigma Techniques Can Improve The Quality Of Erm Processes And Enable Organizations To Manage Risks More Successfully, Sridhar Ramamoorti, Marcia Weidenmier Watson, Mark Zabel

Accounting Faculty Publications

Organizations should not only recognize and minimize traditional downside risks, but also embrace upside risks, or opportunities, as a strategy for success. According to a 2005 survey by management consulting firm Booz Allen, 87 percent of the market value lost by large companies with market capitalizations over US $1 billion was the result of strategic and operational blunders. Compliance failure, typically the focus of downside risk, destroyed only 13 percent of market value during the five-year study. Faced with this counter-intuitive finding, companies may wish to pursue a more balanced and positive approach to risk management. Enterprise risk management (ERM) …

The Changing Components Of The Corporate Annual Report: An Update, Deborah S. Archambeault, John G. Fulmer Jr., Richard A. Turpin

Accounting Faculty Publications

Recent regulatory changes affect not only the content of annual reports but also the population of companies that are required to comply with these reporting regulations. Lenders need to stay abreast of the information provided in corporate reporting packages. This article provides an update on regulatory changes and discusses how these changes affect the information that can be found in corporate annual reports.

Auditing Management Assertions: The Impact Of Sas No. 106, Deborah S. Archambeault

Accounting Faculty Publications

The Auditing Standards Board (ASB) of the AICPA recently issued eight new statements on auditing standards (SASs), which are effective for audits of financial statement periods beginning on or after Dec. 15, 2006. Included within this new set of audit standards is SAS No. 106: Audit Evidence, which provides guidance on the use of management assertions in obtaining audit evidence.

Strengthening The Foundations Of The Accountability Profession, Sridhar Ramamoorti, Sam M. Mccall, Relmond P. Van Daniker

Accounting Faculty Publications

Article discusses the conceptual foundations of the accountability profession in government. The role of the Academy for Government Accountability in strengthening the accountability profession and advancing research and education initiatives in government financial management is described. The author suggests that government accountability needs to be about stewardship, transparency, accountability and citizen-centric government.

How To Use The Changing Components Of The Corporate Annual Report, Deborah S. Archambeault, John G. Fulmer Jr., Richard A. Turpin

Accounting Faculty Publications

The amount of information required in a corporate annual report continues to increase. Most recently, additional reporting requirements brought about by the Sarbanes-Oxley Act of 2002 (SOA), the Public Company Accounting Oversight Board (PCAOB) and the Securities and Exchange Commission (SEC) increase the number of component reports that must be included in the annual report package. Lenders need to be familiar with the additional information that these new components provide. Therefore, this article summarizes the required component reports, discusses the information conveyed in each report and gives some examples of the types of significant new information that can be obtained.

Methods And Systems For Valuing A Business Decision, Sridhar Ramamoorti, Peter Freeman, Anurag Agarwal

Accounting Faculty Publications

Methods, systems, and processor instructions to determine a first direct cost associated with at least a partial implementation of a business decision, the first direct cost including at least one of productivity gains and losses, determine a second direct cost based on a non-implementation of the business decision, the second direct cost based on the productivity gains and losses, determine a first risk reduction associated with at least a partial implementation of the business decision, the first risk reduction based on a business relationship risk(s), determine a second risk reduction associated with a non-implementation of the business decision, the second …

How Corporate Culture Impacts Unethical Distortion Of Financial Numbers, Joseph F. Castellano, Kenneth Y. Rosenzweig, Harper A. Roehm

Accounting Faculty Publications

The recent accounting scandals have highlighted the critical role that investor confidence in the accuracy and lack of distortion of accounting data plays in the health of capital markets and, indeed, the whole economy. The legal and moral culpability of top-level company managers (as well as auditors) is an issue that will be addressed by the nation in the coming months. Whether or not legal sanctions are imposed on managers, it would be well to examine some of the reasons managers may feel compelled to distort accounting numbers as well as engage in other actions that damage the interests of …

Procurement Fraud & Data Analytics, Sridhar Ramamoorti, Scott Curtis

Accounting Faculty Publications

The purpose of this article is to bolster the government auditor's ability to detect procurement fraud through the use of information technology (IT) tools in performing more sophisticated data analytics and effective audit testing. The article primarily focuses on fraud detection. The government auditor should customize the application of general fraud detection principles to specific facts and circumstances and use sound professional judgment. Procurement fraud detection tests may help identify fraudulent activity and also inefficiencies, waste and abuse.

Why Toyota And Honda Topped The 2002 J.D. Power Quality Study, Susan Lightle, Kenneth Yale Rosenzweig, John Talbott

Accounting Faculty Publications

Toyota again topped the annual J. D. Power and Associates quality study released in late May of 2002. Toyota scored the highest mark ever with l 07 defects per l 00 vehicles, while Honda came in second with 113 defects. The study was based on responses of approximately 65,000 new car owners queried during their first 90-days of ownership.

These results do not surprise us, as we have been fortunate to make numerous sojourns to the Toyota plant in Georgetown, Kentucky, and observe the manufacturing processes. These trips were normally facilitated by a former Japanese student of ours, Minako Yanke, …

Research Opportunities In Internal Auditing, Sridhar Ramamoorti

Accounting Faculty Publications

Focuses on the book Research Opportunities in Internal Auditing, edited by Andrew D. Bailey Jr., Audrey A. Gramling and Sridhar Ramamoorti. History, evolution and prospects of internal auditing; Internal audit function; Auditing risk assessment and risk management processes.

Audit Committee Effectiveness: A Synthesis Of The Empirical Audit Committee Literature, F. Todd Dezoort, Dana R. Hermanson, Deborah S. Archambeault, Scott A. Reed

Accounting Faculty Publications

The empirical audit committee literature is both diverse and expansive, with rapid growth in recent years based on increased concerns about corporate governance and the quality of financial reporting. Our objective in this paper is to synthesize empirical literature on audit committee effectiveness to guide future thinking and research on audit committees. To organize our review, we focus on four components that we believe contribute to audit committee effectiveness (ACE) - audit committee composition, authority, resources, and diligence.

Qualitative Materiality In Government Audit Planning, Sridhar Ramamoorti, Andrea Lee Hoey

Accounting Faculty Publications

The political sensitivity of the area under audit to adverse media exposure and litigation concerns the nature rather than the size of an amount, such as illegal acts, bribery and corruption, related party transactions, snowballing patterns of error and other risks that grow over time. Qualitative materiality considerations should not be ignored-they can and frequently do influence the nature and scope of governmental audits. Financial Accounting Standards Board Concepts Statement No. 2 defines materiality as the magnitude of an omission or misstatement that would influence the decisions of a user of financial statements. Audit planning needs to incorporate considerations of …

No. 130 1997 November

International Journal for Business Education

SIEC Historical Documents

No. 129 1997 April

International Journal for Business Education

SIEC Historical Documents

No. 128 1996 November

International Journal for Business Education

SIEC Historical Documents

No. 127 1996 April

International Journal for Business Education

SIEC Historical Documents

No. 126 1995 November

International Journal for Business Education

SIEC Historical Documents

No. 125 1995 April

International Journal for Business Education

SIEC Historical Documents

Decision Framing And Efficiency/Effectiveness Trade-Offs In Auditors' Planning Materiality Judgments, Sridhar Ramamoorti

Accounting Faculty Publications

The exercise of judgment is not only essential to the practice of disciplines such as law, medicine and accounting, but is also what distinguishes these domains as professions (Boritz, Gaber & Lemon, 1987, cited in Gibbins & Mason, 1988). Recent advances in cognitive psychology research have given an impetus to research focusing on the nature of professional judgment, expert-novice cognition, heuristics and biases in decision making as well as decision strategies, the acquisition of knowledge and the effects of experience, and the development of expert/decision support systems (Ashton, 1982a; Smith & Kida, 1991; Chi, Glaser & Farr, 1988). The central …