Reflective Writing Task – Blog #3

I agree with the statement that it is extremely important for forensic accountants to be familiar with the law.  Public interests are at threat if forensic accountants are ignorant of the rules of evidence.

I recently read an article about the ASIC vs Rich case that was settled in 2009.  During the proceedings of this case the Supreme Court of NSW identified a number of issues regarding the expert reports, specifically a report prepared by Paul Carter (a forensic accounting partner at PWC). The report prepared by Carter was deemed inadmissible for the purposes of the relevant proceedings, (Paul, 2017).  Carter failed to “disclose the real factual basis and true reasoning process of the opinions expressed was inadmissible because”, (Small, 2005).  This is a clear example of how a forensic accountant was ignorant of the rules of evidence.  

There are two elements that encompasses a forensic accounts role, investigation and litigation support.  A forensic account must be able to gather evidence, ensuring this evidence is not mishandled (for example distorting original copies), and then be able to present this evidence to a court of law.  The legal requirements that compromise the role of a forensic accountant can sometimes stand as the difference between a guilty and non-guilty verdict.

References

Paul, I. (2017). Forensic Accounting Reports - Sourcing of Information and Independence. FindLaw Australia. Retrieved from http://www.findlaw.com.au/articles/693/forensic-accounting-reports-8211-sourcing-of-infor.aspx

Small, S. (2005). Admissibility of expert evidence. Australian Government Solicitor. Retrieved from http://www.ags.gov.au/publications/express-law/el22.pdf

Reflective Writing Task – Blog #2

I agree with the statement that governance approaches such as COBIT 5 IT Governance, in relation to information security and risk, should address all potential threats to an organisation.  I also agree that as organisations increase their usage of mobile devices and social media, in a business context, the potential risk of fraud also increases.

The COBIT 5 framework addresses IT threats to an organisation by building a set of governance and management enablers to support the achievement of IT-related goals and information security measures, (ISACA, 2012).  It is essential that a holistic approach to IT Governance is taken within an enterprise to ensure a balanced and stable system is in place.

Whilst at the university campus library, I proceeded to leave my laptop unattended for a short period of time, I had no security on my device. During this time an unknown person inserted a USB into my device and not only stole, by deleted my assignment documents for that semester.

Through the holistic implementation of this framework, an organisation can;

-          Improve their integration of information security within the enterprise

-          Make informed risk decisions and raise awareness amongst employees

-          Improve the prevention and detection of fraud. 

References

ISACA. (2012). COBIT 5: A Business Framework for the Governance and Management of Enterprise IT. Retrieved from http://www.isaca.org/COBIT/Pages/COBIT-5-Framework-product-page.aspx

Reflective Writing Task – Blog #1

I disagree with the statement that governance and managerial processes have nothing to do with incidences of fraud. 

I witnessed a case of fraudulent activity due to a lack of governance whilst working at a software company.  A disgruntled employee was able to change banking information on vendor records.  The employee then paid substantial invoices electronically to a fraudulent bank account.  There was no company policy in place that required either multiple authorisations or high level management approval to change banking information on vendor and employee records. The company relied solely on honesty regarding this process. 

Implementing simple management processes could have prevented this fraud. The risks to the business if governance is not introduced include significant monetary losses, loss of credibility and potentially expensive litigation costs.

The role of IT governance in particular could have prevented such a crime from occurring.  An example would be, installing a system that requires a separate security point for vendor and employee bank account changes.

It is argued by Kusnierz (2006) that an organisation is simply unable to eliminate systematic fraud without the implementation of managerial processes and technologies that centre on fraud prevention.  This is too backed up by Farber (2005) who stated that “empirical evidence indicated that weak corporate governance is associated with financial reporting fraud”. 

Reference List

Kusnierz, R. (2006). Fraud doesn’t matter? Credit Control, Vol. 27 Nos 4/5, pp. 61-64. Retrived from http://search.proquest.com.ezp01.library.qut.edu.au/docview/208151291/abstract/B7BBF813B7154AA0PQ/1?accountid=13380.

Farber, D.B. (2005). Reporting trust after fraud: does corporate governance matter? The Accounting Review, Vol. 80 No. 2, pp. 539-561. Retrieved from http://search.proquest.com.ezp01.library.qut.edu.au/docview/218592597?pq-origsite=360link.