Fraud: Ensuring Integrity in Financial Reporting (6 hrs)

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Course Description

Financial Reporting Fraud

A corporate scandal involves alleged or actual unethical behavior by people acting within or on behalf of a corporation. Since the turn of the century, the U.S. has seen some large corporate collapses and scandals due to shoddy and deceptive accounting practices. Many companies, shareholders and employees suffered as stock prices fell and reputations were tarnished when businesses conducted questionable practices.

This Financial Reporting Fraud course is divided into four parts. Chapter 1 identifies the common financial shenanigans demonstrated with a series of real-life cases and addressed ongoing financial reporting issues (e.g., restatements, SEC enforcement actions). The failure of corporate governance and auditor’s role in Enron’s collapse are also discussed. Chapter 2 explains the basic accounting rules for stock-based compensation. It also identifies regulations that protect investors from unethical business practices. Chapter 3 focuses on the impact of Sarbanes-Oxley Act including the creation of PCAOB, reforms of corporate America, and improvements in audit quality. It also discusses internal control reporting requirements, the role of the audit committee, and disclosure controls and personal accountability.  Chapter 4 identifies ways to promote high levels of accountability and transparency. It explains the importance of business ethics and corporate social responsibility. It also discusses the role of good corporate governance in protecting shareholder value.

Course Information

Price: $59


Course No. 7061
Format: Online pdf (125 pages). Printed book available.
Author: Delta CPE LLC
Prerequisites: None
Advance Preparation: None
Level: Overview
CPE Credit: 6 hrs.
Field of Study: Accounting: Technical
Course expiration:  You have one year from date of purchase to complete the course.
Course Revision Date: August 2022

Objectives

After studying this course, you should be able to:

  • Identify techniques used to manipulate a company’s financials
  • Recognize common financial reporting issues
  • Recognize measurement and recognition of employee stock-based compensation
  • Identify regulations that protect investors from unethical business practices
  • Recognize how Sarbanes Oxley Act improves corporate behavior and enhances audit quality
  • Identify laws that govern social responsibilities of business
  • Recognize the role of good corporate governance in protecting shareholder value

Course Contents

Chapter 1: In Need of Financial Reporting Reform
Manipulation of Financial Performance
Improper Revenue Recognition
Inappropriate Earnings Management Practices
Concealed Liabilities and Expenses
Stock Option Backdating
Underreporting of Stock-Based Compensation
Overstated Pension Plan Assumptions
Use of Pro Forma Results
Errors and Violations
Financial Restatements
SEC Staff Comment Letters
SEC Enforcement Actions
Poor Corporate Governance
Audit Failures
Ineffective Board Oversight

Chapter 2: Protecting Investors
Accounting for Stock-Based Compensation
Background
The Measurement Basis
Alternatives to Stock Options
SEC Regulations
Analyst Conflicts of Interest
Mutual Funds’ Broker Rewards
Insider-Trading Disclosures
CFA Institute Research Objectivity Standards

Chapter 3: Restoring Investor Confidence
Key Features
Oversight of Accounting Firms
Reforms of Corporate America
Improvements in Audit Quality
Strengthening Auditor Independence
Adopting Auditing Standards
Internal Control Reporting Requirements
General Rules
The Principles of ICFR
Responsibilities
Significant Deficiencies and Material Weaknesses
Role of the Audit Committee
Disclosure Controls and Personal Accountability
Certification of Financial Reports
Crime Penalty Enhancements
Cybersecurity Systems and Risk Reporting Act

Chapter 4: Promoting Accountability and Transparency
Business Ethics
Factors Influencing Business Ethics
Corporate Ethical Development Model
Codes of Ethical Conduct
Corporate Social Responsibility
The Concept of Social Responsibility
Principles of Social Responsibility
Legal Aspects of Social Responsibility
Principles of Good Governance
NYSE Corporate Governance Standards
Code of Conduct for Management Accountants


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