Fraud Resistance and Detection †Free Samples to Students

Question: Discuss about the Fraud Resistance and Detection. Answer: Introduction In this the introduction is given about the DIPL, it is an Australian based company. The company start the work of printing. In addition to this companys financial statement is being examined to assess the ratio and to verify the faithfulness of the statements. In this Company will discussed on some other factors such as inherent risk factor and other factors such as to impress the shareholders by doing some manipulation in the financial accounts of the company. In this DIPL have to follow the analytical procedure so by the help of this procedure difference coming in financial data from last years can be easily examines with this analytical procedure. In addition to this with the help analytical procedure examines of ratios can be done on the company. In this report financial statement and examine of ratios of the company of last three years has been discussed below:- Statement for analytical analysis (presenting calculation of ratios) Computation of ratio analysis Liquidity ratio 2013 2014 2015 Current ratio 1.424851323 1.46655925 1.500731379 0.017751573 Quick ratio 0.82797619 0.944834334 0.847272997 0.007768664 Working capital 16,05,938.0 23,88,900.0 32,03,429.0 0.331580049 Profitability Ratios 2013 2014 2015 Operating Profit Margin 0.100977727 0.089047255 0.08898715 -0.039581594 Net Profit Margin 0.068957968 0.060779639 0.06838972 -0.002746837 Return on Capital Employed 0.4 0.3 0.2 -0.160459244 Return on Equity 0.257834973 0.212484827 0.24261746 -0.019673454 Return on Total assets 0.182458623 0.144075478 0.113667738 -0.125673945 Debt equity ratio Capital structure ratio 2013 2014 2015 Debt- equity 0.413114754 0.474816041 1.134444326 0.582025183 Interest coverage ratio 40.94205904 40.1257067 4.78608308 -0.294367022 Efficiency ratio Efficiency ratio 2013 2014 2015 Receivable turnover ratio 11.08401323 9.2532887 Creditor turnover ratio 12.68542199 11.23585229 Inventory turnover ratio 12.83396414 10.75765974 Assets turnover ratio 2.614942828 2.066946288 In this report we will discussed about the many changes has been calculated of the financial data of company from last two years. To be more profitable, the company has to change their plans and strategies and also have to make some changes in another process(Well, 2017). The new variation of the company also leads the company from the front for holding the share of the market in the share market. In this case study of the company various ratios is been examined on the company, financial factors are being measure after examined due to changes have being done by the company. In this new factor is introduce knows as liquidity ratio by the help of this ratio there is increments of 1.77% in company current ratio. The big factor of increments in current ratio is, high turnover of the company in last years. Due to high turnover of the company working capital of the company will raise automatically. The effect of this the present working capital was 16, 05,938 AUD it has been increased by 32, 03,429 AUD in year 2015.In addition to this by introduce of the quick ratio company easily managed the liquidity and also managed the capital structure of the company properly and fulfil the various types of requirements of the company. The company introduce the profitability ratio which is used to measure the profit of the company but from last year it has been measured that profit is reducing because of the changes made by the company for the internal and external users. It has been noticed that there is reduction of 3.95% of operating profit margin in the year 2013 and the rate of operating profit margin in present is 1.009% in the year 2015 the rate is estimated as .88%. Due to this the financial condition of the company has gone down it has been effect by the some related factors of the profitability ratio. It has been notice that measurement of the profit of the company is decrease and it can be shows with the help of ROCE, return on total asset ratios, ROE and Net profit margin. In addition to this, introducing the capital structure ratio and efficiency ratio which helps the company for the growth and performance of the company( Hoelzer, 2011). The company follows the capital structure ratio from last two years and due to effect of this there is increment of 58.20% in debt equity ratio. The reason behind the changes made in the debit equity ratio is due to differences in the liabilities and assets of the company from last two years. There are the various ratios related to profitability ratio some of these are discussed below-: Assets turnover ratio, receivable turnover ratio, inventory turnover ratio, efficiency turnover ratio, Creditor turnover ratio and receivable turnover ratio by the help of these ratio company growth and performance can be examine with the help of these ratios and working capital is also examines with the help of these ratios( Iverson, 2013). In this case study, it has been mentioned that because of the modification is done in the business strategies and plans, functions, and operations etc. due to this many changes have been done with the help of ratios. Due to this, it has become the difficult job for the auditors to examine the changes and act on them. It has been examining that changes have been occurring due to mistake and inaccuracy made by Jay and associates( DeGeorge , 2014). It became the duty of Stewart and Kathy to find out the errors and frauds and act on them straightway. Stewart and Kathys is the new client of DIPL, and it is a duty of auditor to examines the risks elements of company and it is a duty of auditor to solve the risks elements and having the abilities to take a decision on risks elements and also have the capabilities for taking the healthy decision for the company( Handsworth, 2012). After study the company report, it has been noticed that company is facing the several problems by inherent risk factors. Inherent risks factors are discussed in details such as:- Intentional Misstatement The inherent risk factor of the company is discussed in details such as:- In this accountant makes the financial statement of the company, without considering to any accounting principles which states that there should be a proper guideline and the rules and principle for preparing the financial statements shall be followed( Fernando, 2012). Mostly accountant are involved in the frauds activities while preparing the financial statement of the company accountant do the frauds in this. In this case, study after examines the DIPLs report, it has been noticed that increments are done on revenue in last year, in addition to this some other factors also represent the growth of the company. According to this company, profit is still less( Hoelzer, 2011). This factor has been taking place, the reason behind this is paying the high tax return to the government of Australian, it happens due to the high profits. Due to this company is involved in the frauds activates they decrease the profit of the company to pay the less tax to the government of the Australia and shows the low profit. This fraud activates can be done by the company by doing the false transaction so that the profit can be decreased. In this case study, it examines the some ratio that the impressive performance and growth of the company, it may be possible only when these facts are shown in the financial statements by the result of this stakeholder of the company may get impressed and they can invest more in company and it can be profitable facts for the company( Fernando, 2012). So companys interest charges have been increased by high rates these types of activities has been including in the frauds activity so the effect of this increase the interest rate charges results of that massive amount of loan. With this there is complexity has been done in the financial statement of the company. In addition to this, the rate of depreciation has been increased. Some other factors are mentioned such as high salaries has been given to the employee which is not necessary. Another reason of inherent risk factor for DIPL, is that wrong statement has been done in the books of accounts by the auditor. To avoid the inherent risk factor company have to avoid the all frauds activates and other some facts so that by avoiding these factors a company can achieve their objectives and works on their growth and performance of the company. International and domestic reporting In addition to this, business of the company can easily managed at domestic level and individual business can easily be managed by the company in Australia. In addition to this to do the business at international level company have to follow the principle and rules of IFRS and GAAP and also follows the all the requirements related to this process. Following the general accounting`s rule and standards could facilitate the company in owing favour of huge investments by FDIC. Beside this, getting huge amount if investment could support the company in resolving several issues. It has been mentioned in this case study it shows that rules and regulation of the general accounting and the guideline does not follow as a result of this appropriate manner is not followed by them in preparing the financial statements( Thibodeau Freier, 2013). This may result in the rise in non-compliance risk for DIPL. In this report, it examines that it is bestial for the company to follows the accounting stan dards, rules, and regulation in an effective manner while preparing the final financial statements. In this report of the company some factors are examined, which represents the misstatements in financial statements to measures the cause of risks. Some of the factors and cause of risks are as follows:- Interest amount- Company`s amount of interest in year 2013 was AUD 84379.0; in contrast to this, 8089038.0 AUD was the interest amount represented in year 2015( Thibodeau Freier, 2013). The variation in interest amount of last two year was 285.87%. In perspective to the loan taken by the company could be determined as this loan amount was merely taken to maintain the liquidity position as well as capital structure. In this report, it has been examined that huge amount of interest is still high and due to this company have to pay the high amount of tax to the Australian government( DeGeorge , 2014). There has been increment in the company`s revenue in previous year, which can be a cause for DIPL to reimburse high tax of return to the government of Australia. In order to not pay the tax, company might have presented the amount of interest as higher as to decrease the amount of profit into the final statements of company. Debt to equity ratio- Assessment of DIPL`s Debt to Equity ratio is being done. The debt to equity ratio, of company was 0.47 in 2014, whereas increment of ratio was 1.13 in year 2015. In this there is not Hugh amount is required to start the new projects. The amount is shown to disturbed the stakeholders and government and other stakeholders decisions( Albuquerque, 2010). Identification of key fraud risk factors The financial factors depicted from the case study are analysed by the auditor to identify the factors which are interrelated to the practice of fraud activities. Several process of the company are being studied such as- e-book revenue process, cash receipts, inventory and purchase, printing process and the process related to finance department; besides the inherent risks factors were also considered by the auditor(Well, 2017). The information is being examined by the companys financial statement and from BODs meeting and the companys new financial decisions( Hoelzer, 2011). Companys also examined the auditors so that auditors can do the frauds in while preparing the final statement of the company. In this company have to pay attention tows the works of the auditors while preparing the financial statements of the company. The company has to follow some various facts so that profit margin ratio of the company can be examined. Conclusion Analysing the whole report, supports in reaching at a conclusion, that unethical activities as well as the fraudulent practices were carried out by the company. These practices were being carried out to put positive impression on the company`s stakeholder, as by portraying the financial statement in such a way that represented the effective financial condition of the company. For this aspect, the accounting standards, rules and principle were also being neglected or not followed. In order to make impression on the shareholders or investors, the company indulged in unethical practices and fraud which could be a reason that lead to inherent risk. In addition to this inherent risk factors has been solved by not doing the frauds activates so that auditors can prepare the final statement of the company without doing any frauds activates. In this auditors have to follow the rules and principle of the general accounting so that the proper accounting can be done in the companys financial sta tements. In addition to this, the job of the auditor is to find out the errors and frauds and not involve in the frauds activities of the company.