Assignment Task 1: REVIEW QUESTIONS
Q1. Why is the fraudulent statement methods under discussion referred to as "financial statement fraud"?
Q2. There are three main groups of people who commit financial statement fraud. Who are they?
Q3. What are the three primary reasons people commit financial statement fraud?
Q4. What are the three general methods commonly used to commit financial statement fraud?
Q5. What is meant by the term overstatement?
Q6. What is meant by the term understatement?
Q7. What are the components of the conceptual framework for financial reporting?
Q8. Define the term financial statement and provide examples of types of financial statements used in companies
Assignment Task 2: DISCUSSION ISSUES
Q1. Why is financial statement fraud commonly referred to as "cooking the books"?
Q2. Compare the three main groups of people who may commit financial statement fraud, and describe their potential reasons for the fraud.
Q3. Although three general methods of committing financial statement fraud have been identified, one of these methods is typically used first. Which method is this, and why is it more likely to be selected first as opposed to the other two?
Q4. What is the generally accepted accounting principle known as matching? Describe how a company may be involved in fraud that violates this principle.
Q5. Management of a cellular phone company learns that a new technological advance will occur within the next year that will make the company's cur- rent phones and related products obsolete. As a result, there is a strong chance that the company will close. When financial statements appear for auditors, management does not reveal its knowledge of the new technology. In this case, what accounting concepts are involved?
Q6. In an organization, who is generally responsible for the financial statements, and how can those responsible help to deter financial statement fraud?