QUESTION

The existence of fraudulent financial reporting has been of great concern to both accounting
profession and regulatory agencies such as the Security Commission. It has been asserted that
companies in trouble frequently go bankrupt shortly after receiving unqualified opinions from
auditors. The auditing profession has historically argued that such cases are rare and that the
cases appearing in the press give the impression that the profession is doing a poorer job than it
actually is.

You are required to identify a recent financial reporting fraud that has been reported in the press
or described on the Internet. The choosen company should be between 2004 to 2015. Based on
the company choosen you are required to :

(a) Distinguish between an audit failure and a business failure. Explain why the press
may have difficulty in distinguishing between the two.
(b) Identify the motivation for the fraud.
(c) Describe how the fraud took place.
(d) Identify the internal control failures that would have allowed the fraud to take place.
(e) Identify the audit procedures that should be able to uncover the fraud or the procedures
that although carried out would not have uncovered fraud.
(f) Explain in your opinion if the auditor had carried out his duty independently and with
due care.

Marks Allocation

Written presentation

Assessment Criteria Weight Marks

Overview - Explain briefly on company background 5% 5
Discussion on audit failure and business failure 10% 10
Discussion on the motivation of fraud 10% 10
Discussion on the mechanism of fraud 10% 10
Analysis critical analysis and discussion the weakness in the internal 20% 20
control of the company.
Analysis critical analysis and discussion on the use of audit procedures 20% 20
with proper use of concept and principles.
Conclusion a conclusion which draws application from the foregoing 20% 20
and summaries the main purpose of the discussion. Students are
encouraged to give recommendation on possible preventive methods for
the fraud to be eliminated or reduced.
Language appropriate application of grammar and sentence structure 3% 3
References use APA style 2% 2
Total 100% 100
 (TOTAL 100 MARKS)

Assignment Assessment Criteria

1. To address the subject satisfactorily, a typed format is mandatory. Pass assignments are
expected to be legible, tidy, well organized and written in clear understandable English.
2. Each group should consist of 4 members and the choosen company cannot be repeated.

3. The written assignment word limit should be between 2,000 to 2,500 words (number of
words should be stated at the conclusion page of the project paper), excluding the cover
page, with 1.5 spacing, font size of 12 and format in Times New Roman and Justified
Alignment.
4. Each group shall submit the group assignment to your respective tutor by Week 8, 21st
July, 2017 (Friday), before 12.00 noon.
5. All pages in the report should be numbered except for the cover page and table of
contents. A copy of the marking scheme (Appendix II) must be attached immediately
after the cover page of the assignment.
6. Binding instruction - The assignment should be bound using tape binding with two punch
holes on the left hand side of the assignment for easy filing. Please refrain from using
plastic cover sheets when binding your assignment.
6. The assignment should include the following:
a. Cover sheet. Refer to Appendix I.
b. Marking scheme for group assignment. Refer to Appendix II. (Attach immediately
after cover page)
c. Table of contents
d. The report text
e. Any references used
f. Appendices (if any).
7. High grades(70%, 75%, +80%) need to demonstrate sustained coherent analytical ability.
A systematic approach to analysis and evaluation is required for grades 60% to 85%, for
grades at the higher end of the scale, integration and synthesis is a requirement. The
quality of the arguments used to develop and support prescriptions/recommendations are
the essential test of integration.
8. Evidence of reading and some understanding of models and concepts are needed to
achieve a pass grade(50%). Integration of theory and practice is expected for any grade
above 65%.
9. You are expected to clearly state any assumptions you make and support statements and
theories by referencing to appropriate sources. (This is essential for higher grades but
does not necessarily prejudice a pass mark(50%) if it is missing).
10. The assignment is to be submitted as a single written report.
11. As well as submitting a hard copy of your assignment you are required to submit the
electronic version. Unless both, hard copy and electronic versions are provided it will not
be counted as submitted.