Fraud Triangle
This part of the Fraud Triangle refers to pressure like money problems or bad habits that push someone toward fraud.
Incentive
This type of auditor works inside a company to evaluate operations and internal controls.
What is an internal auditor bruh?
What is the primary purpose of internal control within a business?
To ensure accurate financial reporting and protect the company’s assets.
Why was the Sarbanes Oxley Act passed?
To restore investor confidence, prevent accounting fraud, and improve internal controls.
Weak internal rules and a lack of supervision mostly increase this part of the Fraud Triangle.
Opportunity
These auditors are independent from the company and examine financial statements for accuracy.
What are external auditors?
What is COSO, and what role does it play in internal controls?
COSO is an independent private‑sector group that identifies and addresses accounting issues and provides the framework for internal control systems.
When was the Sarbanes Oxley Act passed ?
July 30th, 2002
This Fraud Triangle element deals with the excuses people make to feel okay about doing something wrong.
Rationalization
Internal auditors typically report their findings to this GROUP within the company.
Who are management or the board of directors? Try using your brain to memorize next time :)
Internal controls keep a company’s things safe and make sure records are fair. What does this help the company avoid?
Breaking laws
What were some fraud cases that were responsible for the SOX act?
Accounting fraud by Enron and WorldCom
This is the only part of the Fraud Triangle that companies can most directly reduce by improving systems and procedures.
Opportunity
The main purpose of external auditors is to provide this type of opinion on a company’s financial statements.
What is an audit opinion? ngl this one was kind hard
Internal controls protect a company’s assets. What is one example of an asset they help keep safe?
Cash, equipment, or inventory.
What new organization came from the SOX that was to regulate and inspect public accounting firms?
The Public Company Accounting Oversight Board (PCAOB)
This Fraud Triangle element is hardest to detect because it happens internally and has few visible warning signs.
Rationalization
Unlike external auditors, internal auditors primarily focus on improving these two areas within an organization.
What are risk management and operational efficiency? If you got this right, you get a tight hug from the big JZ (Jerry Zhang).
According to the slide, name at least three elements that make up an organization’s internal control system?
The control environment, Assessment of risk, the control of operational activites, mointoring of control processess, and accurate communcation of infomation.
According to today's presentation what did section 404 do?
Requires company managers and auditors to check and report if the company’s financial controls are working properly. If you got this right you get a bear hug from Jerry Zhang.