What Does a Fraud Auditor Do?

Job fraud refers to the intentional misuse or misuse of the resources or assets of the employed organization for the purpose of personal personal gain. From employee thieves to materials, to fraud through financial statements, job fraud covers all kinds of improper behavior of employees and managers at all levels.

Job fraud

Right!

Job fraud refers to the intentional misuse or misuse of the resources or assets of the employed organization for the purpose of personal personal gain. From employee thieves to materials, to fraud through financial statements, job fraud covers all kinds of improper behavior of employees and managers at all levels.

Chinese name

Job fraud

Category

Intentional behavior

Job fraud has the following four characteristics:

Secretly

Breach of fiduciary responsibility to the business;

For the purpose of direct or indirect financial benefits;

Loss of corporate assets or reduced corporate income.

1. Corruption and bribery: Fraudsters use their powers to seek personal gain for individuals by doing business in procurement, sales, bidding and other business links, in violation of their responsibility to their employers and infringing on the rights of others.

2. Illegal misappropriation and embezzlement of assets: including obtaining cash by stealing cash or withdrawing bank deposits privately; there are also methods of intercepting cash through omissions and underreporting; accounting cash receipts into accounts receivable, or Recovered receivables are used as means to write off bad debts to collect cash; various means such as appropriating or stealing the company's physical assets to obtain illegal benefits.

3. Provide false financial statements: provide false external finance through methods such as overestimating assets, overestimating revenue, underestimating expenses, incorrectly amortizing various provisions, changing the time of revenue cost accounting, improper disclosure or non-disclosure of related accounting information, etc. Reports or various internal reports.

An analysis of the causes of job fraud helps us understand under what circumstances job fraud is most likely to occur, how cheaters take action, and how they cover up their behavior. Understanding the objective soil and subjective motives of job fraud, and mastering the law of job fraud, can enable us to take more effective measures to prevent and control job fraud.

(1) Objective soil from job fraud

1. Weak corporate management: management ideas are not in place, do not follow the operating laws of the market economy, and inadequate investigation of market conditions in product development and material procurement makes it possible for internal employees to find the fish in troubled water; management methods are backward, and computers and networked management are not used The internal capital flow, logistics and information flow of an enterprise cannot be truly integrated, which provides an opportunity for employees to commit crimes. 2. Internal control loopholes: The absence of either side of the enterprise's internal control system objectively can easily lead to job fraud. For example, loopholes in business control make it possible for purchasers and sales personnel to receive rebates; loopholes in capital management control make illegal withdrawal and cash theft possible; loopholes in control of accounting systems that make it possible to tamper with vouchers and alter account books; Vulnerabilities make it possible for managers to exceed their authority; loopholes in the control of information systems increase the possibility of corporate risks and weaken their ability to resist risks.

3. Defects in the employment mechanism: When the company hires new employees, it does not carefully review the background of the employee. The employment is not "only employment", but "relationship only." Such employees often leave hidden dangers for the occurrence of job fraud; When treating current employees, they did not achieve know-how and good use of people, giving subordinates with low working ability excessive expectations, making them have to falsify to complete tasks, and giving subordinates with high working ability too low requirements. Neglects their work and leads to oversight.

(2) Subjective motivations arising from job fraud

1. Material benefits. Driven by material benefits, some employees may misappropriate, embezzle public funds or misappropriate company property in order to solve their own distress when encountering severe financial difficulties; some employees may embezzle company assets or Accepting bribes in an attempt to maintain this lifestyle has led employees to continue cheating. On the other hand, in the case where the bonus of the management personnel is directly linked to the accounting income, the management is likely to convert the future income of the company into the current income through accounting choices, thereby increasing their own compensation and damaging the interests of shareholders; on the contrary, if management People think that their contribution does not match their compensation, and their loyalty to the company will decline, and corruption and embezzlement will inevitably occur.

2. Political motivation. The performance of state-owned enterprise operators is linked to their treatment of political positions. Whatever achievements are made can be awarded honorary titles of any level or administrative positions. Once the company fails to achieve the expected goals, managers try to cover up the poor financial status and operating performance of the company by preparing false accounting reports.

Combining the possible ways of job fraud, timely detecting the occurrence of job fraud, and then understanding the weak links of corporate management, exploring how to strengthen internal control to prevent job fraud and minimize the possibility of job fraud. It is an enterprise And stakeholder concerns. This article believes that the following aspects can be taken to strengthen the prevention of job fraud:

1.Strengthen the company's internal control system

The current internal control system of China's enterprises is mainly composed of three major organizations: the board of directors, independent directors, and internal auditing. The supervisory board and independent directors are at the strategic level, and the internal audit department is at the technical level. However, the "Company Law" issued by the State Council, the "Guiding Opinions on Establishing an Independent Director System in Listed Companies" issued by the Securities Regulatory Commission, and the "Audit Office's Provisions on Internal Audit Work" implemented by the Audit Office from May 1, 2003 Various laws and regulations have contradictions with each other, resulting in overlapping functions of these three departments and weakening the role of supervision. Only by rationalizing the power relations between the board of supervisors, independent directors, and the internal audit department, and making the internal control department independent of the enterprise, it must not interfere with the company's production and operation decisions, and is not controlled by the controlling shareholder in remuneration in order to make it work. Some effect. The independent director Lu Jiahao who appeared in the Zheng Baiwen incident filed a lawsuit against the China Securities Regulatory Commission with a fine of 100,000 yuan, which reflected from one aspect that the actual status of independent directors in domestic enterprises was weak and the supervisory role was invalid. Similarly, according to the report on job fraud and abuse of power in the United States in 2004, more than 40% of job fraud cases can occur because the company has not established appropriate internal controls, and another 40% of cases occur mainly because internal controls have not been able to Effective functioning, it also shows that a sound internal control system is an important factor in preventing and detecting job fraud.

2. Improve the performance evaluation and incentive mechanism for enterprise employees

By establishing a scientific, systematic, reasonable, and fair operating performance evaluation system, improving the performance appraisal and evaluation of corporate employees, linking performance appraisal to rewards and punishments, the employee's contribution to the company is directly proportional to the remuneration he receives, which fundamentally prevents employees from Compensation and risk-taking generated by material perspective. The "Interim Measures for the Evaluation of the Operational Performance of Persons in Charge of Central Enterprises" implemented in China since April 1, 2004 stipulates that the responsibility for the operation of state-owned assets shall be implemented to the person in charge of the enterprise, and the person in charge of the enterprise shall be evaluated in accordance with the basic indicators for the year and the term of office. . The specific assessment indicators are classified according to the characteristics of different industries and enterprises, and at the same time, they link the short-term development and mid- and long-term development goals of the enterprise, and achieve the link between assessment and salary.

3. Establish a report hotline

According to the 2004 US Job Fraud and Abuse Report, using public opinion to establish a reporting mechanism is one of the most effective ways to find problems. American Sarbanes. Article 301 of the Oxley Act Listed Companies Audit Committee also mentions that the audit committee must have procedures in place to receive, retain, and deal with issues related to issuers 'accounting, internal control, and auditing issues; and to deal with suspicious issues of issuers' employees. Anonymous reporting of accounting and auditing issues. "

It is part of the public's supervision to report internal job fraud by employees or external stakeholders. However, due to the deficiencies in China's laws, the reporter cannot be protected in a real sense, and there are also huge loopholes in the provisions on retaliation and framing. As a result, many enterprises have established internal reporting mechanisms, but they are useless. Only by incorporating this form of supervision into the legal trajectory and establishing a confidentiality system for whistleblowers so that no one is allowed to retaliate against the whistleblower in any name. The investigation department must have the right to enforce the law independently and not be affected by any power. The incidents can be effectively tracked down, so as to give play to the ownership of employees and improve the enthusiasm for reporting.

4. Supervising the quality of external independent audits

Behind the financial scandals of a series of companies, accounting firms have been involved: Arthur Andersen, which is responsible for the auditing business of Enron, KPMG of Xerox, Deloitte & Touche of China Kelon ... The work was questioned by everyone. Why can't the independent audit department find and prevent accounting irregular operations and false financial information of enterprises? There are three main reasons for this:

The first is that accounting firms coerce into fraudulent companies in order to keep their business, and provide convenience for the job fraud of senior management personnel;

Second, in order to expand revenue, the firm shifted its business focus from providing audit services to consulting services. After experienced auditors switched to consulting services, a large number of inexperienced young auditors took over the audit work, making mistakes unavoidable;

The third is that the audit model has gradually developed from a system-based model to a risk-based model. Accountants have devoted a lot of energy to researching the client's industry risk and business risk. There are fewer and fewer substantive tests in audit work, and the audit results cannot be found naturally Substantive issues.

To improve the quality of external audits, it is necessary to continuously establish and improve the supervision system for external independent auditing departments. According to Sarbanes-Oxley Act, the United States has restructured the accounting professional supervision framework and established a neutral "Public Company Accounting Oversight Board" to supervise accounting professions, inspect, investigate and punish public companies The auditing accounting firm and corresponding certified public accountants, and authorized the SEC (United States Securities and Exchange Commission) to supervise them. The bill also prohibits accounting firms from providing specific non-authentication services to their clients (design and implementation of financial information systems, internal auditing), and authorizes the SEC to review whether other non-authentication services provided by accounting firms undermine their independence. . China can also learn from the practice of the United States and establish an independent regulatory department affiliated with the national government to supervise accounting firms and certified public accountants in conjunction with the Institute of Certified Public Accountants to enhance their sense of crisis and urgency. ^[1]