Financial Audit Essays and Research Papers

Instructions for Financial Audit College Essay Examples

Title: MF Global

  • Total Pages: 4
  • Words: 1252
  • Sources:4
  • Citation Style: APA
  • Document Type: Essay
Essay Instructions: Please list the questions before and then answer the question.

1. Discuss the key difference between conducting a financial audit and a fraud audit, and the related level of responsibility of the auditing firm.

2. After the recent bankruptcy declaration of MF Global, the Chairman and CEO, Jon Corzine, indicated that he had no knowledge of the missing customer funds. Discuss the obligation of corporate CEOs to shareholders and employees ?to know- about the financial activity of the corporation.

3. Analyze how complex global instruments contributed to the fraud and the failure of it to be detected by regulators and auditors of MF Global.

4. Discuss what measures can and should be taken to make it easier for corporate employees to ?blow the whistle on a fraudulent scheme within an organization.

5. Evaluate whether businesses, accounting firms, and other organizations should explicitly reward ethical behavior by their employees and executives.

Ensure the four (4) references are academic references. Wikepedia and other websites cannot be used.

****Please ensure that APA style is correctly used. Please no unnecessary spaces between paragraphs adhered to the correct double spacing.

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Dyck, A., Morse, A., & Zingales, L. (2010). Who Blows the Whistle on Corporate Fraud?. Journal of Finance, 65(6), 2213-2253. doi:10.1111/j.1540-6261.2010.01614.x.

Lee, A. (2012). MF Global client funds: how new NFA proposal would work. International Financial Law Review, 41.

Spencer, J. (2011, December 14). MF Global: A search for answers and millions of dollars. Star Tribune (Minneapolis, MN).

Weinberg, J.A. (2003). Accounting for Corporate Behavior. Economic Quarterly (10697225), 89(3), 1-20.

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Title: Risk Management and Risk Assessment

  • Total Pages: 4
  • Words: 1382
  • References:9
  • Citation Style: MLA
  • Document Type: Research Paper
Essay Instructions: Below are nine websites for state and local governments as well as universities. You are to visit each website and read the material they have available on their sites. After reviewing the material, please answer the following four questions (1 page each).

1. Which website(s) conforms closest to your understanding of what risk management is all about? Why?

2. What tends to be the major focus of many of the websites? Please make sure you compare and contrast the nine sites. In other words, what elements do they all seem to have in common? What is missing?

3. You are to select one unit, website, for review and assume you are conducting a management audit (not a financial audit). In this audit, you are to evaluate the unit using criteria from your base of knowledge on risk management. You are to make recommendations for improving the unit. However, since time and money are both scarce, you need to narrow your list of recommendations down to the two most important changes that should be made. Please make your recommendation and explain why they are important for improving risk management.

4. Evaluate the mission statement of one of the websites using as your guide the readings and their discussion of risk and the process of risk management. Explain how you might change the statement.

WEBSITES:

http://www.broward.org/riskmanagement/welcome.htm

http://cao.lacounty.gov/RMB/overview.htm

http://centralservices.cuyahogacounty.us/risk/default.htm

http://www.unc.edu/finance/risk/erm.htm

http://www.bussvc.wisc.edu/risk_mgt/risk_mgt.html

http://risk.state.nv.us

http://rms.unlv.edu/

http://www.risk.utah.gov/main/

www.cookcountyrisk.com

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Broward County. Risk Management. http://www.broward.org/riskmanagement/welcome.htm

Carolina Risk Management Services. Enterprise Risk Management. http://www.unc.edu/finance/risk/erm.htm

Chief Administrative Office. County of Los Angeles: Risk Management. http://cao.lacounty.gov/RMB/overview.htm

Cook County Illinois Bureau of Finance. Department of Risk Management. http://www.cookcountyrisk.com/services2.html

Cuyahoga County. Department of Central Services: Office of Risk Management. http://centralservices.cuyahogacounty.us/risk/default.htm

State of Nevada. Risk Management. http://risk.state.nv.us/

University of Nevada, Las Vegas. Risk Management and Safety. 2006. http://rms.unlv.edu/

University of Wisconsin-Madison. Risk Management. 2007, March 7. http://www.bussvc.wisc.edu/risk_mgt/risk_mgt.html

Utah.gov. Risk Guidance. 2006. http://www.risk.utah.gov/main/index.php?module=Pagesetter&func=viewpub&tid=1&pid=19

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Title: I question What information routine operational reports kinds organizations Explain organization organization work information regularly References Organizational Communications Business Communication Lesikar R

  • Total Pages: 2
  • Words: 579
  • Works Cited:2
  • Citation Style: APA
  • Document Type: Essay
Essay Instructions: I need help with the following question:
What information might go into routine operational reports for different kinds of organizations? Explain why an organization or an organization that you work for would need this information regularly?

References: Organizational Communications/Business Communication by:
(Lesikar, R. V., Flatley, M.E., & Rentz, K. (2008). Business communication: Making connections in a digital world (11th ed.). Boston, MA: McGraw-Hill.
Class Notes: Page 340-345
Among the varieties of short reports, five types stand out.
? Routine operational reports keep others informed about company operations.
o Their form and content will vary, depending on the organization.
o They should deliver the required information efficiently, clearly, and on time.
o Special word-processing features can assist you with standardized reports.
? Progress reports review progress on an activity.
o Most are informal and in narrative form, but some are formal.
o They should emphasize the positive.
? Problem-solving reports help decision makers choose a course of action.
o They can be internal or external.
o You will need to decide whether or not to make recommendations.
o You will need to decide whether or not to take a direct or indirect approach.
o Though not persuasive per se, these reports do need to convince with their good data and analysis.
? Audit reports hold organizations accountable to certain standards.
o The most common type is the financial audit prepared by an accounting firm.
o Short financial audits follow a standard format.
o Longer audit reports vary in form and content.
o The Sarbanes-Oxley Act has increase the need for audit reports.
o Meeting minutes, a type of descriptive report, provide a written record of a group?s activities and decisions.
o Most are distributed by memo or email, but their layout varies.
o Typical minutes include common preliminary, body, and closing items.
o Minutes have political implications. Use good judgment when preparing them.

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Lesikear, R.V., Flatley, M.E., & Rentz, K. (2008). Business Communication: Making Connections in a Digital World. 11th ed. Boston, M.A.: McGraw Hill.

Programing Pool. (2010). Advantages and disadvantages of operational reporting. PPR. Retrieved August 8, 2012 from http://www.programming-pool.com/blog/operational-reporting.html

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Title: Case Study response

  • Total Pages: 1
  • Words: 345
  • Bibliography:1
  • Citation Style: APA
  • Document Type: Research Paper
Essay Instructions: Please read the following case, and answer the three (3) questions at the end.


The Healthcare Company: Learning from Mistakes?

In 1968 Dr. Thomas Frist, Sr., Jack C. Massey, and Dr. Thomas Frist, Jr., founded the Hospital Corporation of America (HCA) to manage Park View Hospital in Nashville, Tennessee. The firm grew rapidly over the next two decades by acquir¬ing and building new hospitals and contracting to manage additional facilities for their owners. The firm merged with Columbia Hospital Corporation to become Colum¬bia/HCA Healthcare Corporation in 1994, and Columbia founder Richard Scott be¬came chairman and CEO of the combined companies. By 1997 Columbia/HCA Healthcare Corporation had grown to become one of the largest health-care services companies in the United States, operating 343 hospitals, 136 outpatient surgery cen¬ters, and approximately 550 home-health locations. It also provided extensive outpatient and ancillary services in thirty-seven states, as well as in the United Kingdom and Switzerland. The firm's comprehensive network included more than 285,000 em¬ployees and used economies of scale to increase profits.
Columbia/HCA's stated mission was "to work with our employees, affiliated physicians and volunteers to provide a continuum of quality healthcare, cost-effectively for the people in the communities we serve." Its vision was "to work with employees and physicians, to build a company that is focused on the well- being of people, that is patient-oriented, that offers the most advanced technology and information systems. That is financially sound, and that is synonymous with quality, cost-effective health¬care." Columbia/HCA's goals included measuring and improving clinical outcome and patient satisfaction as well as reducing costs and providing services with compas¬sion. With these goals, the company built the nation's largest chain of hospitals based on cost effectiveness and financial performance. It competed by capitalizing on its size and creating economies of scale in the internal control of its costs and sales activities The focus was bottom-line performance and new business acquisitions.

However, a number of critics charged that health -care services and staffing at Co¬lumbia/HCA often took a back seat to the focus on profits. For example, the company employed shorter training periods than competing hospitals provided. One fanner ad¬ministrator reported that training that typically should take six months was sometimes accomplished in as little as two weeks at a Columbia/HCA hospital. In addition, the company was accused of "patient dumping"---discharging emergency-room patients or transferring them to other hospitals when they are not yet in stable condition. In 1997 officials at the Department of Health and Human Services Inspector General's Office indicated that they were considering imposing fines on Columbia/HCA for an un¬specified number of patient-dumping cases. Additionally, the corporate watchdog INFACT publicly challenged the company's practices, inducting Columbia/HCA into its "Hall of Shame" for corporations that manipulate public policy to the detriment of public health.


ETHICAL AND LEGAL PROBLEMS BEGIN

In late July 1997, Fawcett Memorial Hospital in Port Charlotte, Florida, a Colum¬bia/HCA hospital, became the focal point of the biggest case of health-care fraud in the industry. A government investigation resulted in the indictment of three mid-level Columbia/HCA Healthcare Corporation executives for filing false cost reports for Fawcett, which resulted in losses of more than $4.4 million from government pro¬grams. The government alleged that Columbia/HCA had gained at least part of its profit by overcharging for Medicare and other federal health programs; that is, exec¬utives had billed the government for non reimbursable interest expenses. Other con¬cerns were alleged illegal incentives to physicians and the possible overuse of home-health services. Federal investigators accused Columbia/HCA of engaging in a "systematic effort to defraud government health care programs." In a seventy-four-page document, federal investigators quoted confidential witnesses who stated that Co¬lumbia/HCA's former CEO, Richard Scott, and former president, David Vandewater, were briefed routinely on issues relating to Medicare reimbursement claims that the government charged were fraudulent. Samuel Greco, Columbia/HCA's former chief of operations, was also implicated in the scandal.
One of the issues was whether Columbia/HCA had fraudulently overstated home¬health care laboratory-test expenses and knowingly miscategorized other expenditures so as to int1ate the amounts for which it sought reimbursement. For example, Co¬lumbia/HCA's Southwest Florida Regional Medical Center in Fort Myers reportedly claimed $68,000 more in property taxes than it paid. Moreover, documents showed that the hospital had set aside money to return to the government in case auditors caught the int1ated figure. Technically, expenses claimed on cost reports must be re¬lated to patient care and fall within the realm of allowable Medicare reimbursements. However, medical billing can be confusing, chaotic, imprecise, and subject to inter¬pretation. Hence, it is not unusual for hospitals to keep two sets of accounting books. One set is provided to Medicare, and the other set, which includes records for set¬aside money, is held in case auditors interpret the Medicare cost report dit1erently than the hospital does. Some believe it is appropriate for a hospital to set aside money to re-turn to the government if the hospital in good faith believes the Medicare cost claims are legitimate. However, if administrators believe strongly or know that certain claims are not allowable yet still file the claims and note them in the second set of books, charges of fraud may result.
Confidential witnesses said that Columbia/HCA had made an effort to hide from federal regulators internal documents that could have disclosed the alleged fraud. In addition, Columbia/HCA's top executive in charge of internal audits had instructed employees to soften the language used in internal financial audits that were critical of Columbia/HCA's practices. According to FBI agent Joseph Ford, "investigation by the [Federal Bureau of Investigation] and the [Defense Criminal Investigative Ser¬vice] has uncovered a systematic corporate scheme perpetrated by corporate officers and managers of Columbia/HCA's hospitals, home health agencies, and other facilities in the states of Tennessee, Florida, Georgia, Texas, and elsewhere to defraud Medicare, Medicaid, and the [Civilian Health and Medical Program of the Uniformed Services]." ,Indicted Columbia/HCA officials pleaded not guilty, and defense lawyers for Co¬lumbia/HCA tried to diminish the importance of the allegations contained in the gov¬ernment's affidavits.

DEVELOPING A NEW ETHICAL CLIMATE AT COLUMBIA/HCA

Soon after the investigation was launched, Dr. Thomas Frist, Jr., was hired as chairman and CEO of Columbia/HCA. Frist, who had been president of HCA before it merged with Columbia, vowed to cooperate fully with the government and to develop a one ¬hundred-day plan to change the troubled firm's corporate culture. Under the Federal Sentencing Guidelines for Organizations (FSGO), companies that have effective due diligence compliance programs can reduce their fines if they are convicted of fraud. For penalties to be reduced, however, an effective compliance program must be in place before misconduct occurs. Although the FSGO requires that a senior executive be in charge of the due diligence compliance program, Columbia/HCA's general counsel had been designated to take charge of the program.
After a hundred days as chairman and CEO of Columbia/HCA, Frist outlined changes that would reshape the company. His reforms included a new mission state¬ment as well as plans to create a new senior executive position to oversee ethical com¬pliance and quality issues. Columbia/ HCA's new mission statement emphasized a commitment to quality medical care and honesty in business practices. It did not, how¬ever, mention financial performance. "We have to take the company in a new direction," Frist said. "The days when Columbia/HCA was seen as an adversarial or in your face, a behind-closed-doors kind of place, is a thing of the past." (It has been claimed that some managers viewed Columbia/HCA's corporate culture as so unethical that they resigned before the fraud investigation had even started.)
Columbia/HCA hired Alan Yuspeh as the senior executive to oversee ethical com¬pliance and quality issues. Yuspeh, senior vice president of ethics, compliance, and cor¬porate responsibility, was given a staff of twelve at the corporate headquarters and assigned to work with group, division, and facility presidents to create a "corporate cul¬ture where Columbia workers feel compelled to do what is right." Yuspeh's first ini¬tiatives were to refine monitoring techniques, boost workers' ethics and compliance training, develop a code of conduct for employees, and create an internal mechanism for workers to report any wrongdoing.
Because of the investigation, consumers, doctors, and the general public lost con¬fidence in Columbia/HCA, and its stock price dropped more than 50 percent from its all-time high. The new management seemed more concerned about developing the corporation's ethical compliance program than about its growth and profits. For in¬stance, at a conference in Phoenix, Arizona, twenty Columbia managers were asked to indicate by a show of hands how many of them had escaped taunts from friends that they were crooks. Not a single hand went up. The discussion that followed that ques¬tion did not focus on surgery profit margins. It focused on resolving the investigation and on the importance of the corporation's intangible image and values


COLUMBINHCA LAUNCHES AN ETHICS, COMPLIANCE, AND CORPORATE RESPONSIBILITY PROGRAM

Columbia/HCA released a press statement indicating that it was taking a critical step in developing a company-wide ethics, compliance, and corporate responsibility pro¬gram. To initiate the program, the company designated more than five hundred em¬ployees as facility ethics and compliance officers (ECOs). The new ECOs began their roles with a two-day training session in Nashville. The local leadership provided by these facility ECOs was thought to be the key link in ensuring that the company con¬tinued to develop a culture of ethical conduct and corporate responsibility.
As part of the program, Yuspeh made a thirteen-minute videotape that was sent to managers throughout the Columbia/HCA system. The tape announced the launch¬ing of the compliance-training program and the unveiling of a code of ethics that was designed to effectively communicate Columbia/HCA's new emphasis on compliance, integrity, and social responsibility. Frist stated that "we are making a substantial in¬vestment in our ethics and compliance program in order to ensure its success" and that "instituting a values-based culture throughout this company is something our employees have told us is critical to forming our future. The ethics and compliance ini¬tiative is a key part of that effort."
Training seminars for all employees, conducted by each facility's ECO, included introductions to the training program, the Columbia/HCA code of conduct, and the company's overall ethics and compliance program. The training seminars also included presentations by members of senior management and small-group discussions in which participants discussed how to apply the new Columbia/HCA code of conduct in ethics related scenarios.
Although the company wanted individuals to bring their highest sense of persona values to work each day, the purpose of the program was to help employee’s understand the company's strict definition of ethical behavior rather than to change their personal values. Columbia/HCA's ethical guidelines tackled basic issues such as whether nurses can accept $100 tips-they cannot-as well as complicated topics such as what con¬stitutes Medicare fraud. In addition, the company developed certification tests for the employees who determine billing codes. In 1998 a forty-minute training video was shown to all the firm's employees; it featured three ethical scenarios for employees to examine. Columbia/HCA apparently recognized the importance of ethical conduct and quality service to all of its constituents.

RESOLVING THE CHARGES

In 1997-1998, Columbia/HCA Healthcare settled with the Internal Revenue Ser¬vice (IRS) for $71 million over allegations that it had made excessive compensation and "golden parachute" payments to some one hundred executives. As a result of the settlement, the IRS, which had sought $276 million in taxes and interest, agreed to drop its charges that Columbia/HCA had awarded excessive compensation by allowing the executives to exercise stock options after a new public offering of Columbia/HCA stock. Frist had reportedly earned about $125 million by exercising stock options af¬ter that public offering, and seventeen other top executives each made millions on the deals.

In August 2000, Columbia/HCA became the first corporation ever to be removed from INFACT's Hall of Shame. The executive director of INFACT announced that Columbia/HCA had drastically reduced its political activity and influence. For exam¬ple, the corporation has no active federal lobbyists and has a registered lobbying pres¬ence in only twelve states. According to INFACT's executive director, "This response to grassroots pressure constitutes a landmark development in business ethics overall and challenges prevailing practices among f(x-profit health care corporations."

In December 2000, Columbia/HCA announced that it would pay the federal government more than $840 million in criminal fines and civil penalties. The com¬pany agreed in June 2003 to pay $631 million to settle the last of the government's charges that it had filed false Medicare claims, paid kickbacks to doctors, and over¬charged at wound-care centers. No senior executives of the company have ever been charged with a crime. However, the company has paid out a total of$1.7 billion in fines, refunds, and lawsuit settlements after admitting that it had, through two subsidiaries, offered financial incentives to doctors in violation of antikickback laws, falsified records to generate higher payments for minor treatments or treatments that never occurred, charged for laboratory tests that were never ordered, charged f()l" home-health care for patients who did not quality)r for it, and falsely labeled ads as "community educa¬tion." KPMG, the firm's auditor, denied any wrongdoing on its part but agreed to pay $9 million to settle a whistle-blower lawsuit related to the charges. Columbia/HCA also signed a "Corporate Integrity Agreement" in 2000 that subjected the firm to in¬tense scrutiny until 2009. In the same year, the company was officially renamed HCA¬ The Healthcare Company.
In January 2001, Frist relinquished the title of CEO to focus on other interests but remained involved in corporate strategy as chairman of HCA's board of directors. Jack Bovender, Jr. (formerly CFO) replaced him. Of the fraud investigation, Bovender



HCNS COMPLIANCE PROGRAM AT WORK


Today, HCA spends $4 million a year on its ethics program, which includes an ethics and compliance committee of independent board directors, two separate corporate committees that draft: ethics policy and monitor its use, and a twenty-member de¬partment that implements the program. In all, twenty-six executives oversee ethics and compliance for a variety of issues, ranging from taxes to pollution to the Americans with Disabilities Act.
The ethics compliance program set up by Yuspeh includes seven components: (1) articulating ethics through a code of conduct and a series of company policies and procedures; (2) creating awareness of these standards of compliance and promoting eth¬ical conduct among everyone in the company through ethics training, compliance training, and other ongoing communication efforts; (3) providing a twenty-four-hour, toll-free telephone hot line to report possible misconduct; (4) monitoring and audit¬ing employees' performance in areas of compliance risk to ensure that established poli¬cies and procedures are being followed and arc effective; (5) establishing organizational supports for the ethics compliance effort; (6) overseeing the company's implementa¬tion of and adherence to the Corporate Integrity Agreement; and (7) undertaking other efforts such as clinical ethics and pastoral services.
Training continues to playa major role in helping employees understand HCA's new focus on ethics and legal compliance. Every new employee is required to undergo two hours of "orientation" on the firm's code of conduct within thirty days of em¬ployment. At that time, new employees receive a copy of the code of conduct, partic¬ipate in training using videotapes and games, and sign an acknowledgment card. All employees complete one hour of refresher training on the firm's code of conduct every year.
HCA's new ethics hot line helps the firm identity misconduct and take corrective action where necessary. For example, in the spring of2002, an anonymous caller to the toll-free line accused a hospital supply clerk of stealing medical gear and reselling it online through eBay. After investigators verified the complaint, the clerk was fired. Since its inception, the ethics program has fielded hundreds of such ethics-related complaints.
The effort to change HCA's corporate culture quickly and become the model cor¬porate citizen in the health-care industry was a real challenge. This health-care provider learned the hard way that maintaining an organizational ethical climate is the respon¬sibility of top management. As Bovender says, "Internal controls can always be cor¬rupted. We've tried to come up with a system that would require a lot of people to conspire. It would be very hard for Tyco-type things to happen here." HCA seems to have recovered well from all of its problems, and at the time of writing, this case a number of companies were trying to acquire it, an indication that they view it as a great business opportunity.



Questions:

1.What were the organizational ethical leadership problems that resulted in Co¬lumbia/HCA's misconduct?

2.Discuss the strengths and weaknesses of HCA's current ethics program. Does this program appear to satisfy the provisions of the Federal Sentencing Guidelines for Organizations and the Sarbanes-Oxley Act?

3. What other suggestions could Columbia/ HCA have implemented to sensitize its employees to ethical issues?

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No author. (2008) Sarbanes-Oxley. American Institute of Certified Public Accountants. Retrieved December 16, 2008 at http://thecaq.aicpa.org/Resources/Sarbanes+Oxley/

No author. (2008). Federal Sentencing Guidelines. Ethics Resource Center. Retrieved December 16, 2008 at http://www.ethics.org/erc-publications/federal-sentencing-guidelines.asp

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