ACC705: Trimester 1 2018

Tutorial 1

Question 1:

“An accountant only prepares the financial statements of a company and does not do any or
much audit work. Therefore, he/ she is not required to follow any ethical standard”.

A. State whether you agree or disagree with the above statement and why.
Disagree, as he or she won’t be able to prepare the financial statements properly.
Integrity and honesty
B. Explain if accountants in Fiji are required to follow any ethical standards. If so, what
are some of these?
Yes, Integrity, honesty, transparency.
C. State the organization in Fiji that is responsible for overseeing the work of
accountants. Also state what their “other work” involves.
FIA, CPA. They are part of the International Professional Practices Framework. The
International Standards are principles-focused, mandatory requirements consisting
of: Statements of basic requirements for the professional practice of internal auditing
and for evaluating the effectiveness of performance

Question 2:

Sam works as a payroll clerk at ABC Corporation Limited for the past 1.5 years. His salary is
$8,500 per annum. Recently, he has bought a car worth $15,000 and a house on mortgage
worth $250,000. State if you notice any “red flags” for Sam and why.

Yes, His salary is $8500 yet he has recently bought a car and house worth $250,000. His he
bought stuffs which are more then what he could afford.

Question 3:

State some of the skills or attributes that you need to possess if you wish to become a forensic
accountant.

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 Remarkable curiosity.
 Attention to detail.
 Persistence.
 The ability to think creatively.
 Communicate effectively.
 Analytical and research skills.

Question 4:

Why does a forensic accountant need to have knowledge of financial reporting together with
criminal laws of Fiji?

While they are investigating they should have the knowledge of the legal proceeding and what
could be the outcome if the proceeding is taken to court, as the forensic account could be
called in court for the witness purpose or to providing evidence.

Question 5:

Should you as a forensic accountant assist in financial statement audit? Why or why not?
Yes, As the normal audit will only audit the accounts but the forensic account could assist in
investigation if there are any suspected crime and could recommend on how this could be
controlled in future.
Question 6:
Identify the possible risks associated with:

(a) Mergers and acquisitions

(b)Miscalculations in the evaluation of assets

(c) One should reach to a perfect agreement before merging or acquiring
many complex calculations which is valuable for both the parties.
Manipulation of calculation or error in calculation can lead to heavy
losses of the combined entity.
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 (d) Financial statement fraud
If the financial statement is overstated in terms assets and profitability this could
mislead the investors to invest in the company while the company could be making loss.

Question 7:

Read about any business scandal such as WorldCom, Enron, Madoff, ABC Learning. Provide a
summary stating what fraudulent activities the business was engaged in and how their fraud
was identified.

Question 8:

Albert works as a director for Supreme Supplies. During the meeting, Albert strongly
recommends that Supreme Supplies buys its materials from Shayal Supplies which is actually his
wife’s business. The members of that meeting agree to buy supplies from Shayal Supplies.
However, during the meeting, Albert does not disclose to the members that Shayal Supplies is
owned by his wife.

A. Identity the type of fraud committed by Albert.

Vendor / compotator

B. What is Albert’s responsibility in the above case?

Disclose to the members or the meeting that the Shayal supplies is his wifes business.

Question 9:

Read the research paper uploaded on Moodle on “Traits, skills and ethical values of public
sector forensic accountants: an empirical investigation” and state the essentials skills that are
needed for public sector forensic accountants identified by the author. Explain the importance
of such skills.

Investigation ablibilty

Audit abilbity

Critical thinker

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Understand the goals if the case

Identify key issues

Question 10:

Sarah was writing a story book. However, she did not know how to end the book by giving an
interesting climax. Henry, a friend of Sarah one day visits Sarah’s home for dinner. Sarah
discusses the issue with him as a friend. He advises Sarah of a nice ending. She is impressed
with the idea. However, she is still unsure of using that idea. Weeks pass by and Sarah is still not
able to come up with a nice ending. Therefore, she uses the idea advised by Henry. Finally, her
book is published and to her surprise, it is a big hit! She is able to make about $1million dollars
from the sales. Henry learns about it and is angry on her for using her idea and not providing
him the share of the profits. He then files a case against her in court. Sarah gives affidavit that
there was no agreement made between them upon the share of profits or losses and that
Henry only gave her the idea on the dinner table without any verbal or written agreement.

A. Identify the fraudulent issue in the above case.

Copy right
B. State if Henry will be successful in his case.

Yes, as Sarah gives affidavit that there was no agreement made between them upon the share
of profits or losses and that Henry only gave her the idea on the dinner table without any verbal
or written agreement

Question 11:

Mr. Brown is the owner of XYZ Garment Business. He wishes to travel to India for holiday
purposes. He advised his accountant that during his trip, he will also try finding some
prospective suppliers for their garment supplies. Mr. Brown instructed his accountant to
include this expense as business travelling expense.

A. Advise whether the accountant should include the above expense as a business expense
and why.
No as the travel was intended for holiday only.

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 B. Advise whether the accountant will be violating any accounting principles if he/ she
includes these expenses as business expense.
Yes,

Question 12:

A. Explain under what circumstances blank cheques should be signed.

 A blank cheque is required to be attached to the documents, to ensure that the account
details are correct and the account number and IFSC code can be captured. 
B. How should signed blank cheques be treated?
A signed blank cheque cannot be treated as a guarantee for the money lent It is one
among several tools

C. Explain if blank cheques should be signed in advance at all.

no

Question 13:

Assume an accounts clerk is in charge of updating the supplier’s records which is password
protected. Assume the accountant of the same company asked the password from the accounts
clerk stating that he/ she needs to update an invoice due to an error. Advise whether the
accounts clerk should issue the password to the accountant and how.

Question 14:

Define corruption and state some of the activities that can be classified as corruption.

Doing a favor for someone in the intension for a personnel gain

Question 15

A. How can fraud be committed in the area of “business valuation”?

Over stating and giving false information
B. Who can suffer from “business valuation fraud”?
Affects business all all sizes. Valuation could be understated if the owner hides assets

Question 16

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Find out and do some readings on the recent issue about the removal of 500 rupee bill in India.
State how the removal of this note can assist in controlling or removing “black money”
transfers.

Question 18:

A. What is Tax Fraud?

Attempt to evade tax law or defraud IRS , Fail to file income return
B. State some of the ways you as a forensic accountant can detect tax fraud.
Comparing previous years record with current years, you will have some ideas

All the Best.