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Managerial accounting is the process of identifying, measuring, analyzing, interpreting and communicating information for the pursuit of an organization’s goals (Investopedia, n.d.) . Others define management accounting as a function of tracking internal cost for any business process that helps an individual or an organization in making decisions related to production, operations and investment. Simply put, management accounting is the provision of financial and non-financial decision-making information to managers. Management accountants are needed so companies can know the efficiency of their budgets, the cost of their operations, and be able to allocate funds accordingly in investment, production and sales. A management accountant has a role that is very crucial to any organization’s wellbeing.  The role and incumbent responsibilities of a management accountant are so huge, which leaves no room for error. A single miscalculation or underestimation of a business plan don...

Law is the system of rules which a particular country or community recognizes as regulating the actions of its members and which it may enforce by the imposition of penalties. A forensic accountant operates with guiding principles and law. Knowledge of the law is crucial to forensic accountants, as they are to investigate only on matters related to the statutory elements of crime. An overwhelming number of laws relate to financial crime. Remembering that the law in a larger sense, consists of all the formal means of societal control available in a society is thus helpful. Law could be classified into: criminal law, civil law and administrative law. Civil law is the system of law concerned with private relations between members of a community rather than criminal, military, or religious affairs. Administrative law, according to Wikipedia is the body of law that governs the activities of administrative agencies of government. Criminal law on the other hand is a system of law c...

Fraud englobes a range of irregular and unlawful acts qualified by intentional deceit. Fraud could be perpetrated by people within or out of an organization, this could either be done to the benefit of the organization or to its detriment. Fraud contrived to benefit an organization yields the intended benefit by exploiting an unfair advantage that could deceive an outsider. The perpetrators of such fraud benefit indirectly, the staff of the organization will benefit only when the organization is aided by the act. Examples of ‘positive’ fraud include: ·         Sale of fictitious or misrepresented assets; ·         Intentional, improper representation or valuation of transactions, assets, liabilities, or income; ·         Engagement in prohibited business which violate rules, regulations or contracts; ·         Any form of tax fraud e.g. ...

Company Background : HealthSouth is traded as a public company. It operates in the healthcare industry. It was founded in 1979 and has headquarters in Birmingham, Alabama, USA. Its products are: home health, rehabilitation and hospice. It is the largest publicly traded health care company in the U.S. What Happened? HealthSouth got involved in a corporate accounting scandal in which its founder, CEO, and chairman, Richard M. Scrushy was criminated of directing company employees to falsely report grossly exaggerated company earnings in order to meet stockholder expectations. These earnings were allegedly inflated by $1.4 billion to meet shareholder expectations. The accounting fraud began in 1999 and lasted through the second quarter of 2002  (Andrejczak, 2003) . By the third quarter of 2002, HealthSouth’s assets were inflated by $800 million, or 10 percent, the SEC alleges (Andrejczak, 2003) . The company’s in-house accountants made multiple false journal entries to the P...

Company Background : Lehman Brothers Holdings Inc. was a firm specialized in the provision of global financial services. It was founded in Montgomery, Alabama, in the United States of America. The company had headquarters in New York City, New York, in the U.S. It ceased operations in 2008. The founders were: Henry Lehman, Emmanuel Lehman and Mayer Lehman. What Happened? Lehman Brothers hid over $50 billion in loans disguised as sales. They allegedly sold toxic assets [1] to Cayman Island Banks with the understanding that they would eventually be rebought. How they were caught : Their bankruptcy led to the discovery of the fraud. They filed for bankruptcy in 2008, which is the largest bankruptcy ever recorded. Their case was larger than that of Enron, Washington Mutual, WorldCom and GM combined.  On September 15, 2008, Lehman brothers filed for Chapter 11 bankruptcy protection  (Montgomery, n.d.) . Their bankruptcy filing came in as a blow to the financial indu...

A forensic accountant is said to be one who has mastered the science of accounting and is able to assist lawyers and the courts to understand and supply accounting issues to the law and to disputed matters. Forensic accountants investigate financial crimes in accounting. A crime is an offence, an illegal activity as defined by law, punishable by law. There are 7 conditions that form the legal basis or the acknowledgement of crime. All must be present for an action to be considered criminal. They are as follows: ·     The act requirement : There must be a conscious intention between mind and body – a physical movement that results from the determination or effort of the actor. ·       The legality requirement : The act/action must be prohibited by law. ·     The harm requirement : Harm must be created as a result of the crime/offence, without which the crime is incomplete. ·        The causation requirement...

Enron Corporation was an American energy company, which also dealt in commodities and services such as electricity, natural gas, pulp and paper, and communications. This company enjoyed untold success until it went bankrupt in 2001. At the close of 2001, Enron’s institutionalized, systematic, and ingeniously planned accounting fraud (known as the Enron scandal) was uncovered. The Enron scandal has since then become one among the most prominent examples of self-willed corporate fraud and corruption. Enron was involved in large scale financial statement fraud. Enron got into debt after several years of domestic and international expansion, involving complicated contracts and deals. It managed to conceal its debt from shareholders by getting into partnerships with other companies, practicing fraudulent accounting, and getting illegal loans. Partnerships Enron had with entities such as RADR and Chewco (funded by Enron executives) permitted the concealment of the debt. On Aug...