Forensic Accounting Investigation of Proposed Merger - Essay Sample

Southeast Ag Supply Company is looking into a merger with another Ag supply company in a neighbouring territory.

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What types of investigations should forensic accounting firm conduct?

The investigations the forensic accountant will do is about the competitor's financial statements and the possibilities of fraud. The accountant must also produce valuation estimates concerning the competitor, the available assets and the proposed offers of the competitor in consideration of the merger (Eisenberg, 2018). In a case where the assets values have to be estimated, then the forensic accountant needs to hire a specialized appraiser because they have the skills to determine the cost of such assets.

What types of outside assistance might help the forensic accounting firm conduct a thorough investigation?

The assistance provided by the forensic accountant is by searching for an auditor that portrays auditing skills to do a thorough examination like multiple financial accounts and records. Any discovery must be communicated to other members that have the legal aspect of the investigations team that will update everyone as development s take place (Eisenberg, 2018). One significant part of the auditor is the ability to convey financial matters effectively in a way that is appropriate with the law.

Write responses to the following:

Are there differences in the investigations a forensic accountant would undertake for a civil matter versus a criminal case?

In both civil and criminal forensics, various forensic sciences are used in the collection of information, particularly answering legal questions concerning matters that will be for trial. For criminal cases, a different type of forensic might be used, which can also apply to both criminal and civil cases (Eisenberg, 2018). Even though forensic accountants are involved in litigation procedures, it is uncommon for them to deal with criminal cases. Therefore to facilitate this, they can be employed by government agencies, accounting firms and companies looking to improve their reputation and name by preventing financial scandals. Also, a forensic accountant may be hired in police forces, insurance companies and banks.

What are the similarities like the investigations?

Investigations vary based on the available data. Determining studies must not be under the legal rules when it comes to evidence. The investigators, therefore, will concentrate more on the quality information that also use statutory provisions to guide them. Data that don't comply with the rules are known to have lesser quality, and therefore, the investigators give it lower weight (Ammon, 2010). Such practices show that the differences will make the client chose what to depend on while making decisions. However, investigations use similar rules as applied by a tribunal or a court in the subsequent challenge. The factual findings, in this case, will be scrutinized by the tribunal or court.

Are the expected outcomes of the investigations the same? What are the similarities, and what are the differences?

After analyzing the results of the investigations, conclusions have to be made. The similarities that can be discovered is that every inquiry must have a suitable control, a sample size and a single variable test (Ammon, 2010). In such cases, the results will show the difference between the control arms and the analysis of the survey. Another similarity is that in cases where there are positive outcomes, then a conclusion can be made in most investigations, especially if there is a difference between the control and test.

What specialized training would the forensic accountant need to conduct different investigations? Explain.

A forensic accountant should have a combination of education and experience requirements. The reason behind this claim is because the AICPA uses the point system for lifelong learning and business experience. The accountant needs to have a forensic accounting certification that is independent and has a professional association with forensic accountants and examiners (Eisenberg, 2018). The accountant can also have the certified forensic accountant certificate to qualify for the job or to enable them to be eligible for the certification exam. Forensic accountants must also be trained in the accredited fraud examiner by the association of certified fraud one of the most significant anti-fraud organizations.

When a forensic accountant receives such credentials, they meet the experimental requirements and minimum education of the part four exam which covers deterrence, prevention and fraud. The forensic accountant can also train on the accredited valuation analysts or the certified valuation analyst from the NACVA. This organization trains all professionals in advisory, valuations, judicial and financial services (Eisenberg, 2018). Lastly, the forensic accountant can also get a certificate from the National Association of Forensic accountants to attain a complete forensic accounting training.

Reasonable assurance is a concept that relies heavily on internal control

Do you agree with Derek Lodge or Amber Johnson? Explain.

The agreement lies with Derrick because, in auditing, the system administration control and the internal understanding controls are meant to assure the auditor. Such guarantees include the system administration assets to safeguard and protect the company against loses. It is also wise to use the internal controller to attain records that are accurate and reliable and also to make operations effective and efficient (Lawlor, 2014). The procedures and policies established with the internal auditor will determine what can be done, by whom and how it should be done. I agree with Derrick because any successful internal audition requires the support and commitment from the management. In this case, it is not the roles of the CEO to make every worker experts in internal controls but to increase understanding and awareness on when the audit is needed.

Is preventing all financial statement fraud or misstatement an unattainable goal? Explain.

A report released by the Association of Certified Fraud examiners discovered that financial fraud is intentionally publishing false information on the statement. Misstatements, in this case, matters that arise from the financial reports are intentional omissions or inaccuracies of disclosures or amounts in the financial statement meant to deceive the user (Courtois & Gendron, 2019). Most financial statements are not presented in the respected materials as supposed by the accounting principles.

Suppose the internal auditor reports to the CEO. Does that complicate the goal of preventing all financial statement fraud or misstatements? Explain.

When the auditor reports to the CEO, it will complicate things because the fraudulent financial reporting should not be revealed as a conspiracy. Even though the CEO might rationalize the accuracy of the material misstatements, then the indefensible interpretation may complicate the accounting rules. This is because the temporary distortions such as the interim statements will be corrected later anytime the operational results improve.

Total Fresh Products manufactures and distributes snack foods.

What should Rachel Fancy do with the information she has uncovered?

Rachael should report the matter concerning the wrong treatment of the finances and the relevant tax laws

What impact should the discovery have on how she precedes with the audit?

Her report will not have a significant impact because she has discovered irregularities in the company. Also, she had shared the same information to the management even though she may need to search for more transactions.

How should the findings be reflected in her audit opinion report?

The findings must be revealed in a qualified opinion basis of the report. This is because every auditor must make sure that they have documented and gained an understanding that aligns with the environment and the business.

References

Ammon, C. (2010). International Control of Investigations of Rare Meteorites. Nature, 189(4769), 967-968. DOI: 10.1038/189967a0

Courtois, C., & Gendron, Y. (2019). The Show Must go on! Legitimization Processes Surrounding Certified Fraud Examiners' Claim to Expertise. European Accounting Review, 2(1), 1-29. DOI: 10.1080/09638180.2019.1643753

Eisenberg, P. (2018). Application of the Net Worth Method in Forensic Accounting Investigations. SSRN Electronic Journal, 2(1), 144-198. DOI: 10.2139/ssrn.3324282

Lawlor, K. (2014). Corporations. Stock Option Plan Held Invalid Because Reasonable Assurance Lacking That Corporation Would Receive the Contemplated Consideration. Virginia Law Review, 38(7), 945-1004. DOI: 10.2307/1070127