PART 1: MINIMUM OF 300 WORDS

Research one (1) publicly traded company in which you are interested using the Internet and/or Strayer databases. Locate the company website and financial statements. Also locate information on the types of bonds the company issues. Review the Liabilities section of the company’s Balance Sheet.

Imagine that you just read about another company in the same industry facing criminal charges for misrepresenting their liabilities. Naturally, you’re worried that the company you’re researching might be doing something similar. Hypothesize a scenario in which someone at the company could intentionally misstate liabilities for his or her personal financial gain. Recommend two (2) actions that these companies can take to prevent or detect intentional misstatements of liabilities for personal financial gain. Justify your response.

Imagine that you are advising an investor who is considering purchasing bonds issued by the selected company. Analyze the types of bonds the chosen company issues. Make a recommendation to the investor as to which type of bond would provide the most value. Justify your response.

PART 2: COMMENT AND GIVE YOUR OPINION ON THE BELOW, MIN 150 WORDS.

Intentional misstatements of liabilities in other words financial fraud is defined by Bradford, C. in the article “What is financial statement fraud?” as” a deliberate misrepresentation, misstatement or omission of financial statement data for the purpose of misleading the reader and creating a false impression of an organization’s financial strength. Public and private businesses commit financial statement fraud to secure investor interest or obtain bank approvals for financing, as justification for bonuses or increased salaries or to meet expectations of shareholders. Upper management is usually at the center of financial statement fraud because financial statements are created at the management level. “There are several ways one can use to misrepresent liabilities:

-understating account payables,

-overstating revenues,

-not recording payments on mortgages,

-improper labelling,

The 2 ways a company can use to tackle financial fraud first random internal and external financial controls. Both controls may incur randomly so this action will create a surprise effect. It may be challenging to commit effectively fraud when you know that control can happened anytime. In addition, any internal control should be backed up and acknowledged by an external control in order to give credibility to the internal one. The second way is the segregation of duties. For example, 1 person should not have the complete safe combination. Years ago, wen I was a bank teller, my manager had half of the safe combination and the assistant manager had the other half.