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The forensic accounting done on Koss reveals the importance for a business's auditing firm's responsibilities. It also shows that an auditing firm is liable to face legal charges for failing to find a fraud in their accounting activities in a business.
The forensic accounting carried out on Koss revealed that the Vice President Sujata and the former Senior Accountant, Julie Mulvane, engaged in a range of accounting fraud cover ups of Sujata's embezzlement from Koss (Singleton & Singleton, 2010). The investigation revealed that the yearly amounts stole from the company were significant for the amounts were relative to sales and shareholder's equity. The forensic audit also revealed that the lack of adequate internal controls by Koss and Michael Koss, Mulvaney was able to hide substantial embezzlements by Sujata. Internal controls at the time required Koss to approve invoices for payments of $5,000 or more. However, these systems did not prevent Mulvaney and Sujata to make large cashier's checks and wire transfers in accounts payable system to pay for personal purchases.
The two fraud cases provide excellent examples of auditor liability and the ability of forensic accounting to reveal the lack of liability. This is more useful following the lack of auditor liability in audit firms for firms like...
Forensic accounting has proven useful and vital in the revealing of financial statement frauds audited by accounting firms. The forensic accountants involved in such major cases revealed the need for tighter legislation to increase the consequences of altering, fabricating, and destroying financial records in investigations or defrauding stakeholders. The details of the fraudulent cases led the government to require accounting firms and accountants to uphold a high degree of accountability remain unbiased, and independent to clients.
References
Boone, L.E. & Kurtz, D.L. (2011). Contemporary Business. 14th ed. Wiley Publications.
Bruce, a.C. (2009). The Direct Examination of a forensic accountant. Family Advocate, 31(4), 39-41.
Kushniroff, M. (2012). Forensic accounting demystified. GSTF Business Review (GBR), 1(4), 19-24.
Malan, F. & Smit, B. (2001). Ethics and Leadership: In Business and Politics. Gazelle Distribution.
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