Running head: PROJECT 1
PROJECT 1
Project: Corning Glass Works
Anita M. Joslyn
ACCT 650 Corporate Governance and Fraudulent Financial Reporting
Liberty University
28 Jun 2019
Abstract
The manner in which an organization is governed and the financial statements are reported may cause issues with the public’s perception of the organization. Corning Glass Works had such concerns. A brief discussion about a few risks and [possible] types of fraud which this organization [could have] encountered will be presented followed by an equally brief examination of the [possible] impact on financial statement reporting. Next, some shortcomings in the internal control and corporate governance systems will be succinctly surveyed. Some recommended changes to these systems will also be presented. A Biblical application will conclude this discussion on fraud and corporate governance (Joslyn, 2019).
Project: Corning Glass Works
The public’s perception of an organization may be the outcome of the manner in which an organization is governed and the financial statements are reported. Corning Glass Works (Corning Glass) had such concerns. A brief discussion about a few risks and possible types of fraud which this organization may have encountered will be presented followed by an equally brief examination of the possible impact on financial statement reporting. Next, some possible shortcomings in the internal control and corporate governance systems will be succinctly surveyed. Some recommended changes to these systems will also be presented. A Biblical application will conclude this discussion on fraud and corporate governance (Joslyn, 2019).
Risks and Types of Fraud
The executives of an organization need to develop the essential knowledge of how to prevent and reduce fraud. That knowledge includes a thorough understanding of the specific types of fraud that could impact their organization (Verick, 2013, p. 46). The executives of Corning Glass did not seem to have acquired this amount of knowledge nor to have employed those that had this type knowledge about fraud.
When determining what fraud risk may occur, red flags are an “important mechanism for early fraud detection” (Mangala & Kumari, 2015, p. 53 as cited by Joslyn, 2019). Three general red flags – opportunity, rationalization, and pressure - of possible fraud risk may be identified by applying the fraud triangle (Mangala & Kumari, 2015, p. 54) to most situations. Other red flags of possible fraud may include earnings manipulations, asset misappropriation, financial statements manipulations, and corruption. Verick (2013) provided additional red flags to watch for when determining the risk of fraud. The red flags that may have been a part of the Corning Glass case included (a) unexpected areas of profitability, (b) frequent reallocation of funds between accounts, and (c) recurrent reclassification of expenses (Verick, 2013, p. 48). A specific indicator that an organization may be deferring or conceal...
