Asset Misappropriation and Corporate Government. For this assignment, use the Internet or Strayer...

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Asset Misappropriation and Corporate Government. For this assignment, use the Internet or Strayer databases to  research and identify an organization that was a victim of asset  misappropriation. Write a five to six (5-6) page paper in which you: Based on your research, evaluate the type of asset misappropriations  that occurred at the organization, and assess the factors that  contributed to the misappropriation. Give your opinion on whether poor  management or lack of management played a role in the asset  misappropriation. Provide support for your rationale.Evaluate the legal mechanisms that could have been used to recover  assets through the civil and criminal justice systems. Assess whether  the civil and criminal justice systems did an effective job in  recovering the organization’s assets. Provide support for your  rationale.Assess management’s responsibility to share information related to  the breach with various stakeholder groups, indicating what should be  shared and how. Provide support for your rationale.Review AICPA Statements on Auditing Standard (SAS) No. 99, “ Risk  Factors Relating to Misstatements Arising from Misappropriation of  Assets”, found within the text. Assess SAS 99 risk factors and discuss  if the risk factors were prevalent in the organization you researched.  Give your opinion on whether or not organizations should implement a  plan that reviews risk factors on a regular basis to determine if fraud  has occurred. Explain why or why not.Review the corporate governance plan of the organization you  researched, evaluate the effectiveness of the plan, and make suggestions  for improvements to protect the stakeholders. Provide support for your  rationale.Recommend a fraud prevention plan for this organization. Determine  what positive or negative consequences this fraud prevention plan might  have on employees’ morale and the public perception of the organization.Use at least four (4) quality resources in this assignment. Note:  Wikipedia and similar Websites do not qualify as quality resources. Your assignment must follow these formatting requirements: Be typed, double spaced, using Times New Roman font (size 12), with  one-inch margins on all sides; citations and references must follow APA  or school-specific format. Check with your professor for any additional  instructions.Include a cover page containing the title of the assignment, the  student’s name, the professor’s name, the course title, and the date.  The cover page and the reference page are not included in the required  assignment page length.  The specific course learning outcomes associated with this assignment are: Examine the basic concepts related to fraud, including environment, impact, and the methodologies related to fraud examination.Analyze the theories related to crime causation, the essence of  crime, organizational environment conducive to crime, and ethical issues  related to fraud.Examine the human factors related to corruption and how  understanding these factors can facilitate the fraud prevention and  deterrence process.Use technology and information resources to research issues in forensic accounting.Write clearly and concisely about forensic accounting issues using proper writing mechanics.

David · Accepted Answer

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OFF BALANCE SHEET FINANCING 
ENRON CASE 
Part 1 
Off-Balance Sheet Financing is that situation when a company does not disclose its large 
capital expenditure in the balance sheet by putting them under different categories or 
classification, through various methods. This is done by the companies just to make sure that 
their leverage and debt to equity ratios low. These are actually the contrasts to loan, equity 
and debt, which are not shown in balance sheet of the company.  
Operating Lease is one of the most common examples of off-balance sheet financing. In this 
particular, the asset is not shown in the balance sheet of the lessee. The main asset is shown 
in the balance sheet of the lessor. And on the other hand, the lessee is required to disclose just 
the rental payment made by him for the usage of the asset. Generally Accepted Accounting 
Principles (GAAP) has given certain rules and regulations to determine whether a particular 
lease should be capitalised pr expensed in the financial statement. Many companies have used 
this phenomenon to create a spam and have been included in fraudulent activities. An entity 
can actually use the asset either by taking the rights to use the same or simply buy it. On the 
other hand, the entity also can buy the same for its usage. Whether the capital expenditure 
done by it will be shown in the balance sheet or not greatly depends upon the nature of the 
agreement made for the asset. There are many commercial reasons to explain the use of off 
balance sheet financing. The commercial reasons are required because off balancing 
financing can actually lead to various scams and frauds as in the mentioned case of enron 
corporation. The leverage and the interest coverage can be flattered with the help of this 
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facility. Therefore, it highly recommended by the accounting authorities to make sure that the 
entities and the companies have a strong reason to proceed with off balance sheet financing. 
Any company that uses off balance sheet financing does not show the true picture of the 
company as many of the items are not included in the balance sheet. It is the liability which is 
not actually shown in the balance sheet of a company.  
Off balance sheet financing is often conducted in research and development partnership, joint 
ventures, and at times in consignment also. “Common off balance sheet financing 
mechanisms include consignment stock, sale and repurchase (or leaseback) arrangements, 
debt factoring, securitisation, creation of special purpose entities, and leasing” 
(http://lexicon.ft.com/Term?term=off-balance-sheet-financing). The off balance sheet 
financing at times creates a flattering expression of the balance sheet. These gave a false 
impression of the balance sheet ratios and leverage. Along with this, the return on equity also 
does not give us the proper impression of the company.  
                Off Balance sheet financing has been one of the major concerns for the Accounting 
Authorities since the Enron case. The basic problem related to off balance sheet financing is 
the fact that the people are unable to see the true and actual picture of the company. The 
financial ratios which are generally utilised to know the current position of the company will 
not be able to provide the people with actual status of the company. As the liability portion is 
not disclosed, the financial ratios will give the result which is unfair. The ratios, being the 
most important factor for an investor to make its decision, will itself show an unfair result.  
                     In today’s market the companies look to gain a competitive advantage over 
other companies. This is one of the major reasons for them to get succeeded in this field. 
With this particular aspect, the effectiveness of the companies increases which ultimately 
helps them in gaining a competitive advantage over other companies of the same industry. 
http://lexicon.ft.com/Term?term=off-balance-sheet-financing
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Because of this factor, many companies have gained a lot of goodwill of the investors. 
Because of this reason, the company can show a better and a stronger impression and will 
attract the investors to make an investment in the company. “The major issue in off-balance-
sheet financing which is transparent to the lender, but can have significant accounting 
implications is whether the lease will be considered a capital lease or an operating lease.” 
(http://www.iveybusinessjournal.com/topics/strategy/off-balance-sheet-financing-and-trusts-
a-competitive-advantage#.UgUd7pI_v-U). The accounting prospect is harmful as the true and 
fair picture of the company is not visible which may create an issue for the investors and for 
the clients of the company. As the leverage and other ratios of the company will be shown 
efficiently, the company will be able to gain more and more an investors which will 
obviously work in the favour of the same. Generally, all the investors make an investment in 
the company after having a true and fair picture of the company. But with this off balance 
sheet financing, the proper and the fair picture of the company could not be seen by the 
investors and wrongful decisions can be made by them. This has been one of the major 
problems for the investors.

Asset Misappropriation and Corporate Government. For this assignment, use the Internet or Strayer databases to research and identify an organization that was a victim of asset misappropriation. Write...

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