Auditing cost

Auditing cost increases as way to strengthen the check and balances or internal control. In the case of the US, there is rules under Sarbanes-Oxley Act of 2002 (Ramos, 2004) that would require the compliance with certain requirements before process could be considered legally complied. This will also entail the hiring of additional professional like accountants and security officers for strengthening the control mechanisms in organizations. 3. How to improve auditing control To improve auditing control requires more than putting the honest people in their right place in the organization.

The organization must put an internal control that could discourage opportunities for fraud and corruption. Even the most honest people could be but to test on the premise that absolute power corrupts absolutely. The best proof is the case of dictators who in history had the chance of abusing their functions. However, a system of accountability that is properly placed in the organization could really provide the system of check and balances. Thus, it could be more believable to see accountability in a democratic framework rather than a dictatorial form of government.

In case of organizations, this framework is partly practice in the decision by the directors and stockholders to their respective groups when meetings are validly held. 3. 1 Solve conflict of auditing cost The conflict of auditing cost arises because of the cost of providing good internal control to prevent chances for fraud and corruption. The same must be considered however as the price of putting the application of the principle of checks and balances. 3. 2 New challenge in current economy recession

The new challenge in the current economy recession provides a good lesson for the need for better regulation or ways to enact system of checks and balance as way to regulating the evils of capitalism that could feed on greed if not made balance with the greater social objective on ensuring the survival of many organization and people in society. 4. Conclusion The relationship of greed, corruption, and fraud may be summarized as follows. Greed motivates people to commit corruption and fraud as greed is insatiable. Fraud is a sign of corruption or moral perversion that feeds on insatiable greed.

Greed will not know what is honest and fair since it necessarily becomes integrated with corruption and fraud as the three should together. This paper has demonstrated the cases of WorldCom and Enron as examples of firms that have been involved in accounting scandals where the frauds appeared to have been caused by different factors but the most predominant is greed or the unsatisfied desire to have more. The second most influential factor is the laxity of the accounting of accounting rules, behavior of CPA firms or auditor and greed of investors and investment bankers and incentives given to executives.

The case of WorldCom overstated revenues and understated expenses to display a false profitability to attract investors into making investments. The Enron case involve deliberate going around the accounting standards by not disclosing what needed to be disclosed for the information of investors under the most fair condition. But since in both cases, the incentive to commit fraud was more controlling the controls that could have been available to prevent the opportunities, the perpetrators were made blind by their greed.

They resorted to corrupting people including their employees and auditors to accomplish that greed which was insatiable. Thus before satisfaction, the long arms of the law have eventually gone after them. To argue however that fraud has grown over the years may be partly true only if the ways by which fraud committed have expanded because of the increasing complexity of business and ever-changing accounting rules eventual failure to address fraud issues based on this paper. As to other dimension of fraud may be subject of further investigations. Accounting fraud however may just be viewed as a means to an end for the perpetrators’ greed.

These greedy people want to have short cut as they employ s quick-fix strategies to become rich in whatever way possible. Fraud, corruption are as old as history itself and as the saying going, it is bound to repeat itself. The best way to address the problem of fraud must go with the motivation to commit it. If greed could be reduced by 50%, then there is a great to correct problems that the economic world has now. The solution could be found in some other fields like giving values to honor and integrity more than power tainted with corruption and scandal. References:

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