AboutConsuelo Herrera, International Accountant and Fraud Examiner Expertise I can answer questions concerning internal and operational auditing, fraud prevention procedures, internal control, the Sarbanes-Oxley Act, COSO control concepts, and management oriented auditing. I would love to provide business-owners with suggestions on how to prevent and detect fraud so that they are proactive in protecting their wealth since the very beginning of their entrepreneurial affairs. I can answer questions to both English and Spanish population. I am very committed to keep my standards up today so I know many resources where I can direct those seeking advice.
Experience I have rendered services for private companies, profit and non for profit, in two countries. As independent consultant I have provided advice to managers in implementing procedures that streamline their operations and enhance their activities. As a staff accountant in a US CPA firm, I performed regular auditing procedures for different engagements.
Organizations AICPA (American Association of Certified Public Accountants), ACFE (Association of Certified Fraud Examiners), ACFEI (American College of Forensic Examiners.
Education/Credentials Bachelors of Sciences in Business Administration – Accounting
University of South Florida USF – Tampa Florida
Catholic University – Colombia
Title earned: Specialist in Tax and Customs
Central Foundation University – Colombia
Title earned: Certified Public Accountant.
On August, 2006 I passed all four sections of the Certified Fraud Exam which tests for proficiency in the following areas: Criminology and Ethics, Financial Transactions, Legal Elements of Fraud, and Fraud Investigation.
Awards and Honors As employee of Forensic Technology Inc. a Canadian company with locations and sites worldwide, I was the winner of the 2005 President's award in the category of Cost Savings through Efficiency or Innovation granted in January 2006 in Montreal, Canada.
Past/Present clients I have provided advice to all kind of companies: manufacturing, service, consulting, non for profit organizations, etc.
Question What are some legitimate business practices that corporate executives can use for the primary purpose of manipulating the company's reported operating results? What implications do those practices have for the company's independent auditors?
Answer Dear Ana,
Thank you for contacting me.
Manipulating earnings is usually detrimental for the organization and for the auditors as well.
Generally Accepted Accounting Principles, GAAP, allow earnings management where the goal is to maximize accounting practices that benefit the organization as opposed to earnings manipulation motivated to commit fraud than the control group by pressures tied to economic cycles, equity issuance, achievement. Incentives/pressures for earnings manipulation are unrealistic economic goals, bonus and incentives that trigger greed and unethical issues.
The implications for independent auditors are:
1) These companies pose a higher risk
2) More testing would be required
3) Auditors may be allowed to charge a premium fee
4) Auditors' reputation could be at stake
5) Adjustments required to reflect real earnings may become more complex and subject to further discussion with management.
