02 Oct Writer Choice
41884Follow up question on order number 41708
1. What area of the five do you think was the weakest link? The point of collusion? What might the SEC do?
2.We know the SEC is conducting an investigation. These remain private until a case is filed, or a settlement made. The SEC may bring the case to a federal court, or to a administrative law judge (ALJ) within the SEC. We don’t know the outcome yet.
Identify the major components involved, a description of the fraudulent behavior, and the principles violated. Identify the key person involved. Include a discussion of the penalties involved, and your assessment of their effectiveness in achieving the goals of the Treadway Commission.
HERE WAS THE FINISHED WRITE OF YOU SEN ME. PLEASE RESPOND TO THE ABOVE QUESTION.
Fraud Scandal
One of the fraud scandals that have rocked the Pittsburgh-based coatings Company.
According to the research, the company’s internal reporting system had revealed that it had violated accounting procedures and policies concerning failing to accrue certain defined expenses during the 1st quarter of 2018. The people involved in this scandal were the company’s controller Mark Kelly and two employees who acted under his command. Kelly was fired and the two employees reallocated to diverse positions in which they had no role in PPG’s in-house control on financial disclosure nor the company’s reporting procedures and controls. According to PPG, expenses up to $1.4 million which were supposed to be accrued on the quarter were reflected in the quarter earnings of PPG on March 31st and published on 19th April.
Also, there were other suspected $5 million expenses that were not accrued with the 1st quarter. Other violations committed by these employees include understating of a health insurance accrued liability of $500000, improperly reclassifying the gains from income of discounted operations to the income from continuing operations, in aggregate pretax amount of $2.1 million on 30th June 2017 quarter as well as $4.7 million during 31st Dec 2017. No financial fine was stated by the main controller of the company was fired .
This scandal is a clear indication that Kelly violated some COSCO components of internal control and underlying principles. According to COSCO, in an effective internal control system, the key five elements that work with the aim of supporting the accomplishment of a company’s mission, objectives, and strategies include : a) control environment , b) Risk assessment ,c) communication and information , d) control activities procedures and policies ,e) monitoring.
The five components work to set up the basis for a sound in-house control in the company through direct leadership. In this regard, Pittsburgh lacked an effective internal control system that emphasized all these five components and these created an easy way for Kelly to commit financial fraud and thus it failed to meet the goal of Treadway Commission.
References
Mahmoodi, S., & Hanifeh, M. (2014). The role of professional ethical principles in the performance of audit institutions. Advances in Environmental Biology, 374-379.
Tascarella, P. (2018). PPG fires controller, continues internal probe of accounting errors. The Business Journals. Pittsburgh Business Times Retrieved on May 1, 2019 from https://www.bizjournals.com/pittsburgh/news/2018/05/11/ppg-fires-controller-continues-internal-probe-of.html
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