Defrauding the Public Interest: A Critical Examination of Reengineered Audit Processes and the Likelihood of Detecting Fraud

In the past few years, most of the major international public accounting firms have reengineered their audit processes to improve the cost effectiveness of completing an audit and to focus on value-added services for clients. The reengineered audit processes generally focus on a client’s business processes and the information systems used by the client to generate financial information. In essence, the new audit approaches deemphasize direct testing of the underlying transactions and account balances. Such an approach emphasizes analytical procedures as the main source of substantive evidence. During this same time period, however, the profession (through the AICPA) explicitly acknowledged the profession’s responsibility for fraud detection. The main premise of this paper is that the increased emphasis on systems assessments is at odds with the profession’s position regarding fraud detection because most material frauds originate at the top levels of the organization, where controls and systems are least prevalent and effective. As such, the profession may be paying lip service to fraud detection, while at the same time changing the audit process in a manner that is less effective at detecting the most common frauds

Marine monitoring during an economic crisis: The cure is worse than the disease

Borja, A., M. Elliott, 2013. Marine monitoring during an economic crisis: The cure is worse than the disease. Marine Pollution Bulletin, 68: 1-3

The importance of reputation in the auditing of companies: A game theory analysis

Numerous, mainly empirical, studies of auditing behaviour have recently looked at the “reputation” of the auditor and the size of fees it attracts. Our model of the auditing market advances the study of the fundamental principles involved in determining behaviour in relation to the rewards and penalties using an extensive-form game of the auditing process. We set up a two-player fraud detection game with bribes, bonuses and fines faced by an auditor. Our model yields that the auditor’s reputation, reflected in the size of bonuses, is critical to establishing a non-fraudulent behaviour by the client. Hence the model confirms expected behaviour. We further find the new insight, that while the existence of penalties deters fraud by the client, their size is not critical. This is a new understanding of what determines auditor behaviour. It is the perception of a possible penalty that moves the auditor in the direction of executing a thorough investigation using his acquired expertise

Honesty Without Truth: Lies, Accuracy, and the Criminal Justice Process

Focusing on “lying” is a natural response to uncertainty but too narrow of a concern. Honesty and truth are not the same thing and conflating them can actually inhibit accuracy. In several settings across investigations and trials, the criminal justice system elevates compliant statements, misguided beliefs, and confident opinions while excluding more complex evidence. Error often results. Some interrogation techniques, for example, privilege cooperation over information. Those interactions can yield incomplete or false statements, confessions, and even guilty pleas. Because of the impeachment rules that purportedly prevent perjury, the most knowledgeable witnesses may be precluded from taking the stand. The current construction of the Confrontation Clause right also excludes some reliable evidence—especially from victim witnesses—because it favors face-to-face conflict even though overrated demeanor cues can mislead. And courts permit testimony from forensic experts about pattern matches, such as bite-marks and ballistics, if those witnesses find their own methodologies persuasive despite recent studies discrediting their techniques. Exploring the points of disconnect between honesty and truth exposes some flaws in the criminal justice process and some opportunities to advance fact-finding, truth-seeking, and accuracy instead. At a time when “post-truth” challenges to shared baselines beyond the courtroom grow more pressing, scaffolding legal institutions, so they can provide needed structure and helpful models, seems particularly important. Assessing the legitimacy of legal outcomes and fostering the engagement necessary to reach just conclusions despite adversarial positions could also have an impact on declining facts and decaying trust in broader public life

Robust Watermarking using Hidden Markov Models

Software piracy is the unauthorized copying or distribution of software. It is a growing problem that results in annual losses in the billions of dollars. Prevention is a difficult problem since digital documents are easy to copy and distribute. Watermarking is a possible defense against software piracy. A software watermark consists of information embedded in the software, which allows it to be identified. A watermark can act as a deterrent to unauthorized copying, since it can be used to provide evidence for legal action against those responsible for piracy.In this project, we present a novel software watermarking scheme that is inspired by the success of previous research focused on detecting metamorphic viruses. We use a trained hidden Markov model (HMM) to detect a specific copy of software. We give experimental results that show our scheme is robust. That is, we can identify the original software even after it has been extensively modified, as might occur as part of an attack on the watermarking scheme

Legal Terminology and Lesser Used Languages: The Case of Mòcheno

Since 2003 the Institute for Specialised Communication and Multilingualism of the European Academy of Bolzano (EURAC) offers education courses in legal terminology work, coupled with introductions in related/complementary disciplines, e.g. documentation, specialised translation and technical writing. Next to professional trainings, the Institute held also ad-hoc courses, such as a two-day course organised in 2008 for the Mòcheni, a Germanic minority living in the Italian Province of Trento. Since the passing of provincial law no. 6/2008, which foresees specific measures for the protection and promotion of local language minorities, the Mòcheno-speaking community has the right to use their language in all situations of social, economic and administrative life in both oral and written communications. Notwithstanding the recent compilation of a standard grammar, the Mòcheno language is not yet developed for the use in technical and specialised contexts. Indeed, the most urgent needs seem to exist in the translation of administrative terminology

Actions Speak Louder than Words: Econometric Evidence to Target Tacit Collusion in Oligopolistic Markets

Tacit collusion reduces welfare comparably to explicit collusion but remains mostly unaddressed by antitrust enforcement which greatly depends on evidence of explicit communication. We propose to target specific elements of firms’ behavior that facilitate tacit collusion by providing quantitative evidence that links these actions to an anticompetitive market outcome. We apply our approach to incidents on the Italian gasoline market where the market leader unilaterally announced its commitment to a policy of sticky pricing and large price changes which facilitated price alignment and coordination of price changes. Antitrust policy has to distinguish such active promotion of a collusive strategy from passive (best response) alignment. Our results imply the necessity of stronger legal instruments which target unilateral conduct that aims at bringing about collusion

INNOVATIONS AND SUSTAINABILITY ISSUES INVOLVED IN GREEN PROJECT MANAGEMENT

The paper describes the attempt made in the direction of innovative approach to management and sustainability of Green projects concept. Green project concept involved the practice of increasing the efficiency with which building use resources-energy, water, materials, while reducing building impact on human health and the environment. Atmosphere above the earth has suffered high degree of pollution from buildings in recent times resulting in destabilization of ecosystem and ozone layer depletion which culminates in global warming phenomenon. In order to curtail the effect of negative impact of building on human health and environment, the complete building life cycle from design to post construction period should be thoroughly monitored. To this end, this study attempt, to describe innovative approaches to a sustainable Green project development including the attendant sustainability issues