1. 1. Compiled and Presented BY Godwin Emmanuel OYEDOKUN (HND, BSc.Ed, MBA, MSc (Acct), MTP (SA), ACA, ACIB, AMNIM, FCTI, FCFIP, CFA, CFE, CPFA, ACCA-CertIFR) Asst. Director (Head) Education, Research & Technical Directorate The Chartered Institute of Taxation Of Nigeria (CITN) DL: +2348033737184, +2348095491026, +2348055863944 godwinoye@yahoo.com, info@ogecops.com Being a paper presented at the Annual Seminar of Nigerian Universities Accounting Students' Association Osun State University Chapter, Okuku Campus, Osun State. Nigeria On August 12, 2014 The Changes in Accounting Practices and Procedure: An appraisal of the related Current Issues and the expected role of Accountants
2. 2. 2 The Facilitator- Nemo Dat Quod Non Habet Godwin Emmanuel Oyedokun, HND, BSc.Ed, MBA, MSc (Acct), MTP (SA), ACA, ACTI, ACIB, AMNIM, CNA, FCFIP, CICA, CFA,CFE, CPFA, ABR, CertIFR Assistant Director (Head) Education, Research & Technical Directorate of The Chartered Institute of Taxation of Nigeria (CITN) Godwin is an Experience Certified Forensic Accountant, Certified Fraud Examiner, Certified Forensic Investigator, Chartered Accountant, National Accountant, Chartered Tax Professional, Chartered Banker, Chartered Manager, Insolvency Practitioner, and Financial Analyst of good repute. A registered Professional in Nigeria with the Financial Reporting Council of Nigeria (FRC). He also holds a Certificate in International Financial Reporting (CertIFR) of Association of Certified Chartered Accountant (ACCA) Godwin attended Osun State College of Technology Esa- Oke Osun State of Nigeria for his National Diploma (ND) and Higher National Diploma (HND Upper Credit) in Financial Studies and Accountancy respectively in some 16 years ago. Also, he holds B.Sc. Ed in Accounting at University of Ado- Ekiti, (now Ekiti State University) Nigeria. He bagged his MBA in Finance & Accounting at Olabisi Onabanjo University, Ogun State of Nigeria in 2006/2007 academic sessions and graduated with merit. He is currently awaiting his result of MSc. Accounting of Babcock University, while is also currently an MSc Business & Applied Economics (Finance option) student of Olabisi Onabanjo University. He is a seasoned scholar-professional who is currently serving as an Advisory Council Member of Association of Fraud Examiner (ACFE), Austin, USA, and Vice President of Nigeria Chapter of same Association. He is the Membership Mobilization Director for Africa for the International Institute of Certified Forensic Investigation Professional Inc. (IICFIP) USA.
3. 3. 3 The Facilitator- Nemo Dat Quod Non Habet Godwin is a leader in Forensic Accounting and Fraud Investigation, he is a sought after intellectual, who has presented over 195 technical papers in various Training/Seminars on Forensic Accounting, Fraud Investigation, Internal Audit & Control, Risk Management, IFRS, ICT, Strategic Management, Finance & Accounting related subjects. He is also an Examiner to The Chartered Institute of Bankers of Nigeria (CIBN) on Introduction to Financial Accounting (FA) and Information Communication Technology (ICT) He has been trained on Forensic Accounting, Accountancy and Fraud Investigation and other Finance & Accounting related courses, in Ghana, Senegal, Liberia, Kenya, Cote dIvore, Canada- Toronto, at some States in United State of American and in Nigeria including Lagos Business School of Pan Atlantic University. He was the Assistant Director (Head) Finance & ICT of The Chartered Institute of Taxation of Nigeria (CITN). He is the Chief Technical Consultant to OGE & CO Professional Services Ltd. (a firm of Forensic Accounts, Fraud Investigators, Finance and Management Consultants www.ogecops.com) and A & D Forensic Consults Ltd. Nigeria (www.adforensicconsults.com). Godwin was given a meritorious award by the Students Union Government of Osun State College of Technology on October 5, 2013 and he was also given a special recognition and installed as one of the Patrons of Nigeria University Accounting Students Association (NUASA), Obafemi Awolowo University Chapter on March 28, 2014. For his contributions to humanity, Godwin was honoured with a Chieftaincy title (Chief in Council) as Otun-Mayegun of Apomu Land of Owu Kingdom, Ogun State. Nigeria on November 23, 2013. Godwin is happily married with Children Nemo Dat Quod Non Habet
4. 4. Protocol & Appreciations I wish to appreciate the entire students of accounting department of Osun State University and most especially the leadership of the Universitys NUASA executives ably led by my brother, Mr. Samuel Egesi for this good initiative. My appreciation also goes to my Dad Professor Dayo Akintayo the Dean FMS and Senior Colleagues, Mr. Adebayo Aderemi Olalere, FCA, the HOD and the Ag. HOD, Mr. Gbadebo A. Okeyooyin, also I wish to appreciate all our lecture in this Faculty but permit me to mention but few in no particular order, Mr. Feyi Oluwaremi, (Patron NUASA), Mr. Fatoki Ishola, Mr. Odelabu Temitope, Mr. Oyewole J. Olusegun, Mr. Sunday Sasona, Mr. Lawal B. Akeem, Mr. Daramola Sunday Peter, Ms. Olojido O. Esther. Thank you for being there for us.
5. 5. This presentation will cover the following major sub topics: General Introduction IFRS & IPSA Forensic Accounting and related terms Environmental Accounting & Audit Social Accounting & Audit International Accounting & Auditing Petroleum Accounting Green Washing & Taxation Conclusion 5 Contents
6. 6. 6 The hardest thing in the world to understand is income tax Albert Einstein The reasonable man adapts himself to the world; the unreasonable man persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man. GEORGE BERNARD SHAW Quotes
7. 7. 7 The role of accountants in this modern day is changing by the day. I remember during my school days that we were thought Statement of Accounting Standards SASs, also, gone are the days where ICAN was in charge of these Standards, Nigeria Accounting Standard Board (NASB) was taken over by Government, but in year 2011, another was the story and it is now known as Financial Reporting Council (FRC). Courses like Environmental Accounting, Petroleum Accounting, Forensic Accounting, Environmental Taxation, Econometrics, IFRS, ISA, are now part of the Curriculum in the Accounting Course. I remember how I was struggling with these courses during my MSc Accounting programme at Babcock University unlike fresh graduate who were taught during their undergraduate programme My dear brothers and sister, go are the days where students should be happy if their lecturers are on able to complete their course Syllabi before the semester exams. The truth of the matter is that you as a graduate would be expected to know much in order to sustain this get age which is full of knowledge demands,. How will you place my 6 years old boy who is already using iPad, GSM and can use both touch screen devices and keypad mobile devices? Introduction
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9. 9. 9 The continuous spread of global integration and increase in demand for international trade and investments among various countries and multinational corporations has necessitated the need for cross-national co-operation enhancement and international comparability. First it was accounting standards, now auditing standards have been identified to play a major role in the comparability and analysis of audited financial statements emanating from different countries around the world irrespective of barriers in languages and culture. At the moment, the audit reports emanating from different jurisdictions can use the same form of words, but there is no guarantee that the same amount or even the same audit work has been performed. If auditing is standardized, then the finance director and investor will know that not only were the words the same but they meant the same. Introduction
10. 10. 10 Those who perform audits of financial statements independently in order to be able to express an opinion on whether those financial statements provide true and fair view and are drawn up in accordance with the applicable financial reporting framework referred to as Public accountants or external auditors. An external auditor is an audit professional who performs an audit in accordance with specific laws or rules on financial statement of a company, government entity, other legal entity or organization, and who is independent of the entity being audited. The manner of appointment, the qualifications and the format of reporting by an external auditor is defined by statute which varies according to jurisdiction of different countries. Introduction
11. 11. 11 The illiterate of the 21st century will not be those who cannot read or write but those who cannot learn, unlearn and relearn. ALVIN TOFFLER Quotes
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13. 13. 13 Permit me to ask you all this question: Who is an Accountant? Someone that studied accounting at Polytechnic or University? Ok, let us try it together!!!! An accountant is a practitioner of accounting or accountancy, which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resources. (en.wikipedia.org/wiki/Accountant) A professional person who performs accounting functions such as audits or financial statement analysis. Accountants can either be employed with an accounting firm, a large company with an internal accounting department, or can set up an individual practice. (Investopedia.com) Can you now try the question below? What Role Does an Accountant Play in Business Operations? Accountant
14. 14. 14 There has been a concerted convergence effort between the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS) in order to avoid conflict and confusion, promote simplicity, streamlining, consistency and transparency, and avoid any future financial crises or meltdowns. Despite the research-indicated evidence of a higher accounting quality being experienced by firms that either apply the IFRS standards or have switched to them from the GAAP, the convergence process has not proven to be an easy task, mostly because of the differences in approach between the two accounting bodies. The GAAP is a rules-based methodology, while the IFRS takes a principle-based approach. The rules-based approach is comprised of a complex set of guidelines that establishes criteria for every possible contingency and provides the rules required for specified transactions, thus promoting uniformity. The principle-based methodology lays out the key objectives of good reporting in each subject area and then provides guidance, explaining the objective, and relates it to common examples, thus promoting transparency. If these methodological differences between the two approaches cannot be resolved, they may prolong the process of compiling a true set of international accounting standards and increase the costs required to maintain two sets of books. GAAP And the IFRS Standards
15. 15. 15 General use of the term In everyday usage, the term 'International Financial Reporting Standards' (IFRSs) has both a narrow and a broad meaning. Narrowly, IFRSs refers to the new numbered series of pronouncements that the IASB is issuing, as distinct from the International Accounting Standards (IASs) series issued by its predecessor. More broadly, IFRSs refers to the entire body of IASB pronouncements, including standards and interpretations approved by the IASB and IASs and SIC interpretations approved by the predecessor International Accounting Standards Committee. IFRSs as defined in Standards Paragraph 7 of IAS 1 Presentation of Financial Statements defines IFRSs as comprising: International Financial Reporting Standards International Accounting Standards IFRIC Interpretations SIC Interpretations (The definition of IFRSs was amended after the name changes introduced by the revised IFRS Foundation Constitution in 2010.) International Financial Reporting Standards
16. 16. 16 Requirements for issuing IFRSs In developing IFRSs, the IASB follows its due process requirements. Under the IFRS Foundation Constitution, the publication of an exposure draft, or an IFRS (including an International Accounting Standard or an Interpretation of the Interpretations Committee) requires approval by: nine members of the IASB, if there are fewer than sixteen members ten members of the IASB, if there are sixteen members. Other decisions of the IASB, including the publication of a discussion paper, require a simple majority of the members of the IASB present at a meeting that is attended by at least 60 per cent of the members of the IASB, in person or by telecommunications. Compliance with IFRSs Paragraph 16 of IAS 1 requires: An entity whose financial statements comply with IFRSs shall make an explicit and unreserved statement of such compliance in the notes. An entity shall not describe financial statements as complying with IFRSs unless they comply with all the requirements of IFRSs. When a Standard or an Interpretation specifically applies to a transaction, other event, or condition, the accounting policy or policies applied to that item shall be determined by applying the Standard or Interpretation and considering any relevant Implementation Guidance issued by the IASB for the Standard or Interpretation. [IAS 8.7] International Financial Reporting Standards
17. 17. 17 International Public Sector Accounting Standards (IPSAS) are a set of accounting standards issued by the IPSAS Board for use by public sector entities around the world in the preparation of financial statements. These standards are based on International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). IPSAS aims to improve the quality of general purpose financial reporting by public sector entities, leading to better informed assessments of the resource allocation decisions made by governments, thereby increasing transparency and accountability. IPSAS are accounting standards for application by national governments, regional (e.g., state, provincial, territorial) governments, local (e.g., city, town) governments and related governmental entities (e.g., agencies, boards and commissions). IPSAS standards are widely used by intergovernmental organizations. IPSAS do not apply to government business enterprises. International Public Sector Accounting Standards
18. 18. 18 IPSASB adapts IFRS to a public sector context when appropriate. In undertaking that process, the IPSASB attempts, wherever possible, to maintain the accounting treatment and original text of the IFRS unless there is a significant public sector issue which warrants a departure. The IPSASBs goal is to serve the public interest by developing high quality accounting standards for use by public sector entities around the world in the preparation of general purpose financial statements. This will enhance the quality and transparency of public sector financial reporting and strengthen public confidence in public sector financial management. In pursuit of this objective, the IPSASB supports the convergence of international and national public sector accounting standards and the convergence of accounting and statistical bases of financial reporting where appropriate. A number of countries have transformed their accounting systems to accrual accounting based on IPSAS. Several other countries have adopted the Cash Basis IPSAS as a first step to future full accrual accounting based on the IPSAS. International Public Sector Accounting Standards
19. 19. 19 There are 31 standards on the accrual basis of accounting and one standard on the cash basis of accounting (source: IPSAS Handbook published). When the accrual basis of accounting underlies the preparation of the financial statements, the financial statements will include: the statement of financial position (IPSAS 1), the statement of financial performance (IPSAS 1), the cash flow statement (IPSAS 2), the statement of changes in net assets/equity (IPSAS 1), the notes to the financial statements, or annex (IPSAS 1). When the cash basis of accounting underlies the preparation of the financial statements, the primary financial statement is the statement of cash receipts and payments. International Public Sector Accounting Standards
20. 20. 20 The illiterate of the 21st century will not be those who cannot read or write but those who cannot learn, unlearn and relearn. ALVIN TOFFLER Quotes
21. 21. Forensic Accounting Forensic accounting has been defined as "accounting analysis that can uncover possible fraud that is suitable for presentation in court. Such analysis will form the basis for discussion, debate, and dispute resolution." Forensic accounting, sometimes referred to as investigative accounting, is a unique career field that combines accounting with information technology. A Forensic Accountant uses his knowledge of accounting, law, investigative auditing and criminology to uncover fraud, find evidence and present such evidence in court if required to. According to Oyedokun (2013), Forensic Accounting is a Scientific Accounting method of uncovering, resolving, analyzing and presenting fraud matters in a manner that is acceptable in the court of law 21
22. 22. Why is forensic accounting so popular now? According to some experts, this increased interest is because of the struggling stock market and lack of investor confidence which has forced many organizations to take a long, hard look at their financial statements. A sluggish economy with its attendant problems might also be an incentive to commit fraudulent acts, thus requiring the services of an expert. The increase in white collar crime and the difficulties faced by law enforcement agencies in uncovering fraud have also contributed to the growth of the profession. Many accounting firms believe that the market is sufficiently large to support an independent unit devoted strictly to forensic accounting. Whatever the reasoning may be, more and more forensic accountants are being called upon to use their investigative skills to seek out irregularities in their companies financial statements 22
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24. 24. Who needs Forensic Accountants? Forensic Accountants work in most major accounting firms and are needed for investigating mergers and acquisitions, and in tax investigations, economic crime investigations, all kinds of civil litigation support, specialized audits, and even in terrorist investigations. Forensic Accountants work throughout the business world, in public accounting, corporations, and in all branches of government (from the EFCC, ICPC, SSS, FBI and CIA to the offices of the local authorities). Forensic Accounting firms are everywhere., even Nigeria Police need these new bread of Accountants 24
25. 25. A forensic accountant uses sophisticated computer programs to analyze financial data and find evidence that would be legally valid during a court proceeding. A forensic accountant is a specialized accountant who performs investigative accounting as well as litigation support. Those in the forensic accounting field generally use both accounting and investigating skills to interpret financial evidence and are often called upon to analyze and present this evidence to others in a clear manner. For example, they may be called upon as expert witnesses in a court of law or to provide documented proof of financial misdeeds. A forensic accountant can become involved in a wide variety of investigations among many different industries.25 Forensic Accountants
26. 26. Forensic accountants are often asked to review financial records for mergers and acquisitions. They may also serve as advisers to a corporations audit committee or work to resolve shareholder disputes within a company. Objective verification is the primary goal of forensic accounting. For this reason, many forensic accounting professionals are asked to testify in court cases as expert witnesses for either the prosecution or the defense. Forensic accountants can work in both civil and criminal court cases. In a civil case, a forensic accounting professional may be asked to calculate economic damages that occurred as the result of a breach of contract or provide insight into a case based on a claim of professional negligence. In a criminal case, a forensic accountant may be asked to present evidence of insurance fraud, identity theft, money laundering, terrorist financing, embezzlement, price fixing, stock market manipulation, or other related offences. 26 Forensic Accountants cont
27. 27. To be successful as a forensic accounting professional, you must be detail oriented, persistent, ambitious, and highly organized. Forensic accounting also requires a great deal of creativity, since you must often explain complex financial concepts to an audience that lacks basic accounting knowledge. Several well-known case investigations around the world have involved forensic accounting. The famous American gangster, Al Capone, was arrested and successfully prosecuted in 1931 because a forensic accountant was able to unearth his tax crimes. In another example, it took 14 years for accountants to investigate the billion-dollar embezzlement case of European publisher Robert Maxwell before finally solving the financial puzzle in 1991. Additionally, after the September 11 terrorist attack on the United States in 2001, forensic accountants were hired by the CIA and the FBI to track terrorist movement worldwide. These accountants are often able to follow a criminal's money trail which can help lead to a subsequent arrest. 27 Forensic Accountants cont
28. 28. Forensic Accountants and the Vexed Problem of Corporate World According to Owojori, A. A & T. O. Asaolu (2009), the following are the Role of Forensic Accounting in Solving the Vexed Problem of Corporate World: 1. Giving preliminary advice as an initial appraisal of the pleading and evidence available at the start of proceedings. 2. Identifying the key documents which should be made available as evidence. This is important when the forensic accountant is acting for the defense and lawyers are preparing lists of documents to tender in court. 3. Preparing a detailed balanced report on quantum of evidence, written in a language readily understood by a non-accountant and dealing with all issue, irrespective of whether o not they are favourable to the client. 4. Reviewing expert accounting reports submitted by the other party which may have impact on the quantum of evidence and advising lawyers on these reports. 5. Briefing legal counsels on the financial and accounting aspects of the case during pre-trial preparation. 6. The other plane of the forensic accountant can initiate measure for introduction of environment accounting to highlight the damage done to the environment by the possible recoupment of such damages or replenishment of lost properties through environmental management continually. 28
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30. 30. 30 Several organizations support and promote the practice of forensic accounting. These include: The Institute of Chartered Accountants of Nigeria (ICAN), The Association of Certified Fraud Examiners (ACFE), The American College of Forensic Examiners International (ACFEI), Institute of Certified Forensic Accountants (ICFA) Institute of Certified Forensic Investigators International (IICFIP) The Association of Certified Fraud Specialists (ACFS) and The American Institute of Certified Public Accountants (AICPA). Other resources include the Forensic Accounting Society of North America, the National Association of Certified Valuation Analysts and National Litigation Support Services Association. Many of these organizations offer credentials to those who meet their rigorous standards. How to become a forensic accountant
31. 31. 31 Quotes "... the reason why we are where we are now is break in value... - Prof. Yemi Osinbajo (SAN)
32. 32. 32 Environmental accounting is a subset of accounting proper, its target being to incorporate both economic and environmental information. It can be conducted at the corporate level or at the level of a national economy through the National Accounts of Countries (among other things, the National Accounts produce the estimates of Gross Domestic Product otherwise known as GDP). Environmental accounting is a field that identifies resource use, measures and communicates costs of a companys or national economic impact on the environment. Costs include costs to clean up or remediate contaminated sites, environmental fines, penalties and taxes, purchase of pollution prevention technologies and waste management costs. An environmental accounting system consists of environmentally differentiated conventional accounting and ecological accounting. Environmentally differentiated accounting measures effects of the natural environment on a company in monetary terms. Ecological accounting measures the influence a company has on the environment, but in physical measurements. (Source: Wikipedia) Environmental accounting
33. 33. 33 Why environmental Accounting? There are several advantages environmental accounting brings to business; notably, the complete costs, including environmental remediation and long term environmental consequences and externalities can be quantified and addressed. Environmental Accounting
34. 34. 34 Environmental audit is a general term that can reflect various types of evaluations intended to identify environmental compliance and management system implementation gaps, along with related corrective actions. In this way they perform an analogous (similar) function to financial audits. There are generally two different types of environmental audits: i. compliance audits, and Ii. management systems audits. Environmental Audit
35. 35. 35 Social accounting (also known as social accounting and auditing, social and environmental accounting, corporate social reporting, corporate social responsibility reporting, non-financial reporting or accounting) is the process of communicating the social and environmental effects of organizations' economic actions to particular interest groups within society and to society at large. Social accounting is commonly used in the context of business, or corporate social responsibility (CSR), although any organisation, including NGOs, charities, and government agencies may engage in social accounting. Social Accounting can also be used in conjunction with Community-Based Monitoring (CBM). Social accounting emphasises the notion of corporate accountability. D. Crowther defines social accounting in this sense as "an approach to reporting a firms activities which stresses the need for the identification of socially relevant behaviour, the determination of those to whom the company is accountable for its social performance and the development of appropriate measures and reporting techniques. (wikipedia.com) Social Accounting & Audit
36. 36. International Auditing According to Nobes C. and Parker R. (2008, p 482-483), International aspect of Auditing refers to the harmonization of Auditing Standards and Rules across Countries as well as referring to the practice of Auditing, based on one or more set of Auditing rules, of the financial information prepared by Multi-National Corporations. .the internationalization of auditing started when Multinational enterprises began preparing consolidated financial statements (Nobes C. and Parker R. 2008, p 483, para 3). 36
37. 37. Factors contributing to International Auditing The following among others are the factors contributing to the internationalization of Auditing: The emergence of multinational enterprise; The increasing internationalization of capital market; The growth of international accounting firms, with common approaches to audit methodology, training and quality review; The convergence around common international frameworks for accounting and audit 37
38. 38. International Audit Process The followings are major 4 main stages of an audit process: Acceptance and defining the terms of engagement Planning, including assessment of audit risk and materiality Gathering audit evidence; and Reporting 38
39. 39. International Accounting & Auditing High quality financial reporting contributes to promoting private sector growth and reducing volatility, through: (a) strengthening countries financial architecture and reducing the risk of financial market crises, together with their associated negative economic impacts; (b) contributing to foreign direct and portfolio investment; (c) helping to mobilize domestic savings; (d) facilitating the access of smaller-scale corporate borrowers to credit from the formal financial sector by lowering the barrier of high information and borrowing costs; (e) allowing investors to evaluate corporate prospects and make informed investment and voting decisions, resulting in a lower cost of capital and a better allocation of resources; and (f) facilitating integration into global financial and capital markets. Financial reporting is also a building block of a market-based monitoring of companies, which allows shareholders and the public at large to assess management performance, thus influencing its behavior. (Rick S. HAYES, Arnold SCHILDER, Roger Dassen & Philip Wallage, 2013)
40. 40. International Auditing is the heart of International Accountancy Practices. The necessity to go global in International Financial Reporting calls for the globalization of Audit and Auditing Practices. High quality financial reporting will be aided with International Standards on Auditing. The general adoption of International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) enhances shareholding and the publics ability to assess the extent to which public companies are creating or eroding value. High quality financial reporting will contributes to improving the assessment and collection of taxes on corporate profits. Countries currently have fundamentally different approaches to the relationship between accounting and taxation. The greater the level of dependency, the greater the importance of high-quality financial statements for the assessment and collection of taxes on corporate profits. International Accounting & Auditing
41. 41. International Auditing and Assurance Standards Board (IAASB) The International Auditing and Assurance Standards Board (IAASB) functions as an independent standard setting body under the auspices of the International Federation of Accountants (IFAC). The IAASB works to establish high quality auditing, assurance, quality control and related services standards and to improve the uniformity of practice by professional accountants throughout the world, thereby strengthening public confidence in the global auditing profession and serving the public interest. Until 2002, the IAASB was known as the International Auditing Practices Committee (IAPC).
42. 42. 42 Quotes "... Value are essential ingredient in National development..." Dr Ezekwesili (Madam Due Process)
43. 43. 43 Auditors can be classified into the following categories: External auditor/ Statutory auditors Internal auditors Consultant auditors Quality auditors What about Forensic auditors? Auditors
44. 44. Wednesday, February 18, 2015 44 Internal Auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Managers are responsible for designing control processes that provide reasonable assurance for the following business objectives: Effective and efficient operations Compliance with laws and regulations Reliable financial reporting Internal auditors evaluate how well the control processes designed by managers function, and therefore the extent to which managers can have reasonable assurance business objectives will be realized. Because of their expertise and thorough knowledge of operations, internal auditors often fulfill a consulting role to top management. Internal Auditing
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46. 46. 46 Internal Auditing is an independent appraisal function established within an organization to examine and evaluate its activities as a service to the organization. The objective of internal auditing is to assist members of the organization in the effective discharge of their responsibilities. To this end, internal auditing furnishes them with analyses, appraisals, recommendations, counsel, and information concerning the activities reviewed. The audit objective includes promoting effective control at reasonable cost. The members of the organization assisted by internal auditing include those in management and the board of directors. Objective of Internal Auditing
47. 47. Wednesday, February 18, 2015 47 If internal auditors are only the second line of defense against the occurrence of fraud in an organization, what is the first line of defense? The answer is clear: Management is preeminently responsible for fraud deterrence in two respects. First , through the example it sets the tone at the top- management is first to deter and defend against corporate wrongdoing of all kinds. Second, Management is responsible for the system of internal controls Internal Audit: The Second Line of Defense
48. 48. 48 Green Washing: this is refers to the techniques by which companies engages in antics and practises that do not reflect best practises in the environment they find themselves. When companies tries to convince people that they are doing something which is good for the environment by being involved in small, environmentally friendly initiatives, especially as a way of hiding their involvement in activities which are damaging to the environment. CSR/CS: Corporate Social Responsibility has become subsumed by Corporate Sustainability issues which is a broader term in describing the issues the firm is confronted in todays world. By Corporate sustainability, we mean a business approach that creates long-term consumer and employee value by creating a "green" strategy aimed toward the natural environment and taking into consideration every dimension of how a business operates in the social, cultural, and economic environment. It also formulates strategies to build a company that fosters longevity through transparency and proper employee development. In other words, it involves processes set up to ensure the adoption of a set of ethical codes that serve as beacons in ensuring that the environment is well catered for and business operation adequately addresses the concerns of other stakeholders other than the Investors/ owners of the business. Green Washing, CSR & Taxation
49. 49. 49 Tax: a tax is a charge imposed through the instrumentality of the state with a view to establishing and funding same for the common good and benefit of all therefrom. Further explained, it is a compulsory contribution to the support of government levied on persons, property, income, commodities, transaction and so on. It can also be described as money to be paid by people or businesses to a government for public purposes. It is a payment in return for which no direct and specific quid pro quo or benefit is rendered to the payer. In all of these definitions, certain features underline and further elucidates the nature of a tax. Green Washing, CSR & Taxation
50. 50. 50 These features include: A Charge/payment Benefit(s) to be derived is not directly ascribable to payer It is paid to/received by government It is mandatory It is a creation through the legal instrumentality of law In dispensing with its Corporate responsibility, the firm sees itself as giving back to the community they have taken so much from and have also impacted positively and/ or otherwise during operations. It is the act of demonstrating values of honesty, responsibility and equality as well as show an ongoing concern for and contribution to the well-being of the communities in which they operate. In other words, organisations should be good corporate citizens. Green Washing, CSR & Taxation
51. 51. 51 A lot of persons and organisations have gotten it wrong when they enter the economic and accounting argument that they do not owe the government through the tax man a penny more than they have already paid. Indeed, the law allows the firm to arrange its affairs, within provisions allowable under the law, to pay over to government just what is due same, however the same firm sometimes finds itself walking the thin line between tax avoidance as mentioned here and tax evasion which, simply put, amounts to breaking the law. It therefore comes as little surprise to find a discourse such as this relating one misleading aspects of operations a company could find itself with another capable of landing the firm in hot waters with the law using the veil of Corporate Sustainability. Tax evasion as this paper has stated is the process of arranging the affairs of the firm in such a manner as to conceal and ultimately fail to pay over taxes due to government. It is an act in contravention of the law whereby a person who derives a taxable income either pays no tax or pay less tax than he would otherwise be bound to pay. Tax evasion includes the failure to make a return of taxable income or the failure to disclose in a return the true amount of income derived. Tax Criminality & Green Washing
52. 52. 52 Environmental taxes are compulsory, unrequited payment to general government levied on tax bases deemed to be of particular environmental relevance e.g. i. energy products, Ii. motor vehicles, Ii. waste, emissions, natural resources. Environmental Taxes
53. 53. 53 The sovereign debt crisis has illustrated the dire consequences of insufficient transparency and accountability of governments and poor public finance management and reporting. Governments are not risk-free and the failure of fiscal management in the public sector has an economic impact that will far exceed the impact of losses incurred by corporate failures. This jeopardizes both the interests of the public as well as investors. Today, many key decision-makers, politicians, and public finance management leaders are taking the key steps toward meaningful reform, including the adoption and implementation of accrual accounting and International Public Sector Accounting Standards (IPSASs). There has been a concerted convergence effort between the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS) in order to avoid conflict and confusion, promote simplicity, streamlining, consistency and transparency, and avoid any future financial crises or meltdowns. Despite the research-indicated evidence of a higher accounting quality being experienced by firms that either apply the IFRS standards or have switched to them from the GAAP, the convergence process has not proven to be an easy task, mostly because of the differences in approach between the two accounting bodies. Conclusion
54. 54. 54 Recently, the number of reported fraudulent cases, especially in government agencies and banks has continued to grow with low rate in the number of successful prosecution. According to information gathered from law enforcement and prosecuting agencies, the low rate of successful prosecution and conviction of fraudulent cases is partly attributed to lack of necessary skills and knowledge on the part of some fraud investigators and prosecutors in providing suitable evidence to support prosecution. This is where Forensic Accountants and Fraud Examiners come in. Forensic accountants are currently in great demand, with the public need for honesty, fairness and transparency in reporting increasing exponentially. These Forensic Accountants and Fraud Examiners uses accounting, finance, law and investigative skills to identify, interpret, communicate and prevent fraud. As more and more companies look for Forensic Accountants & Fraud Examiners, and professional organizations offer certifications in the area, it is becoming evident that forensic accounting would emerge as one of the hottest jobs in Nigeria within the next few years. Conclusion
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