1. Scenario: You have been the Chief Financial Officer (CFO) for Pharm, Inc., a large pharmaceutical company, for 15 years. The Companys year-end is March 31 and you are finishing the year-end accounts.

You have recently been advised by the Chief Operating Officer (COO) that Pharm holds a significant amount of a particular stock that has been very slow moving and has been devalued within the past year. Typically, the stock in question would normally have been written off as a loss some months previously.

The shareholders are trying to sell Pharm and the Chief Executive Officer (CEO), who is also the majority shareholder, has told you that it is not necessary to write off the devalued stock in the year-end accounts. You know that the CEO wants the financial statements to carry an inflated stock valuation because he has found a prospective buyer for Pharm. The CEO has mentioned to you that if the proposed deal is successful, all employees will keep their jobs and you will receive a substantial pay increase.

What are specific ethical issues and implications to consider in making this decision?

2. Scenario: Company X, a multinational manufacturing company based in the US, produces and sells boxed cereals. X grows some of the grain used in its cereals, and buys the other ingredients for its products from suppliers in the US and overseas. X has an existing Corporate Social Responsibility (CSR) program called Breakfast First through which it donates cereal products to homeless shelters, and to the Red Cross for distribution to areas where needed; . X is considering spending even more money to create one or two new CSR programs.

Assume the role of Milton Friedman addressing top management and the Board of Directors for Company X. Friedmans role is to recommend against the new CSR programs for X; he must explain and justify his theory that the business of business is business and the primary focus of a business is maximizing profits is also ethical.

3. Why is fraud relevant to an Internal Auditor? How does the Institute of Internal Auditors define fraud? Elaborate.

4. Discuss the role of Internal Audit in prevention and detection of fraud. Discuss with the example of a fraud that you know occurred from personal experience or searching the internet.

5. Read the case They Protect Us from Computer Fraud: Who Protects Us from Them? SafeNet, Inc.: A Case of Fraudulent Financial Reporting by Marshall, Leisa L.

Cali, James that appeared in the November 2015 issue of the Journal Issues in Accounting Education. You can retrieve it from the Library.

1.Describe the conditions at SafeNet, Inc. that allowed for the perpetration of this fraud.

2.Describe two specific internal control policies and/or procedures that would have helped to prevent the fraud described in the SafeNet case. Justify your response.