Part 1
External stakeholders are individuals that earn a financial profit or receive benefits from the organization. They can include debt issuers, stockholders, governments, and suppliers. External stakeholders should have access to a company’s financial statements because they need to have updated information about a company’s expenses, revenues, debt load, profitability, and the ability to meet the short-term and long-term financial obligations. For instance, the governments may want to observe the financial statements to know that the company pays the right amount of taxes. Creditors will see financial statements to determine whether the company can pay back loaned funds, while stockholders may want to assess their return on investments and the company's future.
An adequate environment and internal control system are essential for the preparation of financial statements as it reduces opportunities for intentional fraud or unintentional errors. Internal control ensures that information in the financial statement is accurate and reliable and that the company’s financial operations are conducted according to the required laws and regulations. It facilitates that the company successfully achieves its financial reporting objectives and reduces risks from asset loss.
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One example of an organization that does not have strong internal control is JPMorgan Chase Unit. The company had to pay $250 million in penalties over poor internal controls and internal audit practices (Hagel & Beckerman, 2020). It was established that JPMorgan had a complex fiduciary business but failed to have a sufficient audit and internal control programs to monitor those activities. One factor that could lead to poor internal control procedures is poor documentation and poor record-keeping, making it difficult to provide evidence of underlying transactions. Another factor is that the organization may not have set up proper procedures and policies to ensure proper internal control procedures are followed. Every employee can contribute to proper internal control procedures by documenting various transactions and advocating for internal control improvement.
Part 2
Ethics can be described as the standards of right and wrong that dictate how human beings should behave in a right manner and promotes fairness and specific virtues. Having strong ethical standards means that one engages in a continual effort to improve their moral conduct.
High ethical standards are expected by students of Kennesaw State University as it encourages honesty in one’s education. The university strives to instill good study and work habits that will only be possible if students follow the correct ethical procedures. Holding high ethical standards builds trust and respect and ensures that the student acts responsibly. Ethical standards apply to the business environment by promoting integrity and building trust among company stakeholders such as consumers and investors. High ethical standards among employees ensure that crucial business procedures run well and there are no incidences of intentional fraud.
The fraud triangle is a framework that explains the decision to engage in fraud. It involves opportunity, incentives, and rationalization. An opportunity can occur due to the weak internal control procedures of an organization. One can also find an opportunity when its leadership does not act ethically with honesty and integrity. Incentives can occur due to the expected financial gain, and rationalization can occur when one can feel that the upper management is also acting unethically. Engaging in proper internal controls and maintaining high ethical standards reduces the excuses seen in the fraud triangle.
As a student, my role in the University’s control environment is to conduct myself responsibly. I can keep myself knowledgeable and mindful about the institution’s internal controls and ethics and point out when proper procedures have not been followed. I can strive to always act ethically by doing what is right and doing it correctly.
Part 3
Acts of academic dishonesty and cheating can occur in different ways, such as plagiarism reproduces another person's works or ideas without proper acknowledgment. One can also copy another student’s homework or test and allow another student to copy from them. Collaborating in a take-home test or in-class activity without the professor’s permission can also amount to plagiarism.
The student who commits acts of academic dishonesty cannot be a trustworthy business partner. It shows that he or she can engage in unethical behaviors to get ahead in their career. Engaging in such unethical behaviors could be a sign that the student may engage in financial and business dishonesty in the future.
References
Hagel, J., & Beckerman, J. (2020). JPMorgan Chase Unit to pay a $250 million penalty over poor internal controls. Wallstreet Journal. https://www.wsj.com/articles/jpmorgan-chase-unit-to-pay-250-million-penalty-over-poor-internal-controls-11606255474
