Misappropriation of Funds For I.T. Equipment 148



  • Can someone tell me where I can read about the penalties and any pertinent language associated with the misappropriation of funds for I.T. equipment? Basically, funds that were set aside for a particular piece of equipment and something else was purchased and used by that person for their personal gain.



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  • James,
    SOX is not specific when it comes to company ethics, but COSO which is what most companies are using as their baseline for SOX compliance does specify that ‘tone at the top’ should be present. Your company should have their own code of ethics in place. If you have further questions, please email me with specifics. Cassandra_koneval_at_hotmail.com



  • I agree with what Cassandra said. Additionally SOX doesn’t really care what the money got spent for, as long as you show that correctley within your accounting statements.



  • Holger:
    If the funds are misappropriated, the PCOAB standard definitely DOES care about how the money is spent:
    24. The auditor should evaluate all controls specifically intended to address the risks of fraud that have at least a reasonably possible likelihood of having a material effect on the company’s financial statements. …
    25. Part of management’s responsibility when designing a company’s internal control over financial reporting is to design and implement programs and controls to prevent, deter, and detect fraud. …



  • Remember that all of those rules are subject to materiality. No level of management control will eliminate all fraud. While management is to have controls in place designed to prevent or detect fraud, if fraud occurs, then management has no further responsibility than to properly report it in its financial statements to meet SOX 404 requirements.



  • Also, if the individual in question could be considered a member of ‘senior management’ then most of the big 4 if not all would start with the presumption of a material weakness.
    Otherwise, the issue becomes one of materiality–but my question would be, if one person could do this, couldn’t more? Seems at least you’ve a hole to plug…
    Ben


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