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freescale_semiconductors_r.pptxFreescale Semiconductors, Inc.
Student name
Course
Date
Additional laws and harsher penalties
harsher penalties acts as a deterrent to crime
Additional laws to cover the loophole used to fraud
Hefty fines prohibits engagement in crime
Increases compliance with the laws
Human beings who have a tendency to break laws run Corporates. However having harsher penalties acts as a deterrent to committing a crime since they are afraid of penalties and severe fines to be paid. Having additional laws to cover the loophole used by the executives to commit unethical or fraudulent acts. Also having Hefty fines and increases, supervision prohibits engagement in crime as well as increases compliance with the laws
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1. strategies to eliminate or mitigate insider trading
Preventing information that is non public from circulating
Such information denies perfect knowledge to investors
Increases the cost of stock through hoarding information
Only fully disclosed information should circulate
Insider trading happens when a few people, usually the executives, hold confidential information about the trading activities of the firm. One of the ways of preventing insider trading is by preventing information that is nonpublic from circulating within the market. This requires a full disclosure by the firms concerning the intended trading activities of the company. Having nonpublic information in circulation denies perfect knowledge to investors as well as increases the cost of stock through hoarding information for personal gains. However, when the information is public, the price will remain low and eliminate the privilege of knowing first (Legal Information Institute, 2013).
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2. strategies to eliminate or mitigate insider trading
Restricting the time where the top executives of a firm can sell the shares awarded to them to an automatic pre arranged plan
The stock option awarded to top executives be sold at pre agreed time
Automatic time of selling stock eliminates making deals with investors
Makes the information publicly available
Most corporates reduce the cost of holding top-level executive through stock options. However to deter insider trading, restricting the time where the top executives of a firm can sell the shares awarded to them to an automatic pre-arranged plan should be followed. This restriction removes the hoarding of the investment information by the executives. There should be a clearly defined timeline when the executives sell their stock option, only after they have received their compensation and not before being compensated (Gandel, 2012).
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3. strategies to eliminate or mitigate insider trading
Ban the payment of the executives using the stock options
Eliminates the unfair investment information holding by executives
Firms to seek other alternatives of paying executives
Continued of stock options makes executives hold information others don’t have
The most useful tool would be a total ban the payment of the executives using the stock options since this option makes the executives have the privilege of always having some unfair information and power to decide who buys the stock and at what amount. The elimination removes the wrong investment information holding by executives (Securities and Exchange Commision, 2013). This call for the firms to seek other alternatives to compensate their executives.
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key internal controls needed over the communication
Development of an insider trading policy that:
Defines clearly what is insider trading
The trading times for executives
Actions to be taken against insider traders
Communication with external stakeholders will start with the development of an insider trading policy that defines clearly, what insider is trading, the trading times for executives as well as the actions to be taken against insider traders. This policy will clarify how the firm will be sharing the information about the expected activities to be happening in the company. The policy, having defined what is considered as insider trading as well as to what extent the executives of the firm can interact with external stakeholders and what they would offer as information concerning the activities of the enterprise (Louwers, Ramsay', Sinason, Strawser, & Thibodeau, 2015).
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key internal controls needed over the communication
Inclusion of third parties and watch dogs in reviewing the reports and communication of the firm
Allows transparency, visible and clear communication
confidentiality to the firm’s information
Having a clear line of communication lines where external parties can offer their ideas, critique and queries
The inclusion of third parties and watchdogs in reviewing the reports and communication of the firm allows transparency, visible and transparent communication to exist in the company. The watchdogs will be crucial in ensuring that relevant information is shared with external stakeholders. However, confidentiality to the company’s information has to be maintained to ensure that all information is not carelessly spread to the wrong person. It is achieved by having a clear line of communication where external parties can offer their ideas, critique, and queries (Louwers, Ramsay', Sinason, Strawser, & Thibodeau, 2015).
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Alternative plan to act on the leaked information
SEC would not act on the impartial and lack of evidence leaks
I would make it easier for SEC to act on the information by:
Report to the SEC in a detailed manner that is well thought out
Include most documentations to corroborate the evidences I refer to
I will also attach a list of witnesses who can be contacted for confirmation
SEC would not act on the unbiased information that lacks evidence to support the claims raised in the information. To ensure that the leak gets acted upon, I would make it easier for SEC to act on the information by reporting to the SEC in a detailed manner that is well thought out. This will be held possible by including most documentations to corroborate the evidence I refer to in the communication as well as attaching a list of witnesses who can be contacted for confirmation.
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strategy to communicate the alternative plan
Will report the case under anonymity calls to protect the identity
Will seek the services of an attorney to advice on the way forward
Would communicate to those in position to take action on the information
Avoid direct communication with the media
Communicating the alternative plan is very crucial. To ensure the confidentiality and safety, I will report the case under anonymity calls to protect the identity of the whistleblower. Before availing the information as well as during the confirmation process, I will seek the services of an attorney to advise on the way forward concerning the legal status of the issues I have raised.
However, I will avoid any confrontation with the media but would communicate to those in a position to take action on the information. Which is a requirement under the whistleblowing requirements
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auditor’s responsibilities between consulting and audit engagements: similarities
Has to abide by ethical standards
Professionalism and confidentiality
Has to uphold their independence and give fair information
Are required to have professional competence in the assignment they undertake
Highest level of integrity is required in both cases
For an auditor, there are similarities between the responsibilities when conducting audit work or when consulting for a client. The auditor has to abide by the professional ethical requirements such as honesty, integrity, and confidentiality. The auditor has to use their independence when offering their opinions in audit work or offering alternatives during consultancy. In both cases, an auditor is required to provide fair information as well as have the professional competences required by the AICPA registration. Such include the right educational levels, experience, and professional membership requirement (Louwers, Ramsay', Sinason, Strawser, & Thibodeau, 2015).
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When auditing
Appointed by the board
Has to abide by PCAOB, AICPA and GAAPS
The jobs have to meet the legal requirements
Have rules, regulations and standards to meet
Gives and independent opinion on fairness and accuracy of financial statements to shareholders
The auditor identifies fraudulent activities to board and to SEC
When conducting auditing services, an auditor has to maintain communication with the firm’s board, which is responsible for the appointment of the auditor. The auditor has to abide the by rules and regulation governing the audit work as provided by the PCAOB, AICPA, and GAAPS. The auditor’s work is ruled by the legal requirements in both appointments, reporting, and nature of work to undertake. An auditor is responsible for giving an independent opinion on fairness and accuracy of financial statements to shareholders as well as assure them that the statements are free from any material misstatement. The auditor is also required to identify fraudulent activities to board and to SEC (Louwers, Ramsay', Sinason, Strawser, & Thibodeau, 2015).
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When consulting engagements
Is appointed by the firm’s management
Are responsible and reports to the managers
They do not have a legal backing in how they conduct
They offer viability reports
Can offer alternatives
However, when on a consulting job, an auditor is appointed by the firm’s management, for whom the auditor is responsible. The consultancy assignments are not a legal requirement, but the terms and condition of the engagement are determined by an agreement between the management and the consulting auditor. The consultant offers a viability report to the management concerning the project and can provide alternatives that the management can use to achieve maximum returns (Louwers, Ramsay', Sinason, Strawser, & Thibodeau, 2015).
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a position on whether more legislative and/or regulatory agency oversight will increase or decrease corporate fraud
Increased oversight decrease corporate fraud
It makes the corporates comply with regulations
Will help identify fraud easily
Legislative oversight will seal the weakness taken advantage of by corporate to commit fraud
I am of the opinion that increased oversight decrease corporate fraud since it makes the corporates comply with regulations as well as will help identify fraud easily. On the other hand, Legislative oversight will seal the weakness taken advantage of by corporate to commit fraud.
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references
Gandel, S. (2012, November 29). How to really stop (some) insider trading. Retrieved from http://fortune.com/2012/11/29/how-to-really-stop-some-insider-trading/
Legal Information Insitutute. (2013). 17 CFR 240.10b5-1 - Trading “on the basis of” material nonpublic information in insider trading cases. Retrieved from cornell university Law School: https://www.law.cornell.edu/cfr/text/17/240.10b5-1
Louwers, T. J., Ramsay', R. J., Sinason, D. H., Strawser, J. R., & Thibodeau, J. C. (2015). Auditing & Assurance Services (6 ed.). NewYork: McGraw-Hill Education,.
Securities and Exchange Commision . (2013, 01 15). Insider Trading. Retrieved from http://www.sec.gov/answers/insider.htm
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