Ethics in Accounting – Discussion
Please read the attached paragraphs and answer the discussion question.
Question:
Assume you are asked as part of an audit of GE’s insurance business to assess fraud risks, what would you include in your report and why? Please be specific to this case.
Please write in your own words
Requirements: 1 page
Please write in your own words and answer more specifically to the case by using accounting terminology.
Answer preview
Non-disclosure or misrepresentation is a significant fraud risk (Cartwright, 2012). There is a major risk for the company to fail to disclose the worsening trends in the insurance business. Indeed, this situation represents a major risk for substantial losses. Hence the company may choose to report the earlier projections of the financial situations in the organization. The company announced an after-tax charge of $6.2 billion and an additional capital funding of $15 billion to the insurance business for the 2017 reporting period. The latter explains the funds expected to meet the increasing number of claims over the last few years. A significant risk to non-disclosure is that the long-term care policies have been underpriced, and an increase in claims as the population grows older poses threats of exceeding previous projections. Indeed, CEO John Flannery reported that the company had underappreciated the risks in the book during this period.
330 words
