REQUIREMENTS
l. Ttree conditions a1e often present when fraud exists. First, management or employees have an ineentive or are under pressure, which providei them ii..r"" ," comrnit the fraud act. second circumstances exist - for exampl;,--;6;;l'o,'
inellbctive internal conkols or the ability fo,r management override of coirrols - that provide a\opp?rtuirity for the fraud to u. p"rpe6ted. Ttrird, trror" inuoiu"a L able to rationalize the &aud as being ccrsisteni *itn irt"ir p.oonat code of ethics. Some individuals possess-an auitude,character, or wt oirtfrical values that allows therir to knownrgry comrnit a aaudulint acr Using zo-zo hinds,sr,liJ.rny ;;;;;r, present at Waste.Management that arc inorcatlve of each 6f if," tf"J"-nuuo conditions: incentives, opportunities, and anitudes. 2' Review Wastc Mairagenent's Consolidaed Balance Sheet as of December 31, 1996. Identify accounts whose tF*l were titety based on signiRcant
managemenr estimation techniques. Descrihe the reasons why estimatk were required.for each of the accounts identified. 3' Describe why accolnsinvolving significant managemenr estimation are generally
viewed as inberently rislcy" 4' Review SAS No. 57, Auditing Accoruuittg Estinntes, and describe the auditor,s
responsibilities f9r exarnini"g managemenr-genirated estimates. atso, sAs N;. 57 provides guidance to assist auditors in examining estimates. Describe the techniq*es comrnonly used by marugem.nr to evaluan the reasonableness of manage.ment's estimates. 5' The waste Manageurent fraud primanly centered around inappropriate estimates of salvage varues and usefirl live.s for properry anJ equipmenr. Describe
techniques Aacersen auditors could have used to assess the reasonabl:ness of those estimates used o creare was." Management,s financiat satements. 6. several of the waste Management rc"ouniog personner;;;;;emproyed
by the company's auditor, Arthur Andersen. bevelop recomrnendations for how accounting firms can address rists associated...