Municipal Research Service of Washington State reports that cybersecurity attacks on local governments in Washington State have substantially increased over the last three years. More resonant, national, cases have even made it to the national news. For example: “A cyber attack against the city of Baltimore in May disconnected many basic services for nearly two months including many employees ability to use email, the ability of residents to pay bills online and halted real estate transactions. In the end, Baltimore did not pay the ransom but still spent over $18 million as it recovered services. A similarly high-profile cyber-attack rocked the city of Atlanta in 2018” (Arizona Daily Sun, 2019).
In many cases, a cyber-attack or a phishing crime begins with a fake email message coming, for example, from a Chief Financial Officer or the Head of Human Resources with an order to submit a payment for services or a wire transfer to a specified account. In many cases, such correspondence seems real but the instructions ask that the moneys are wired to the fraudster’s bank account. Once the payment is made, it is very difficult to reverse and in most cases the money in question is lost.
Your task as an internal auditor is to do your best to prevent these financial frauds from happening. In order to address the issue, you are asked to write a formal memo to all employees handling organization finances (i.e. your budget managers, procurement personnel, and colleagues in finance division). In that memo, you must:
set the tone from above,
raise awareness of such incidents taking place, and
provide specific conduct instructions in an event of a suspected attack.
Explain the purpose of Generally Accepted Accounting Principles.
Explain every one of these three GAAP principles:
Objective evidence and the cost convention
The going concern
Accrual basis of accounting
Part B: Essay 1. Financial Analysis Question
In examining the Statement of Activities for the Port of Seattle,
Estimate operating and net profit margins in all three years, and
Recommend whether the Port should raise their fees in based on your results
Seattle Parks and Recreation department considers new applications for the provider of basketball lessons across its 26 community centers. The goal of the department is not only to support the best basketball youth initiative, but to also to select community service providers in good financial standing. Two providers have applied for the tender. Their financials are provided in the tables below.
Based on the information contained in the financial statements, compare and contrast the financial standing of each provider without calculating financial ratios. Which organization appears to have stronger financials? Why? Support your arguments with specific numbers from the Statement of Activities and the Statement of Financial Position.
Calculate four financial ratios of your choice for each provider (a total of 8 ratios). Justify your selection of ratios based upon the information that they convey. Which provider has a better financial standing based on your ratio analysis? Be careful to use a mosaic, or complex, approach in your interpretation.