Fun & Games - Summary of Findings

The CEO of the Baker Inc, wants to implement a new accounting system, to improve work flow through the company’s sales, cash receipts, accounts payable, and cash disbursement procedures. The CEO is, however, concerned about the potential disruption that the implementation will have on operations. In an announcement letter to Baker’s employees, the CEO stated that: “I have contracted Flybynight Consulting Group to do the needs analysis, system selection, and design work. The programming and implementation will be performed in-house using existing IT department staff. The development process will be unobtrusive to user departments because Flybynight knows what needs to be done. They will work independently, in the background, and will not disrupt departmental and internal audit work flow with time consuming interviews, surveys, and questionnaires. This promises to be an efficient process that will produce a system that will be appreciated by all users.” Required: Draft a memo from George…

In a financial fraud case, city employees in Brooklyn, New York, accessed digital databases to defraud the city of $20 million. Several employees, in collusion with the former deputy tax collector, completely erased or reduced $13 million in property taxes and $7 million in accrued interest that taxpayers owed. In exchange for this service, the taxpayers paid the employees involved bribes of 10 to 30 percent of their bills. Required Discuss the control techniques that could prevent or detect this fraud.

In a recent financial fraud case, city employees in Brooklyn, New York, accessed electronic databases to defraud the city of $20 million. Several employees in collusion with the former deputy tax collector completely erased or reduced $13 million in property taxes and $7 million in accrued interest that taxpayers owed. In exchange for this service, the taxpayers paid the employees involved bribes of 10 to 30 percent of their bills. Required Discuss the control techniques that could prevent or detect this fraud.

Question  ABC Limited is a manufacturing firm with a workforce of more than 100 employees. Mr Peter has recently joined the firm as the account payable clerk. Miss Emma is the accounting department head, and she is concerned about the cash disbursement system. Therefore, she has asked Mr Peter to analyse the firm's cash disbursement system and identify the internal control weaknesses from the system. Following is the description of the cash disbursement system. In the temporary file, the account payable clerk receives the supplier's invoice and reconciles it with the purchase order. The accounts payable clerk records the purchase in the purchases journal from the clerk's computer terminal and records the liability by adding a record to accounts payable subsidiary ledger. The clerk then updates the inventory control and accounts payable control accounts in the general ledger. The purchases order and invoice are later filed in the department. Each day, the clerk visually searches the…

All-Around Sound Co. discovered a fraud whereby one of its front office administrative employees used company funds to purchase goods such as computers, digital cameras, and other electronic items for her own use. The fraud was discovered when employees noticed an increase in the frequency of deliveries from vendors and the use of unusual vendors. After some investigation, it was discovered that the employee would alter thedescription or change the quantity on an invoice in order to explain the cost on the bill.What general internal control weaknesses contributed to this fraud?

Carl Kerns is one of the directors of the board. Carl said that as a board member they are given the profit and cash flow budgets. He was appointed by the board to conduct an internal audit of operations to look for weaknesses in the internal control system. His report uncovered the following processes that he believed needed to be strengthened. While the overall customer base is increasing from year to year, there may be internal control issues relating to how these new customers are secured. Some discounts that were being given to customers were recorded as a net amount on the invoices and gave no indication of the discount from standard prices. Some cash registers in the stores were not reconciling the cash in drawer with the register printout. Not all timesheet overtime amounts were being authorized by the line manager. Service invoices for some items of equipment were not signed or linked to a purchase order. There was no check that the work had been carried out. Not all assets…

In the Why It Matters feature “Examples of Theft and FinancialReporting Frauds” at the beginning of the chapter, we introduced youto the Koss Corporation fraud. In this problem, we provide you withfurther details about that fraud. During the fall of 2009, Koss Corporation,a Wisconsin-based manufacturer of stereo headphone equipment,revealed that its vice president of finance (Sujata “Sue” Sachdeva) haddefrauded the company of approximately $31 million over a periodof at least five years. Grant Thornton LLP was the company’s auditor,and the firm issued unqualified audit opinions for the entire period in which they worked for Koss. According to reports, Sachdeva’s theftaccelerated over a period of years as follows:FY 2005 $2,195,477FY 2006 $2,227,669FY 2007 $3,160,310FY 2008 $5,040,968FY 2009 $8,485,937Q1 FY 2010 $5,326,305Q2 FY 2010 $4,917,005To give you a sense of the magnitude of the fraud, annual revenuesfor Koss Corporation are in the range of $40 to $45 million…

Pls explain first how you solve it. Thank you.  F COMPANY, organized on March 1, 2021, has a very poor internal control system. Thecompany's cashier is also its accountant. After 9 months of operations, the company's managersuspects that the cashier-accountant has been misappropriating company collections. You havebeen engaged to audit the company's accounts to determine the extent of fraud, if any. You started the audit on November 15. On that date, the cash on hand per your surprise countwas P5,140. Also on that date, the bank confirmed that the balance of the company's currentaccount was P26,328. Your examination of the records reveals that a check for P1,852 wasoutstanding on November 15. The company's markup is 40% of sales. Further examination of the company's records reveals the following balances at November 15,2021:

ABC Limited is a manufacturing firm with a workforce of more than 100 employees. Mr Peter has recently joined the firm as the account payable clerk. Miss Emma is the accounting department head, and she is concerned about the cash disbursement system. Therefore, she has asked Mr Peter to analyse the firm's cash disbursement system and identify the internal control weaknesses from the system. Following is the description of the cash disbursement system.In the temporary file, the account payable clerk receives the supplier's invoice and reconciles it with the purchase order. The accounts payable clerk records the purchase in the purchases journal from the clerk's computer terminal and records the liability by adding a record to accounts payable subsidiary ledger. The clerk then updates the inventory control and accounts payable control accounts in the general ledger. The purchases order and invoice are later filed in the department.Each day, the clerk visually searches the accounts…

Strivant Industries is a struggling company whose profits are dropping. Manager Jill Trainor is looking at the numbers on the annual report she is preparing to send out to investors. She takes a red pencil and strikes through several numbers, replacing them with figures that make Strivant seem more profitable than it really is. This is an example of Multiple Choice editing. auditing. embezzling. fraud.

Bradford College FraudBradford College has several sites and employs hundreds of teaching staff. The college has recently discovered a serious fraud involving false billings for part-time teaching. The fraud involved two members of staff. Noel is a clerk in the payroll office who is responsible for processing payments to part-time teaching staff. Ruth is the Head of the Business Studies department at the college campus. Part-time lecturers are required to complete a monthly claim form that lists the classes taught and the total hours claimed. These forms must be signed by their Head of Department, who sends all signed forms to Noel. Noel checks that the class codes on the claim forms are valid, that hours have been budgeted for those classes, and inputs the information into the college’s payroll package. The college has a separate personnel department that is responsible for maintaining all personnel files. Additions to the payroll must be made by a supervisor in the personnel office.…

Identify the fraud triangle risk factor (Opportunity, Pressure, or Rationalization) in each situation. 1. The business has no cameras or security devices at its warehouse. 2. A worker sees other employees regularly take inventory for personal use. 3. Payroll manager feels she is greatly underpaid. 4. No one matches the cash in the register to receipts when shifts end. 5. Managers are expected to grow business or be fired. 6. Managers are told to make extreme cuts in expenses. Opportunity Rationalization Pressure Opportunity Pressure Pressure