a) Determine the type of fraud committed and describe the symptoms of fraud that might be evident to an investigator. b) As discussed in units 1 to 4, all frauds involve key elements. Identify and describe using examples, the elements of Sharp’s fraud. c) In the scenario, Sharp’s employer has been putting more emphasis on controlling costs for the various businesses. With the slowing of overall spending in the construction sector, Travolta had ordered managers to closely monitor expenses. He had sold several companies and has given vice presidents greater responsibility for statements of financial positions. What positive and negative consequences might this pose to the company in future fraud prevention? Outline at least three of each type. d) Describe Fine Works Paver’s fraud prevention programme and identify any improvements that might be necessary to prevent this type of fraud or at least discover it sooner.
Trusted Employee
Fine Works Pavers hired Sharp as a part-time bookkeeper in December 2005, and the owner was so pleased with her performance that he offered her a full-time position the next year. John Travolta, the owner of Fine Works Pavers, grew up on a farm. He did not attend college but had a knack for business. His construction company had grown tremendously when the economy was booming.
Over the years, he purchased and sold several businesses, and “as a result, he controlled approximately a dozen companies, each with their own financials in an enterprise that grossed $25 million a year.”
Sharp was a trusted employee and soon was overseeing the finances of four companies. However, Sharp was having difficulty paying the rent and fearing eviction, she stole her first $750 from her employer, and no one noticed. From there, it escalated. She started small, but by 2009 she had taken nearly $460,000. She would come to work dressed as she always had and lived in a modest home. Her only extravagance seemed to be once a year when she and her husband would go all out decorating their home for Christmas.
Sharp’s husband did not work, staying at home to raise the children. He and Sharp had a passion for Christmas, and in December, their house transformed. “He had reindeers, a statute of Santa in the driver's seat of a customized sleigh, and a 20-foot Christmas tree. The display inevitably drew the attention of the local papers and TV stations and then so many drive-bys that Sharp and her husband had to hire a nightly police detail. Sharp’s co-workers took notice. Some carpooled to check out the scene, among them Olivia Newton, Travolta's sister; and credit manager.
She liked Sharp, but after seeing the overblown Christmas display, she had to ask, "How can you afford all that?" Sharp explained that her husband, Stephen, had built some of the attractions and persuaded people to loan him the rest.”
There were other things, however, that did not fit. “Newton remembered that Sharp once remarked that she had property in New Hampshire. Newton knew Sharp made just over $40,000 a year, and her husband did not have a job, but Sharp had a ready answer. She said her in-laws had given them a spit of land as a wedding present. Newton could accept that, but she never understood a much smaller matter. "She bought lunch every single day - and not just a sub or something. She'd get takeout from some of the more expensive restaurants.
Meanwhile, Sharp was feeling pressure from elsewhere at work. The general manager of the Blue Stone Design plant often found the inventory and
Travolta had his different business operations, each in its own entity, and Sharp handled the books and the cash for several entities. When the auditors arrived, they sought to obtain the bank statements directly from the banks. “Travolta thought that was a waste of time. He designated one of his most trustworthy employees as the point person to work with the auditors. "Sharp will give you anything you need," he told them. "She's got it all under control.”
Sharp had a passion for horses and purchased several thoroughbreds for her daughter. In 2011 Sharp and her husband began construction on a log cabin on 100 acres in rural picturesque New Hampshire. The cabin had two kitchens with marble floors and four substantial bedrooms, each with its own private bathroom. The basement had a media room and a hand-carved pool table. The garage was large enough to house a growing collection of vehicles, while the upper level had a video arcade.
In writing your response, the following points must be addressed fully:
a) Determine the type of fraud committed and describe the symptoms of fraud that might be evident to an investigator.
b) As discussed in units 1 to 4, all frauds involve key elements. Identify and describe using examples, the elements of Sharp’s fraud.
c) In the scenario, Sharp’s employer has been putting more emphasis on controlling costs for the various businesses. With the slowing of overall spending in the construction sector, Travolta had ordered managers to closely monitor expenses. He had sold several companies and has given vice presidents greater responsibility for
d) Describe Fine Works Paver’s fraud prevention programme and identify any improvements that might be necessary to prevent this type of fraud or at least discover it sooner.
The provided excerpt tells the tale of Sharp, a bookkeeper employed by John Travolta, the proprietor of Fine Works Pavers, a building firm. Sharp was hired part-time at first, but she was given a full-time role after demonstrating her excellence. As time went on, she was responsible for managing other businesses' finances under Travolta's firm, which brought in $25 million annually. Nonetheless, Sharp started stealing cash from the company, initially in tiny sums that increased to about $460,000 by 2009. Despite her relatively modest lifestyle, her coworkers noticed certain irregularities, such as her lavish Christmas decorations and pricey lunch orders. Sharp loved horses and had a 100-acre estate in New Hampshire with a great log home. The line in question makes one wonder how Sharp maintained her standard of living on such a meagre wage and how her fraudulent acts remained unnoticed for so long.
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