bookkeeper in a New York City condo put a dummy person on the payroll and. for a year-and a-half, sent salary checks to a post office box. ''There was an actual person cashing the check and splitting it with the bookkeeper," Glodstein says. The bookkeeper, however, knew the chance of getting caught was low. She had worked tor the condominium association tor over five years, and since it was convenient for the board to give one person sole responsibility for paying its bills, she controlled the checking account. "Because the board trusted her." says Glodstein, "they thought she would never take money." But after about three-and-a-half years of this, the bookkeeper, very simply, added the name of a relative to the list of maintenance employees. Neither the board treasurer nor the condo's accountants ever tried to verify all the employees' existences, and there was no red flag since it was slow and consistent. Eventually, however, "a member of the board came to us because he noticed there was a person on the books and he didn't know who this person was," Glodstein says. Armed with some basic research from this member, the board called in Goldstein’s company. In typical forensic accounting fashion, an accountant went in person to the building to look at the condo's books and records. and an investigator started interviewing staff- none of whom were notified beforehand in order to prevent staff members from colluding and "getting their stories straight." The scheme began unraveling when they talked to the bookkeeper. "We didn't even know she was doing anything wrong," Glodstein says. "But you talk to everybody, try to find out what their responsibilities are, and follow through. She was handling all the money coming in and going out. That gives you the feeling that something could go wrong here." Then they got their break: a name on the employee list was suspiciously similar to the bookkeeper's. Under questioning, the bookkeeper eventually allowed that he was a relative. They took that information to the board treasurer, who confirmed he didn't know who the person was. That did it. The sordid scheme was out in the open. Based on Article: Describe what is meant by the term "Fraud Triangle" {please discuss the three components) and why do you think it is a key factor in the discovery of fraudulent financial activity? What are a few of the "telltale signs" that would lead to the identification of fraud mentioned in the article? Hint (The Fraud Triangle is found in your textbook on Pages 219-222) Based on the Case: As the forensic accountant, what type of internal controls would you suggest to the Board to prevent this type of activity in the future?

bookkeeper in a New York City condo put a dummy person on the payroll and. for a year-and a-half, sent salary checks to a post office box. ''There was an actual person cashing the check and splitting it with the bookkeeper," Glodstein says. The bookkeeper, however, knew the chance of getting caught was low. She had worked tor the condominium association tor over five years, and since it was convenient for the board to give one person sole responsibility for paying its bills, she controlled the checking account. "Because the board trusted her." says Glodstein, "they thought she would never take money." But after about three-and-a-half years of this, the bookkeeper, very simply, added the name of a relative to the list of maintenance employees. Neither the board treasurer nor the condo's accountants ever tried to verify all the employees' existences, and there was no red flag since it was slow and consistent. Eventually, however, "a member of the board came to us because he noticed there was a person on the books and he didn't know who this person was," Glodstein says. Armed with some basic research from this member, the board called in Goldstein’s company. In typical forensic accounting fashion, an accountant went in person to the building to look at the condo's books and records. and an investigator started interviewing staff- none of whom were notified beforehand in order to prevent staff members from colluding and "getting their stories straight." The scheme began unraveling when they talked to the bookkeeper. "We didn't even know she was doing anything wrong," Glodstein says. "But you talk to everybody, try to find out what their responsibilities are, and follow through. She was handling all the money coming in and going out. That gives you the feeling that something could go wrong here." Then they got their break: a name on the employee list was suspiciously similar to the bookkeeper's. Under questioning, the bookkeeper eventually allowed that he was a relative. They took that information to the board treasurer, who confirmed he didn't know who the person was. That did it. The sordid scheme was out in the open. Based on Article: Describe what is meant by the term "Fraud Triangle" {please discuss the three components) and why do you think it is a key factor in the discovery of fraudulent financial activity? What are a few of the "telltale signs" that would lead to the identification of fraud mentioned in the article? Hint (The Fraud Triangle is found in your textbook on Pages 219-222) Based on the Case: As the forensic accountant, what type of internal controls would you suggest to the Board to prevent this type of activity in the future?

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter4: Gross Income

Section: Chapter Questions

Problem 9P

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