Solve pleaser it For each of the following three independent cases of employee fraud, recommend how to prevent similar problems in thefuture:Case A:Due to abnormal inventory shrinkage in the audiovisual department at a retail chain store, internal auditors conducted an in-depth audit of the department. They learned that a customer frequently bought large numbers of small electroniccomponents from a certain cashier. The auditors discovered that they had colluded to steal electronic components by notrecording the sale of items the customer took from the store.Case B:During an unannounced audit, auditors discovered a payroll fraud when they distributed paychecks instead of departmentsupervisors. When the auditors investigated an unclaimed paycheck, they discovered that the employee quit four monthspreviously after arguing with the supervisor. The supervisor continued to turn in a time card for the employee and pocketedhis check.Case C:Auditors discovered an accounts payable clerk who made copies of supporting documents and used them to supportduplicate supplier payments. The clerk deposited the duplicate checks in a bank account she had opened using a name similarto that of the supplier.

Approach to solving the question: Detailed explanation:Here are recommendations for preventing…

Answered: For each of the following three…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter9: Auditing The Revenue Cycle.

Section: Chapter Questions

Problem 32CYBK

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For each of the following three independent cases of employee fraud, recommend how to prevent similar problems in the future: Case A: Due to abnormal inventory shrinkage in the audiovisual department at a retail chain store, internal auditors conducted an in- depth audit of the department. They learned that a customer frequently bought large numbers of small electronic components from a certain cashier. The auditors discovered that they had colluded to steal electronic components by not recording the sale of items the customer took from the store. Case B: During an unannounced audit, auditors discovered a payroll fraud when they distributed paychecks instead of department supervisors. When the auditors investigated an unclaimed paycheck, they discovered that the employee quit four months previously after arguing with the supervisor. The supervisor continued to turn in a time card for the employee and pocketed his check. Case C: Auditors discovered an accounts payable clerk who made…
An auditor suspects that certain client employees are ordering merchandise for themselves over the Internet without recording the purchase or receipt of the merchandise. When vendors' invoices arrive, one of the employees approves the invoices for payment. After the invoices are paid, the employee destroys the invoices and the related vouchers. In gathering evidence regarding the fraud, the auditor most likely would select items for testing from the file of all: Multiple Choice Cash disbursements. Approved vouchers. Receiving reports. Vendors' invoices.
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?
You are a fraud examiner and have been hired by Blackman Company to carry out an investigation. Blackman is a beverage company that has experienced increased shipments of beverages but no increase in revenue. Management suspects that inventory is being shipped to unknown places or is being stolen.How would you use invigilation to help you determine whether inventory is being stolen or shipped to unknown locations? Briefly explain how you would carry out this investigative procedure.
Baker is an auditor for ABC Company. As part of a proactive fraud audit, Baker runs the following tests: (1) a review of the Sales Register for dormant customer accounts that posted a sale within the last two months; and (2) a comparison of the Sales Register and the Shipment Register for shipping documents that have no associated sales order. Taken together, what type of non-cash scheme is Baker most likely to find with these tests? Explain how each one might identify fraud.
As the lead accountant for a small company, you notice that inventory purchases from a certain vendor have increased dramatically over the past few months, whereas purchases from all other vendors have decreased. You suspect that something may not be right and that there may be a fraudulent relationship between someone in your company and the vendor that is getting increased business. question: Which theft act investigative method would you use to investigate your suspicions? state evidences that you to support suspicions.
When in an examination of a retail firm, Lily, a recently recruited internal auditor, discovered a plan in which the warehouse manager and a buying staff moved around Php2 million worth of products to an outside warehouse, where they were sold to third parties. Because the warehouse manager changed the perpetual inventory records and subsequently transmitted receiving reports to the accounts payable department for processing, the fraud was not discovered earlier by the internal audit team. Which one of the following steps did Lily follow that resulted in the discovery of the missing materials and the fraud? Group of answer choicesRandom sampling of receiving reports and tracing to the recording in the perpetual inventory records.Selecting a random sample of purchase orders and trace to receiving reports and to the records in the accounts payable department.Performance of physical inventory count, then reconciliation of the amounts with the perpetual inventory…
27. Lily, an auditor for a major retail company, suspects that inventory fraud is occurring at three stores which have high costs of goods sold. Which of the following audit activities would provide the most persuasive evidence that fraud is occurring? Group of answer choices Use an integrated test facility (ITF) to compare individual sales transactions with test transactions submitted through the ITF and investigate all differences. Select a sample of individual store prices and compare them with the sales entered on the cash register for the same items. Interview the three individual store managers to determine if their explanations about the observed differences are the same, and then compare their explanations to that of the section manager. Schedule a surprise inventory audit to include a physical inventory and investigate areas of inventory shrinkage.
208.Lily, an auditor for a major retail company, suspects that inventory fraud is occurring at three stores which have high costs of goods sold. Which of the following audit activities would provide the most persuasive evidence that fraud is occurring? Group of answer choices Use an integrated test facility (ITF) to compare individual sales transactions with test transactions submitted through the ITF and investigate all differences. Select a sample of individual store prices and compare them with the sales entered on the cash register for the same items. Interview the three individual store managers to determine if their explanations about the observed differences are the same, and then compare their explanations to that of the section manager. Schedule a surprise inventory audit to include a physical inventory and investigate areas of inventory shrinkage.
Some of the largest business frauds ever perpetrated have involved the misstatement of inventory. Two classics were at Leslie Fay and McKesson Corporation. Feel free to check them out to get a feel for the impact that it has. There is considerable information regarding inventory frauds available on the Internet. Search for information about another instance of inventory fraud at any other company, and prepare an explanation of the nature of the inventory fraud.
18.During an audit of a retail company, Lily, newly hired internal auditor, found a scheme in which the warehouse manager and a purchasing staff diverted approximately Php2 million worth of goods to an outside warehouse, the sold the goods to third parties. The fraud was not found earlier by the internal audit team since the warehouse manager updated the perpetual inventory records and then forwarded receiving reports to the accounts payable department for processing. Which of the following procedures did Lily perform which would have most likely led to the discovery of the missing materials and the fraud? Group of answer choices Random sampling of receiving reports and tracing to the recording in the perpetual inventory records. Selecting a random sample of purchase orders and trace to receiving reports and to the records in the accounts payable department. Performance of physical inventory count, then reconciliation of the amounts with the perpetual inventory records. Random…
Tests of Controls and Errors/Frauds. The following four questions are taken from an internal control questionnaire. For each question, state (a) one test of controls procedure you could use to find out whether the control technique was really functioning and (b) what error or fraud could occur if the question were answered “no” or if you found the control was not effective.1. Are blank sales invoices available only to authorized personnel?2. Are sales invoices prenumbered and are all numbers accounted for?3. Are sales invoices checked for the accuracy of quantities billed? Prices used? Mathematical calculations?4. Are the duties of the accounts receivable bookkeeper separate from all cash functions?5. Are customer accounts regularly balanced with the control account?6. Do customers receive a monthly statement even when the ending balance on the account is zero?

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