You are in charge of the checking account for a small business. One morning, your accounting supervisor enters your office and asks you for a check for $150 for expenses that he tells you he incurred entertaining a client last night. He submits receipts from a restaurant and lounge. Later, your supervisor’s girlfriend stops by to pick him up for lunch, and you overhear her telling the receptionist what a great time she had at dinner and dancing with your supervisor the night before. What would you do and why?
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You are in charge of the checking account for a small business. One morning, your accounting supervisor enters your office and asks you for a check for $150 for expenses that he tells you he incurred entertaining a client last night. He submits receipts from a restaurant and lounge. Later, your supervisor’s girlfriend stops by to pick him up for lunch, and you overhear her telling the receptionist what a great time she had at dinner and dancing with your supervisor the night before. What would you do and why?
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- The A/P clerk of a company writes the checks for vendors, and the controller signs the checks. The A/P clerk has devised a plan to give herself a raise. She creates a new vendor for her friend's business and creates two purchase orders for random car detailing services for $75 and $70. She writes the checks to pay these new vendors knowing the controller will only pay close attention to checks over $100. She delivers the checks to her friend to deposit in his bank account, and then he writes her a personal check for the full amount of $145. What can the company do to prevent this type of behavior?The A/P clerk of a company writes the checks for vendors, and the controller signs the checks. The A/P clerk has devised a plan to give herself a raise. She creates a new vendor for her friend's business and creates two purchase orders for random car detailing services for $75 and $70. She writes the checks to pay these new vendors knowing the controller will only pay close attention to checks over $100. She delivers the checks to her friend to deposit in his bank account, and then he writes her a personal check for the full amount of $145. Respond to the following in a minimum of 175 words: Eventually, what will be the effect of her actions? What can the company do to prevent this type of behavior?Your small business client, Phillip’s Computer Repair Shop, is experiencing financial difficulties and has to lay off one of its four employees in the accounting area. Phillip has asked you to determine what duties should be assigned to the three remaining employees—Abigail, Bryan, and Chris—to maintain the best separation of duties.Required:Assign the following 10 duties to each of the three employees.a. Reconcile bank statement.b. Open mail and list checks.c. Prepare checks for Phillip’s signature.d. Prepare payroll checks.e. Maintain personnel records.f. Prepare deposit and take to bank.g. Maintain petty cash.h. Maintain accounts receivable records.i. Maintain general ledger.j. Reconcile accounts receivable records to general ledger account.
- The A/P clerk of a company writes the checks for vendors, and the controller signs the checks. The A/P clerk has devised a plan to give herself a raise. She creates a new vendor for her friend's business and creates two purchase orders for random car detailing services for $75 and $70. She writes the checks to pay these new vendors knowing the controller will only pay close attention to checks over $100. She delivers the checks to her friend to deposit in his bank account, and then he writes her a personal check for the full amount of $145. Eventually, what will be the effect of her actions"Dennis Jones, an old college friend, contacted you last week. Dennis owns several car washes, and he believes that financial statement fraud may be occurring. (He pays each car wash manager a bonus if a certain level of profits is earned and is worried that some managers are overstating profits to earn a higher bonus.)Dennisiscomingovertoday to see whether you can help him determine if his suspicions are valid. He is bringing along the financial statements for each car wash (income statements, balance sheets, and cash flow statements) for the last five years.1.What kind of financial statement analysis could you perform to help Dennis detect possible fraud?"Your client is preparing financial statements to show the bank. You know that he has incurred a refrigeration repair expense during the month, but you see no such expense on the books. When you question the client, he tells you that he has not yet paid the 1,255 bill. Your client is on the accrual basis of accounting. He does not want the refrigeration repair expense on the books as of the end of the month because he wants his profits to look good for the bank. Is your client behaving ethically by suggesting that the refrigeration repair expense not be booked until the 1,255 is paid? Are you behaving ethically if you agree to the clients request? What principle is involved here?
- You are the auditor for Lambda Ltd, a sportswear company. The following is an excerpt from an interview between you and the sales ledger clerk, Sandy. Auditor: What are the controls over the cash receipts your company receives?Sandy: Good. The receptionist opens the mail each day and makes sure each cheque is crossed. She then gives me all the cheques to post against the sales ledger.Auditor: What happens then?Sandy: I make a list of all the cheques received – for control purposes. Then I record each cheque against each customer’s record on the sales ledger. After the cheques have accumulated for a couple of days, I give them to the receptionist to bank. The receptionist keeps all the bank-in slips as a record in case there are any queries later.Auditor: Are there ever any difficulties between the cheque value and the associated invoice?Sandy: Sometimes there are. Usually it relates to a special discount that has been authorised by me or the sales manager. If the differences are not…Cain, the authorized signer on his company's accounts, prepared and signed a check payable to the company's plumber. He gave the check to Baker, his secretary, and asked her to mail the check to the plumber. Instead, Baker took the check home, signed the plumber's name on the back, and had her husband cash the check at their grocery store. Baker committed which of the following schemes? a. An authorized maker scheme O b. A forged endorsement scheme O c. An altered payee scheme O d. A forged maker schemeHarriet Knox, Ralph Patton, and Marcia Diamond work for a family physician, Dr. Gwen Conrad, who is in private practice. Dr. Conrad is knowledgeable about office management practices and has segregated the cash receipt duties as follows. Knox opens the mail and prepares a triplicate list of money received. She sends one copy of the list to Patton, the cashier, who deposits the receipts daily in the bank. Diamond, the recordkeeper, receives a copy of the list and posts payments to patients' accounts. About once a month the office clerks have an expensive lunch they pay for as follows. First, Patton endorses a patient's check-in Dr. Conrad's name and cashes it at the bank. Knox then destroys the remittance advice accompanying the check. Finally, Diamond posts payment to the customer's account as a miscellaneous credit. The three justify their actions by their relatively low pay and knowledge that Dr. Conrad will likely never miss the money. 1. Who is the best person in Dr. Conrad's…
- Harriet Knox, Ralph Patton, and Marcia Diamond work for a family physician, Dr. Gwen Conrad, who is in private practice. Dr. Conrad is knowledgeable about office management practices and has segregated the cash receipt duties as follows. Knox opens the mail and prepares a triplicate list of money received. She sends one copy of the list to Patton, the cashier, who deposits the receipts daily in the bank. Diamond, the recordkeeper, receives a copy of the list and posts payments to patients’ accounts. About once a month the office clerks have an expensive lunch they pay for as follows. First, Patton endorses a patient’s check in Dr. Conrad’s name and cashes it at the bank. Knox then destroys the remittance advice accompanying the check. Finally, Diamond posts payment to the customer’s account as a miscellaneous credit. The three justify their actions by their relatively low pay and knowledge that Dr. Conrad will likely never miss the money. Required 1. Who is the best person in Dr.…Lena, Carrie, and Margaret work for a family physician. The doctor is knowledgeable about office management practices and has segregated the cash receipt duties as follows: Lena opens the mail and prepares a triplicate list of money received. Lena sends one copy of the list to Carrie, the cashier, who deposits the receipts daily in the bank. Margaret, the recordkeeper, receives a copy of the list and posts payments to the patients' accounts. About once a month, the office clerks have an expensive lunch they pay for as follows. First Carrie endorses a patient's check in the doctor's name and cashes it at the bank. Lena then destroys the remittance advice accompanying the check. Finally, Margaret posts payment to the customer's account as a miscellaneous credit. The three justify their actions by their relatively low pay and knowledge that the doctor will likely never miss the money. Would a bank reconciliation uncover this office fraud?You are a summer intern working for a major professional services firm. During your lunch break each day, you and fellow intern, Bob, eat at a local sandwich shop. One day, Bob's girlfriend joins you for lunch. When the bill arrives, Bob pays with a company credit card and writes the meal off as a business expense. Bob and his girlfriend continue to be "treated" to lunch for a number of days. You know Bob is well aware of a recent memo that came down from management stating casual lunches are not valid business expenses. When you ask Bob about the charges, he replies, "Hey, we're interns. Those memos dont apply to us. We can expense anything we want." QUESTIONS: 1. Who are the relevant facts? 2. What Are the Ethical Issues? 3. Who Are the Primary Stakeholders? 4. What Are the Possible Alternatives? 5. What Are the Ethics of the Altermatives? 6. What Are the Practical Constraints? 7. What Actions Should Be Taken?