1. FRAUD SCHEME HEALTHINSPECTORA city health inspector threatens to close down a restau-rant by issuing a fake health violation notice if the ownerdoes not make a financial payment to the inspector. Ifthe restaurant owner does not cooperate, he will not beable to open for business and the publicity will driveaway his customers permanently. Faced with a threatof economic loss, the owner makes the payment.RequiredWhat type of fraud is this, and what controls can beimplemented to prevent or detect the fraud?

Economic extortion: The kind of fraud where a procurement agent of huge metropolitan building…

- FRAUD SCHEME HEALTH NSPECTOR city health inspector threatens to close down a restau- ant by issuing a fake health violation notice if the owner Loes not make a financial payment to the inspector. If he restaurant owner does not cooperate, he will not be uble to open for business and the publicity will drive

- FRAUD SCHEME HEALTH NSPECTOR city health inspector threatens to close down a restau- ant by issuing a fake health violation notice if the owner Loes not make a financial payment to the inspector. If he restaurant owner does not cooperate, he will not be uble to open for business and the publicity will drive

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. FRAUD SCHEME HEALTH
INSPECTOR
A city health inspector threatens to close down a restau-
rant by issuing a fake health violation notice if the owner
does not make a financial payment to the inspector. If
the restaurant owner does not cooperate, he will not be
able to open for business and the publicity will drive
away his customers permanently. Faced with a threat
of economic loss, the owner makes the payment.
Required
What type of fraud is this, and what controls can be
implemented to prevent or detect the fraud?

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