FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
19th Edition
ISBN: 9781119493624
Author: Kimmel
Publisher: WILEY
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Chapter 7, Problem 1Q

A local hank reported that it lost $150,000 as the result of employee fraud. Ray Fairburn is not clear on what is meant by “employee fraud.” Explain the meaning of fraud to Ray and give an example of fraud that might occur at a bank.

Expert Solution & Answer
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To determine

Fraud: Fraud is a deliberate and deceptive action of an employee to obtain unlawful gain from the employer.

To define: Fraud with an example

Explanation of Solution

Definition: Fraud can be defined as a deliberate and deceptive action of an employee to obtain unlawful gain from the employer.

Example: A bank employee could transfer the money from any customer deposit account to his personal accounts through computer. This kind of internal embezzlement committed by bank employee, against his employer is referred to as employee fraud.

Conclusion
Thus, fraud is defined as an unlawful action intended by employee to obtain personal benefit by deceiving the employer.

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Students have asked these similar questions
1. A local bank reported that it lost $150,000 as the result of employee fraud. Ray Fairburn is not clear on what is meant by "employee fraud." Explain the meaning of fraud to Ray and give an example of fraud that might occur at a bank.
Assume that brooke miles accounts payable clerk for west coast design inc.stole $48,350 by paying fictitious companies and cashed the checks at a local banks.  Describe a control procedure that would have prevented or detected the fraud?
A bank manager’s responsibility was to making loans. Auditors discovered that several loans he made over a five year period had not been repaid. A fraud investigation revealed that the manager had been receiving kickbacks from risky clients in exchange for extending loans to them. His actions cost the bank millions of dollars in uncollectible loans that should never have been made. You have been asked to offer ideas on the following: Which type of records would you search to find information about the manager’s assets? Which records would be the most helpful in this case? Why?

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FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS

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