Question

For each of the following fraudulent acts, describe one or more internal control procedures that could have prevented (or helped prevent) the problems.
a. Nina Wells, the administrative assistant in charge of payroll, created a fictitious employee, wrote weekly checks to the fictitious employee, and then personally cashed the checks for her own benefit.
b. Noel Rand, the receiving manager of Southern Lumber, created a fictitious supplier named F&M Building Supply. F&M regularly billed Southern Lumber for supplies purchased. Rand had printed shipping slips and billing invoices with the name of the fictitious company and opened a post office box as the mailing address. Rand simply prepared a receiving report and submitted it for payment to the accounts payable department. The accounts payable clerk then paid the invoice when it was received because Rand acknowledged receipt of the supplies.
c. Patty Smith works at a local hobby shop and usually operates the cash register. She has developed a way to give discounts to her friends. When they come by, she rings a lower price or does not charge the friend for some of the material purchased. At first, Smith thought she would get caught, but no one seemed to notice. Indeed, she has become so sure that there is no way for the owner to find out that she has started taking home some supplies for her own personal use.



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  • CreatedOctober 26, 2013
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