1. Outline an internal control program that could be installed that would prevent or at least disclose irregularities such as those identified in this case.

2. Outline an internal audit program that could be performed on a cyclical basis to determine if abuses such as those described in this case are occurring.

3. Where do you believe the basic cause of this situation is lodged?

4. As the external auditor for ACU, complete SWOT and Impact&Likeihood Grid exhibit for ACU

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GSH TERM-CONTRACTING IRREGULARITIES Background The Government Services Handling (GSH), frequently referred to as the housekeeper of the Federal Government," is an agency that deals in a vast range and variety of contracting and procurements. In 1978, GSH was rocked by a series of scandals within the Public Buildings Service (PBS) that exposed an elaborate conspiracy to defraud the U.S. Government. Centered in Washington, D.C., at the heart of this conspiracy were certain PBS-building managers in collusion with GSH contractors. The mechanisms used to commit the fraud were many, but misuse and manipulation of term contracts accounted for the majority of the abuses uncovered and losses incurred. Term contracts were first introduced into the PBS in 1973 as a method of performing commonly requested items of work associated with office renovations for occupying agencies. A term contract would normally be issued for a period of a year and would include line items for the types of work anticipated. Work orders were written against the contract when there was a need for that type of work. The theory was that term contracts substantially improved GSH's responsiveness to the requesting agencies and reduced overall cost compared with formally advertising each project. However, by 1978 these contracts were proving to be highly susceptible to fraud. In the midst of the expanding and growing revelations of fraud in the Washington, D.C., area, there was concern that similar abuses of PBS term contracts might have occurred in other locations where such contracts were used. As a result, term contracts were scanned nationwide, looking for similar indicators or patterns that had proven to be symptomatic of serious abuse and fraud in the ongoing Washington, D.C., investigation. It was found that many GSH regions exhibited some of the same patterns discovered in Washington. But GSH's Region 7, covering Texas, Louisiana, Oklahoma, and New Mexico, exhibited the greatest number of indicators as well as some patterns that had not previously been observed. Because of these observations, a separate internal auditing case was opened in Region 7. GSH TERM-CONTRACTING IRREGULARITIES Background The Government Services Handling (GSH), frequently referred to as the housekeeper of the Federal Government," is an agency that deals in a vast range and variety of contracting and procurements. In 1978, GSH was rocked by a series of scandals within the Public Buildings Service (PBS) that exposed an elaborate conspiracy to defraud the U.S. Government. Centered in Washington, D.C., at the heart of this conspiracy were certain PBS-building managers in collusion with GSH contractors. The mechanisms used to commit the fraud were many, but misuse and manipulation of term contracts accounted for the majority of the abuses uncovered and losses incurred. Term contracts were first introduced into the PBS in 1973 as a method of performing commonly requested items of work associated with office renovations for occupying agencies. A term contract would normally be issued for a period of a year and would include line items for the types of work anticipated. Work orders were written against the contract when there was a need for that type of work. The theory was that term contracts substantially improved GSH's responsiveness to the requesting agencies and reduced overall cost compared with formally advertising each project. However, by 1978 these contracts were proving to be highly susceptible to fraud. In the midst of the expanding and growing revelations of fraud in the Washington, D.C., area, there was concern that similar abuses of PBS term contracts might have occurred in other locations where such contracts were used. As a result, term contracts were scanned nationwide, looking for similar indicators or patterns that had proven to be symptomatic of serious abuse and fraud in the ongoing Washington, D.C., investigation. It was found that many GSH regions exhibited some of the same patterns discovered in Washington. But GSH's Region 7, covering Texas, Louisiana, Oklahoma, and New Mexico, exhibited the greatest number of indicators as well as some patterns that had not previously been observed. Because of these observations, a separate internal auditing case was opened in Region 7.

Answer rating: 100% (QA)

Audit and Internal Control Introduction Internal control consists of measures plans and methodologies integrated within an organization or a government agency Internal control aims at protecting its a... View the full answer