B. Your friend, Peppy, started his own pizza store 10 years ago based on exotic pizza...

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B. Your friend, Peppy, started his own pizza store 10 years ago based on exotic pizza flavors found nowhere else. Wasabi Bacon is their all-time best seller. Business has been great, but he cannot understand why there is so little cash in the company bank account. He tells you that Annie is his right-hand person and he could not operate the store without her. She does just about everything and has been with him from the beginning when he opened the store. Annie is responsible for almost all of the financial day-to-day operations including bookkeeping, payments to vendors, and bank reconciliations. She also trains and schedules cashiers and quite often takes shifts herself to help out. She is so dedicated to her job that she refuses to take vacations even though she recently bought a vacation home in Laguna Beach and even though she says she would like to visit her 2 children who are studying abroad in Italy and France. Peppy also tells you that he is too busy travelling the world discovering new pizza flavors to concern himself with the financial side of operations. Peppy has asked you what you think might be wrong and what he could change. He doesn't want to believe it but he suspects that one of his employees might be stealing from him. Please: 1. Explain to him briefly what fraud is, the three main factors that contribute to fraudulent activity, and what role those three factors may have played if, in fact, one of his employee's has been stealing from him. 2. Briefly describe to Peppy what internal controls are and the six principles of internal control activities. For each, give him advice on specific policies and procedures he can put in place. 3. Explain to Peppy the limitations on internal control. B. Your friend, Peppy, started his own pizza store 10 years ago based on exotic pizza flavors found nowhere else. Wasabi Bacon is their all-time best seller. Business has been great, but he cannot understand why there is so little cash in the company bank account. He tells you that Annie is his right-hand person and he could not operate the store without her. She does just about everything and has been with him from the beginning when he opened the store. Annie is responsible for almost all of the financial day-to-day operations including bookkeeping, payments to vendors, and bank reconciliations. She also trains and schedules cashiers and quite often takes shifts herself to help out. She is so dedicated to her job that she refuses to take vacations even though she recently bought a vacation home in Laguna Beach and even though she says she would like to visit her 2 children who are studying abroad in Italy and France. Peppy also tells you that he is too busy travelling the world discovering new pizza flavors to concern himself with the financial side of operations. Peppy has asked you what you think might be wrong and what he could change. He doesn't want to believe it but he suspects that one of his employees might be stealing from him. Please: 1. Explain to him briefly what fraud is, the three main factors that contribute to fraudulent activity, and what role those three factors may have played if, in fact, one of his employee's has been stealing from him. 2. Briefly describe to Peppy what internal controls are and the six principles of internal control activities. For each, give him advice on specific policies and procedures he can put in place. 3. Explain to Peppy the limitations on internal control.

Answer rating: 100% (QA)

Certainly lets address each of Peppys concerns one by one 1 Fraud and the Three Main Factors Fraud Triangle Fraud is an intentional act by an individual or a group of individuals to gain an unfair adv... View the full answer