What Was Going On at EU5 Outlet? Trevor Getz, the CEO of Everything Under $5 Corporation...

Transcribed Image Text:

What Was Going On at EU5 Outlet? Trevor Getz, the CEO of Everything Under $5 Corporation (hereafter EUS) invited you, an accounting fraud examiner, to visit one of the EUS's retail outlets. He was concerned about some unusual practices by his employees at that EUS outlet. During your visit, you observed the following: . Maria Garcia, the register clerk. Maria Garcia was seen lifting the ribbon from the printer in her register, collecting the sales, and then rolling back the register tape to the point where the next transaction should appear and replacing the ribbon. The next transaction was printed without leaving any blank space on the tape. . David Mustart, the accounts payable clerk. David Mustart has his manager's password to the accounts payable address file. When the manager was out at lunch, Mustart was seen logging on the manager's computer and accessing the accounts payable address file. He changed a vendor's name and address to a new name and new address. The new name and new address were run through the accounts payable system with an old invoice from the vendor, causing the accounts payable system to issue a check to the vendor with the new name and new address. He then changed the new name and new address back to the vendor's old name and old address, and logged off the computer before the manager returned from the lunch. . Cindy Thomas, the accountant. Cindy Thomas was allowed to make purchases on company credit cards. Prior approval for purchases on company credit cards was not required. She signed her name at the time of the purchase. Since she had control of the credit card statement, she coded all her purchases that appeared on the credit card statement to various legitimate expense accounts. Victor Lai, the operations supervisor. Victor Lai has complete authority in the hiring and supervision of janitorial work for the EUS outlet. He was also responsible for filling out and authoring the time sheets of the janitors that he hired. At the end of each month. Lai was responsible for distributing the paychecks to all the janitors that he had hired for that particular month. The total number of janitors that were hired for the janitorial work fluctuated widely from month to month. . Judi Strebel. The petty cash cashier. Judi Strebel used a white-out pen to alter a co-worker's request for a petty cash advance and inserted a larger amount for the request. She then paid the co-worker the amount of petty cash advance that he has requested for from her petty cash box. Once a month. Cindy Thomas, the accountant, replenished the amount in the petty cash box. ▪ Richard Godard, the computer manager. Richard Godard has just successfully completed the upgrade of the EUS outlet's computer systems. However, he requested approximately $100,000 of additional computer equipment. Godard knew that this additional request required the verbal confirmation of the purchasing manager and the chief accountant from two other departments. Godard was seen setting up the company's phone system to forward calls from two different lines to his own desk. He answered the verbal confirmation requests over the phone. Required For each employee that you have observed at the EU5 outlet: 1. Identify the category and scheme of asset misappropriation that might have occurred at the EU5 outlet. 2. Describe what you think would be the most effective way of detecting the potential asset misappropriation at the EUS outlet 3. Describe what you think would be the most effective way of preventing the potential asset misappropriation at the EUS outlet. Use the format below, adding rows as needed. An entry is made in the first row as an example to help you complete the rest. . Maria Garcia, the register clerk. Category and Scheme: Detection: Prevention: Cash Receipts Fraud-Sales Skimming Scheme Trend analyses of cash receipts, sales accounts, and inventory accounts for inconsistent patterns among them. Management sets the tone and clearly communicates to the register clerk that she should not commit fraud by understating sales and stealing incoming customer cash. . David Mustart, the accounts payable clerk. Category and Scheme: Detection: Prevention: . Cindy Thomas, the accountant. Category and Scheme: Detection: Prevention: What Was Going On at EU5 Outlet? Trevor Getz, the CEO of Everything Under $5 Corporation (hereafter EUS) invited you, an accounting fraud examiner, to visit one of the EUS's retail outlets. He was concerned about some unusual practices by his employees at that EUS outlet. During your visit, you observed the following: . Maria Garcia, the register clerk. Maria Garcia was seen lifting the ribbon from the printer in her register, collecting the sales, and then rolling back the register tape to the point where the next transaction should appear and replacing the ribbon. The next transaction was printed without leaving any blank space on the tape. . David Mustart, the accounts payable clerk. David Mustart has his manager's password to the accounts payable address file. When the manager was out at lunch, Mustart was seen logging on the manager's computer and accessing the accounts payable address file. He changed a vendor's name and address to a new name and new address. The new name and new address were run through the accounts payable system with an old invoice from the vendor, causing the accounts payable system to issue a check to the vendor with the new name and new address. He then changed the new name and new address back to the vendor's old name and old address, and logged off the computer before the manager returned from the lunch. . Cindy Thomas, the accountant. Cindy Thomas was allowed to make purchases on company credit cards. Prior approval for purchases on company credit cards was not required. She signed her name at the time of the purchase. Since she had control of the credit card statement, she coded all her purchases that appeared on the credit card statement to various legitimate expense accounts. Victor Lai, the operations supervisor. Victor Lai has complete authority in the hiring and supervision of janitorial work for the EUS outlet. He was also responsible for filling out and authoring the time sheets of the janitors that he hired. At the end of each month. Lai was responsible for distributing the paychecks to all the janitors that he had hired for that particular month. The total number of janitors that were hired for the janitorial work fluctuated widely from month to month. . Judi Strebel. The petty cash cashier. Judi Strebel used a white-out pen to alter a co-worker's request for a petty cash advance and inserted a larger amount for the request. She then paid the co-worker the amount of petty cash advance that he has requested for from her petty cash box. Once a month. Cindy Thomas, the accountant, replenished the amount in the petty cash box. ▪ Richard Godard, the computer manager. Richard Godard has just successfully completed the upgrade of the EUS outlet's computer systems. However, he requested approximately $100,000 of additional computer equipment. Godard knew that this additional request required the verbal confirmation of the purchasing manager and the chief accountant from two other departments. Godard was seen setting up the company's phone system to forward calls from two different lines to his own desk. He answered the verbal confirmation requests over the phone. Required For each employee that you have observed at the EU5 outlet: 1. Identify the category and scheme of asset misappropriation that might have occurred at the EU5 outlet. 2. Describe what you think would be the most effective way of detecting the potential asset misappropriation at the EUS outlet 3. Describe what you think would be the most effective way of preventing the potential asset misappropriation at the EUS outlet. Use the format below, adding rows as needed. An entry is made in the first row as an example to help you complete the rest. . Maria Garcia, the register clerk. Category and Scheme: Detection: Prevention: Cash Receipts Fraud-Sales Skimming Scheme Trend analyses of cash receipts, sales accounts, and inventory accounts for inconsistent patterns among them. Management sets the tone and clearly communicates to the register clerk that she should not commit fraud by understating sales and stealing incoming customer cash. . David Mustart, the accounts payable clerk. Category and Scheme: Detection: Prevention: . Cindy Thomas, the accountant. Category and Scheme: Detection: Prevention:

Answer rating: 100% (QA)

Here is my analysis of the potential asset misappropriations observed at the EUS outlet Maria Garcia ... View the full answer