To identify the type of fraud in the following cases: Marcus pays $30 for a baseball of $70 by changing the price-tag. Craig loses $500 by investing in a multilevel marketing scheme. A bank employee diverts the amount from a wealthy customer’s account to his personal account. The bank was held responsible for the act of the employee. A CEO showed profits for the year 2018, when there was a loss of $150 million. The CEO was held responsible and convicted with jail and fine. The government lost $50 million as it was overcharged by contractor and sub-contractors in the Middle East for fictitious hours and assets. A student accessed the school computer and changed her school grade to be accepted into graduate school.

Question

Which of the following is NOT a method UCI's former executive VP and CFO used to embezzle 2.97 million? options: 1) Charging personal purchases on UCI's corporate credit card, followed by arranging for UCI to pay the credit card statement by check 2) Preparing false expense reports and submitting them for reimbursement, resulting in payment to himself since nobody other than the accounts payable supervisor reviewed these reports 3) Adding family members to UCI's payroll and placing large checks into their bank accounts 4) Submitting unsupported check requests for personal credit card accounts and nonbusiness expenditures, such as construction work on his personal residence

Answer 1

Question

Chapter 1, Problem 3SC

To determine

To identify the type of fraud in the following cases:

Marcus pays $30 for a baseball of $70 by changing the price-tag.

Craig loses $500 by investing in a multilevel marketing scheme.

A bank employee diverts the amount from a wealthy customer’s account to his personal account. The bank was held responsible for the act of the employee.

A CEO showed profits for the year 2018, when there was a loss of $150 million. The CEO was held responsible and convicted with jail and fine.

The government lost $50 million as it was overcharged by contractor and sub-contractors in the Middle East for fictitious hours and assets.

A student accessed the school computer and changed her school grade to be accepted into graduate school.

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Which of the following is NOT a method UCI's former executive VP and CFO used to embezzle 2.97 million? options: 1) Charging personal purchases on UCI's corporate credit card, followed by arranging for UCI to pay the credit card statement by check 2) Preparing false expense reports and submitting them for reimbursement, resulting in payment to himself since nobody other than the accounts payable supervisor reviewed these reports 3) Adding family members to UCI's payroll and placing large checks into their bank accounts 4) Submitting unsupported check requests for personal credit card accounts and nonbusiness expenditures, such as construction work on his personal residence

In the Why It Matters feature “Examples of Theft and FinancialReporting Frauds” at the beginning of the chapter, we introduced youto the Koss Corporation fraud. In this problem, we provide you withfurther details about that fraud. During the fall of 2009, Koss Corporation,a Wisconsin-based manufacturer of stereo headphone equipment,revealed that its vice president of finance (Sujata “Sue” Sachdeva) haddefrauded the company of approximately $31 million over a periodof at least five years. Grant Thornton LLP was the company’s auditor,and the firm issued unqualified audit opinions for the entire period in which they worked for Koss. According to reports, Sachdeva’s theftaccelerated over a period of years as follows:FY 2005 $2,195,477FY 2006 $2,227,669FY 2007 $3,160,310FY 2008 $5,040,968FY 2009 $8,485,937Q1 FY 2010 $5,326,305Q2 FY 2010 $4,917,005To give you a sense of the magnitude of the fraud, annual revenuesfor Koss Corporation are in the range of $40 to $45 million…

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