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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Consider each of the following situations. Is there a potential problem? Which part of the fraud triangle is involved, if any?

  1. A.    Susan is an accounts payable clerk. She sets up creditors in a financial database and pays invoices as they come in. Last year, she won employee of the year and is a valued employee. Through the grapevine, Susan’s boss just learned that Susan’s brother has a gambling problem.
  2. B.     Now suppose that Susan from situation A is now secretary for the head of the marketing department. She keeps track of the vice president of marketing’s schedule and handles the correspondence.
  3. C.     Keith has been employed for 6 months as a teller at a community bank. All is going well and his cash drawer has had shortages only twice (of less than $10). The shortages were traced and the problems corrected.
  4. D.    At the company Memorial Day picnic and golf outing last week, Nancy notice that June moved her ball to a better lie when she thought no one was looking. There were no prizes for a low score, and June did not benefit from the lower score that resulted.

To determine

Identify the fraud risk factor for each of the given case.

Explanation

Fraud Triangle:

Fraud triangle is a model provided by Association of Certified Fraud Examiners. According to this model, employees can involve in fraud due to three reasons which are; financial needs, opportunity to commit fraud, and rationalization of fraud.

Case A: Fraud risk factor involved are, Opportunity and financial need.

Employee has an opportunity since; same employee is responsible for maintenance of creditor’s account as well as payment to creditors. Also, since employee’s family member is involved in gambling, employee would be in a financial need to commit fraud.

Case B: Fraud risk factor involved are, Opportunity and financial need.

Employee is responsible for maintenance of marketing data as well as the relating correspondence...

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