Fraud Examination
6th Edition
ISBN: 9781337619677
Author: Albrecht, W. Steve, Chad O., Conan C., Zimbelman, Mark F.
Publisher: Cengage,
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Question 3
Which of the following IT events would create the most serious risk to financial reporting?
A.
Employees writing down passwords on sticky notes
B.
Using software on the company network that has been downloaded from a warez website
C.
Finding an employee running a personal business on company computers
D.
Unauthorized access to the corporate network
Which of the following is NOT an example of an opportunity to commit fraud in the accounting information system?
a. The need to sell confidential information from the database for cash to pay for his medical bills
b. User names and passwords of most employees are stored in a shared Google document file
c. The employee's discovery that passwords are not required to enter any modules in the accounting information system
d. Supervisors are not required to approve transactions entered into by their staff in the accounting system
What internal control or procedure(s) would provide protection against the following threats?
A company is late in paying a particular invoice. Consequently, a second invoice is sent, which crosses the first invoice’s payment in the mail. The second invoice is submitted for processing and also paid.
A clerical employee obtains a blank check and writes a large amount payable to a fictitious company. The employee then cashes the check
A fictitious invoice is received and a check is issued to pay for goods that were never ordered or delivered
A purchasing agent adds a new record to the supplier master file. The company does not exist. Subsequently, the purchasing agent submits invoices from the fake company for various cleaning services. The invoices are paid.
Cash disbursement department updates account payable once payment is due.
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- Charles Hart, an accounts payable clerk, is an hourly employee. He never works a minute past 5 P.M. unless the overtime has been approved. Charles has recently found himself faced with some severe financial difficulties. He has been accessing the system from his home during the evening and setting up an embezzlement scheme. As his boss, what control technique(s) discussed in lectures network risks and auditing could you use to help detect this type of fraud?arrow_forwardThe sales of $2,000 made to Shanaya has been posted to the Sara’s account by mistake. It happened because a customer account number was incorrectly entered into the system. Explain what internal control procedure(s) would provide protection against this threat in future?arrow_forward1. What does it mean to say that internal control has limitations and what are these limitations? 2. Provide an appropriate response based on the following scenarios. Assume that the accounting clerk posts a customer’s payment for the wrong amount, giving the customer credit for less than he or she actually paid. How will this error be detected? How might this error have been prevented? Assume that the employee who opens the mail steals a customer payment. How will this theft be detected? How might this theft have been prevented? 3. What is petty cash and what purpose(s) does it serve? 4. What types of controls should be in place to make sure people in the office don't just take from petty cash (for their own personal use) whenever they feel like it? In your opinion, what is an appropriate amount to have in petty cash? 5. Prepare the necessary journal entries for each of the following: (a) On March 1, issued a check to establish a petty cash fund of $1,410 (b)…arrow_forward
- Choose only one answer as well as state their reasons/rationale for the answer chosen. A customer entered the wrong account number on the memo line of the check mailed to the company. Consequently, another customer’s account was credited for that payment. The most effective way to prevent such problems would be to use:a. Turnaround documentsb. A validity check of customer account numbersc. Closed loop verificationd. Check digit verification of customer account numbersarrow_forwardChapter 11: Internal Control and COSO Framework During your audit of ABC Sports, Inc., a retail chain of stores, you learn that a programmer made an unauthorized change to the sales application program even though no work on that application had been approved by IT Management. In order for the sales application program to work, the programmer had to make modifications to the operating software security features. The unauthorized change forced the sales program to calculate an automatic discount for a customer who happens to be the brother-in-law of the programmer. The customer and the programmer split the savings from the unauthorized discount. The programmer modified the program and returned it to the librarian, who placed it into the files for live productions use. No other information was forwarded to the librarian. 1. What recommendation do you have for the management of ABC Sports to prevent this from recurring? 2. Explain why you believe the suggested internal control…arrow_forwardA multimediacourse graduate used design software to create paychecks that lookedidentical to those of a company in his town.The paychecks were deposited electronically into ofhis friends’ accounts. What type of fraud did hecommit? Select one: a. output fraud. b. input fraud. c. computer instruction fraud. d. processor fraud.arrow_forward
- Charles Hart, an accounts payable clerk, is an hourly employee. He never works a minute past 5 PM unless the overtime has been approved. Charles has recently found himself faced with some severe financial difficulties. He has been accessing the system from his home during the evening and setting up an embezzlement scheme. As his boss, what control technique(s) discussed in this chapter could you use to help detect this type of fraud?arrow_forwardMatthew Corp. has changed from a system of recording time worked on clock cards to a computerized payroll system in which employees record time in and out with magnetic cards. The computerized system automatically updates all payroll records. Because of this changea. A generalized computer audit plan must be used.b. Part of the audit trail is altered.c. The potential for payroll-related fraud is diminished.d. Transactions must be processed in batches.arrow_forward
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