Business Its Legal Ethical & Global Environment
10th Edition
ISBN: 9781305224414
Author: JENNINGS
Publisher: Cengage
expand_more
expand_more
format_list_bulleted
Question
error_outline
This textbook solution is under construction.
Students have asked these similar questions
An employee of JHT Holdings, Inc., a trucking company, was responsible for resolving roadway accident claims under $25,000. the employee created fake accident claims and wrote settlement checks of between $5,000 and $25,000 to friends or acquaintances acting as phony victims. One friend recruited subordinates at his place of work to cash some of the checks. Beyond this, the JHT employee also recruited lawyers, whom he paid to represent both the trucking company and the fake victims in the bogus accidents. When the lawyers cash the checks they allegedly split the money with the corporate JHT employee. This fraud went undetected for two years
Answer the following true or false questions concerning the fraud.
Frauds that are perpetrated with multiple parties in different positions of control make detecting fraud more difficult.
Claims should be authorized and verified before payment is made.
The employee made sure each claim had a phony victim.
Corrupt lawyers were bought into the fraud…
In a recent financial fraud case, city employees in Brooklyn, New York, accessed electronic databases to defraud the city of $20 million. Several employees in collusion with the former deputy tax collector completely erased or reduced $13 million in property taxes and $7 million in accrued interest that taxpayers owed. In exchange for this service, the taxpayers paid the employees involved bribes of 10 to 30 percent of their bills. Required Discuss the control techniques that could prevent or detect this fraud.
A former chairman, CFO, and controller of Donnkenny, Inc., an apparel company that makes sportswear for Pierre Cardin and Victoria Jones, pleaded guilty to financial statement fraud. These managers used false journal entries to record fictitious sales, hid inventory in public warehouses so that it could be recorded as “sold,” and required sales orders to be backdated so that the sale could be moved back to an earlier period. The combined effect of these actions caused $25 million out of $40 million in quarterly sales to be phony.
Why might control procedures listed in this chapter be insufficient in stopping this type of fraud?
How could this type of fraud be stopped
Knowledge Booster
Similar questions
- The U.S. General Accounting Office (GAO) Office of Special Investigations was responsible for investigating a potential purchase fraud case. The man who allegedly committed the fraud was Mark J. Krenik, a former civilian employee of the U.S. Air Force. Mr. Krenik was the Air Force's technical representative on contracts with Hughes STX. Hughes STX provided hardware, software maintenance, technical support, and training to the Air Force. Part of Mr. Krenik's alleged fraud included opening accounts under his control at banks in Maryland. The accounts were opened under the names Hughes STX and ST Systems Corporation. A section of the GAO report on this fraud investigation reads as follows: On December 15, 1992, Mr. Krenik opened post office box 215 in Vienna, Virginia, in his own name. On December 24, 1992, Mr. Krenik delivered to the Air Force Finance Office 11 bogus invoices totaling $504,941.19. Accompanying the invoices were the respective DD‐250s, on which Mr. Krenik had falsely…arrow_forwardRohini works as an accountant with PQR Ltd. She embezzled $20,000 from the company bank account. She was caught in the annual audit of the company. She justified her action saying that her employer has not given any pay rise, so she had to take $20,000 from the account. Explain in your own words the internal control that may have failed in the above situation. Also explain which element of the fraud triangle Rohini is referring to justify her action.arrow_forwardA situation where a respected individual’s reputation was tarnished by personal decisions is the resignation of David Petraeus, former U.S. military general and head of the Central Intelligence Agency (CIA). On November 9, 2012, Petraeus resigned from the CIA after it was announced he had an extramarital affair with a biographer, Paula Broadwell, who wrote a glowing book about his life. Petraeus acknowledged that he exercised poor judgment by engaging in the affair. When Federal Bureau of Investigation (FBI) agents investigated the matter because of concerns there may have been security leaks, they discovered a substantial number of classified documents on her computer. Broadwell told investigators that she ended up with the secret military documents after taking them from a government building. No security leaks had been found. In accepting Petraeus’s resignation, President Obama praised Petraeus’s leadership during the Iraq and Afghanistan wars and said: “By any measure, through his…arrow_forward
- Mark Buffalo works for a mid-size accounting firm in Boston. One day he overhears a colleague talking to a friend on his cellphone. Mark gasps when he realizes the colleague is sharing one of their client's confidential information, likely as an insider trading tip. As a member of the AICPA, Mark is required to report this discreditable act to the Boston chapter of the AICPA. Select one: True Falsearrow_forwardDirks was an officer of a New York broker-dealer firm that specialized in providing investment analysis of insurance company securities to institutional investors. On March 6, Dirks received information from Ronald Secrist, a former officer of Equity Funding of America. Secrist alleged that the assets of Equity Funding, a diversified corporation primarily engaged in selling life insurance and mutual funds, were vastly overstated as the result of fraudulent corporate practices. Dirks decided to investigate the allegations. He visited Equity Funding’s headquarters in Los Angeles and interviewed several officers and employees of the corporation. The senior management denied any wrongdoing, but certain corporation employees corroborated the charges of fraud. Neither Dirks nor his firm owned or traded any Equity Funding stock, but throughout his investigation he openly discussed the information he had obtained with a number of clients and investors. Some of these persons sold their holdings…arrow_forwardDuring an internal investigation, Black, a Certified Fraud Examiner, interviewed Green, a fraud suspect. Although Green wanted to leave in the middle of the interview, Black blocked the exit and prevented him from leaving. Green subsequently confessed to committing fraud. If, under these facts, Green files a lawsuit for false imprisonment against Black, Black will likely: A. Win the case because the qualified business privilege protects investigators conducting internal investigations. B. Win the case because Green confessed to the fraud. C. Lose the case if a trier of fact concludes that he restrained Green without consent or legal justification. D. Lose the cans because Green did not leave the interview.arrow_forward
- In order to improve the cash flow of the company, Neal Emerald decided to postpone depositing all employment taxes a few months ago. He told his sales manager, “I’ll pay up before the IRS catches up with me.” What risks does Emerald face by not upholding his responsibility for the collection and payment of employment taxes?arrow_forwardAOL, LLC, mistakenly made public the personal information of 650,000 of its members. The members filed a suit in California, alleging violations of federal law and California state law. The member agreement between AOL and its members included a provision declaring Virginia as the location of any court dispute. AOL asked the court to dismiss the suit on the basis of that "forum-selection" clause in its member agreement. Under a previous decision of the United States Supreme Court, a forum-selection clause is unenforceable "if enforcement would contravene a strong public policy of the forum in which suit is brought." California courts previously have declared in other cases that clauses similar to the AOL clause contravene a strong public policy. If the court applies the doctrine of stare decisis, will it dismiss the suit? Explain. [Doe 1 v. AOL LLC, 552 F.3d 1077 (9th Cir. 2009)] (See The Common Law Tradition.)arrow_forwardAssume you are the senior in charge of the audit of a client in New York who offers you two tickets to the Super Bowl between the New York Giants and the Denver Broncos. The opportunity to see the Manning brothers square off against each other is appealing. How would you decide whether to accept the tickets for the game?arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Business Its Legal Ethical & Global EnvironmentAccountingISBN:9781305224414Author:JENNINGSPublisher:Cengage
- Business/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage
Business Its Legal Ethical & Global Environment
Accounting
ISBN:9781305224414
Author:JENNINGS
Publisher:Cengage
Business/Professional Ethics Directors/Executives...
Accounting
ISBN:9781337485913
Author:BROOKS
Publisher:Cengage