FINANCIAL ACCT.:TOOLS...(LL)-W/ACCESS
8th Edition
ISBN: 9781119250913
Author: Kimmel
Publisher: WILEY
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 7, Problem 7.1BE
Match each situation with the fraud triangle factor (opportunity, financial pressure, or rationalization) that best describes it.
- (a) An employee’s monthly credit card payments are nearly 75%of their monthly earnings.
- (b) An employee earns minimum wage at a firm that has reported record earnings for each of the last five years.
- (c) An employee has an expensive gambling habit.
- (d) An employee has check-writing and -signing responsibilities for a small company, and is also responsible for reconciling the bank account.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Match each situation with the fraud triangle factor (opportunity, financial pressure, or rationalization) that best describes it.
(a). An employee has check-writing and -signing responsibilities for a small company, and is also responsible for reconciling the bank account.
(b) An employee earns minimum wage at a firm that has reported record earnings for each of the last five years.
(c) An employee has an expensive gambling habit.
(d) An employee's monthly credit card payments are nearly 75% of her monthly earnings
A long-time employee had become such a trusted employee that their bosses had put them in charge of paying bills, balancing bank accounts, and handling other cash management responsibilities. The employee became ill and took sick leave. During their absence, their employer determined they had been stealing company cash for years by forging checks and tamporing with company documents. The stolen cash was used to stoke a gambling habit. In total, the employee stole nearly $320,000.
Answer questions in short answers
What were the employee's perceived opportunities?
What pressure did the trusted employee have to commit fraud?
How did the fact that they were a trusted employee give them more opportinity to commit fraud?
How do vices motivate people to commit 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.
Chapter 7 Solutions
FINANCIAL ACCT.:TOOLS...(LL)-W/ACCESS
Ch. 7 - A local hank reported that it lost 150,000 as the...Ch. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - Prob. 4QCh. 7 - Prob. 5QCh. 7 - Prob. 6QCh. 7 - Prob. 7QCh. 7 - Prob. 8QCh. 7 - Prob. 9QCh. 7 - Prob. 10Q
Ch. 7 - Prob. 11QCh. 7 - Prob. 12QCh. 7 - Prob. 13QCh. 7 - Prob. 14QCh. 7 - Prob. 15QCh. 7 - Prob. 16QCh. 7 - Prob. 17QCh. 7 - Prob. 18QCh. 7 - Prob. 19QCh. 7 - Prob. 20QCh. 7 - Prob. 21QCh. 7 - Prob. 22QCh. 7 - Prob. 23QCh. 7 - Prob. 24QCh. 7 - Prob. 25QCh. 7 - Prob. 26QCh. 7 - Prob. 27QCh. 7 - Prob. 28QCh. 7 - Match each situation with the fraud triangle...Ch. 7 - Prob. 7.2BECh. 7 - Prob. 7.3BECh. 7 - Prob. 7.4BECh. 7 - While examining cash receipts information, the...Ch. 7 - Prob. 7.6BECh. 7 - Luke Rove is uncertain about the control features...Ch. 7 - Prob. 7.8BECh. 7 - Prob. 7.9BECh. 7 - Prob. 7.10BECh. 7 - Prob. 7.11BECh. 7 - Prob. 7.12BECh. 7 - Prob. 7.13BECh. 7 - Prob. 7.14BECh. 7 - Prob. 7.1DIECh. 7 - Prob. 7.2DIECh. 7 - Prob. 7.3DIECh. 7 - Prob. 7.4ADIECh. 7 - Prob. 7.4BDIECh. 7 - Prob. 7.1ECh. 7 - Prob. 7.2ECh. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Prob. 7.5ECh. 7 - Prob. 7.6ECh. 7 - Prob. 7.7ECh. 7 - Prob. 7.8ECh. 7 - Prob. 7.9ECh. 7 - Prob. 7.10ECh. 7 - Prob. 7.11ECh. 7 - Prob. 7.12ECh. 7 - Prob. 7.13ECh. 7 - Prob. 7.14ECh. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Prob. 7.1APCh. 7 - Prob. 7.2APCh. 7 - Prob. 7.3APCh. 7 - Prob. 7.4APCh. 7 - Prob. 7.5APCh. 7 - Prob. 7.6APCh. 7 - Prob. 7.7APCh. 7 - Prob. 7.8APCh. 7 - Prob. 7CCCPCh. 7 - Prob. 7.1EYCTCh. 7 - Prob. 7.2EYCTCh. 7 - Prob. 7.3EYCTCh. 7 - Prob. 7.4EYCTCh. 7 - Prob. 7.5EYCTCh. 7 - Prob. 7.6EYCTCh. 7 - Prob. 7.7EYCTCh. 7 - Prob. 7.8EYCTCh. 7 - Prob. 7.9EYCTCh. 7 - Prob. 7.10EYCTCh. 7 - Prob. 7.1IFRSCh. 7 - Prob. 7.2IFRS
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 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…arrow_forwardOn February 15, 2022, Kate Collins, owner of Kate’s Cards, asks you to investigate the cash han- dling activities in her business. She believes that a new employee might be stealing funds. “I have no proof,” she says, “but I’m fairly certain that the January 31, 2022, undeposited receipts amounted to more than $12,000, although the January 31 bank reconciliation prepared by the cashier (who works in the treasurer’s department) shows only $7,238.40. Also, the January bank reconciliation doesn’t show several checks that have been outstanding for a long time. The cashier told me that these checks needn’t appear on the reconciliation because he had notified the bank to stop payment on them and he had made the necessary adjustment on the books. Does that sound reasonable to you?” At your request, Kate shows you the following (unaudited) January 31, 2022, bank reconciliation prepared by the cashier: KATE’S CARDS Bank Reconciliation January 31, 2022 Ending balance from bank statement . . . $…arrow_forwardIn a financial fraud case, city employees in Brooklyn, New York, accessed digital 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.arrow_forward
- Jacqueline Mensah, manager of Expert Building Company, is a valued and trusted employee. She has been with the company from its start two years ago. Because of the demand of her job, he has not taken a vacation since she began working. She is in charge of recording collections on account, making the daily bank deposits, and reconciling the bank statement. Late last year, clients began complaining to you, the Managing Director, about incorrect statements. As Managing Director, you want to investigate this matter. Jacqueline tells you there is nothing to worry about. The problem is due to the slow mail: customers payments and statement are crossing in the mail. Because clients were not complaining last year, you doubt the mail is the primary reason for the problem. Required: What might be some of the reasons for the delay? What should be done to make sure the problems are avoided in the future?arrow_forwardDuring the preparation of the bank reconciliation for Building Concepts Co., Joel Kimmel, the assistant controller, discovered that Lone Peak National Bank incorrectly recorded a $3,290 check written by Building Concepts Co. as $329. Joel has decided not to notify the bank but wait for the bank to detect the error. Joel plans to record the $2,961 error as Other Income if the bank fails to detect the error within the next three months. Discuss whether Joel is behaving in a professional manner.arrow_forwardCharles 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_forward
- Bramble Company is a very profitable small business. It has not, however, given much consideration to internal control. For example, in an attempt to keep clerical and office expenses to a minimum, the company has combined the jobs of cashier and bookkeeper. As a result, Bret Turrin handles all cash receipts, keeps the accounting records, and prepares the monthly bank reconciliations.The balance per the bank statement on October 31, 2020, was $18,620. Outstanding checks were No. 62 for $140.00, No. 183 for $187, No. 284 for $261.50, No. 862 for $211.40, No. 863 for $244.00, and No. 864 for $169.40. Included with the statement was a credit memorandum of $114.80 indicating the collection of a note receivable for Daisey Company by the bank on October 25. This memorandum has not been recorded by Daisey.The company’s ledger showed one Cash account with a balance of $21,980.00. The balance included undeposited cash on hand. Because of the lack of internal controls, Bret took for personal use…arrow_forwardDuring the preparation of the bank reconciliation for Apache Grading Co., Sarah Ferrari, the assistant controller, discovered that Rocky Spring Bank incorrectly recorded a $610 check written by Apache Grading Co. as $160. Sarah has decided not to notify the bank but wait for the bank to detect the error. Sarah plans to record the $450 error as Other Income if the bank fails to detect the error within the next three months. Discuss whether Sarah is behaving in a professional manner.arrow_forwardCharles 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_forward
- Gladys is in charge of receiving all customer payments, recording the payments, and depositing them at the bank. What element of the fraud triangle is best described here? Group of answer choices Opportunity Rationalization Incentive/Pressure Attribution Gladys has large amounts of student loan debt and a crippling gambling habit. She works part-time job in another city. What element of the fraud triangle is best described here? Group of answer choices Opportunity Fraudy fraud Pressure/incentive Rationalizationarrow_forwardDaisey Company is a very profitable small business. It has not, however given much consideration to internal control. For example, in an attempt to keep clerical and office expenses to a minimum, the company has combined the jobs of cashier and book-keeper. As a result, Bret Turrin handles all cash receipts, keeps the accounting records, and prepares the monthly bank reconciliations. The balance per the bank statement on October 31, 2020, was $18,380. Outstanding checks were No. 62 for $140.75, No. 183 for $180, No. 284 for $253.25, No. 862 for $190.71, No. 863 for $226.80, and No. 864 for $165.28. Included with the statement was a credit memorandum of $185 indicating the collection of a note receivable for Daisey Company by the bank on October 25. This memorandum has not been recorded by Daisey. The company's ledger showed one Cash account with a balance of $21,877.72. The balance included undeposited cash on hand. Because of the lack of internal controls, Bret took for personal use…arrow_forwardOn February 15, 2019, Kate Collins, owner of Kate’s Cards, asks you to investigate the cash han-dling activities in her business. She believes that a new employee might be stealing funds. “I have no proof,” she says, “but I’m fairly certain that the January 31, 2019, undeposited receipts amounted to more than $12,000, although the January 31 bank reconciliation prepared by the cashier (who works in the treasurer’s department) shows only $7,238.40. Also, the January bank reconciliation doesn’t show several checks that have been outstanding for a long time. The cashier told me that these checks needn’t appear on the reconciliation because he had notified the bank to stop payment on them and he had made the necessary adjustment on the books. Does that sound reasonable to you?”At your request, Kate shows you the following (unaudited) January 31, 2019, bank reconciliation prepared by the cashierYou discover that the $1,200 unrecorded bank credit represents a note collected by the bank on…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Computer Fraud; Author: Mitch Wenger (Accounting Systems & Tech);https://www.youtube.com/watch?v=-s82SCuMaTI;License: Standard Youtube License