Southern New Hampshire University
Module One Homework
Find an article online that addresses fraud within a company (for example: "Bookkeeper caught embezzling from local plumbing company"). Respond to the following questions. Please answer in paragraph format in one to two pages. Use APA formatting and citations as applicable. Include a link to the article at the end of the paper.
1. What items on the balance sheet were affected by this fraud? The items on the balance sheet that were affected were many but the ones that stuck out to me the most was Accumulated Depreciation, Current Liabilities, Accrued Expenses. The companies CEO Dean Buntrock and former President Philip Rooney skewed the financial statements by inflating the salvage values and extending the lives of the garbage vehicles.
2. Based on the seven elements of internal control from the lecture, discuss what controls might have been missing.
I believe that adequate separation of duties is what might have been missing for this fraudulent act to happen. In many companies one person wears many hats and has many different roles. This could have been the case which allowed people to allow these "variances" to go through. It is very important to make sure that a good separation of duties is outlined in a company to prevent this from happening.
3. What steps could have been taken to prevent the fraud that was perpetrated?
For starters, adequate separation of duties followed by internal and external audits done quarterly. If an internal auditor is in on the fraud, then having an external auditor that would Iook at everything with a microscope would help bring out those variances.
References:
https://ensscpa.com/wasteffmanagementffincff1998fffraudffscandal/
Bragg, Steven M. (2011). The controller's function: The work of the managerial accountant. Hoboken, New Jersey. John Wiley & Sons, In