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. 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 most prominent account on the balance sheet that is impacted by this fraud to me is the TDI which is Temporary Disability Insurance which is recognized in my state of Rhode Island. I would also recognize the account payable being Ms. Gavlin used the law firms own checks to pay her personal credit cards and rent.
2. Based on the seven elements of internal control from the lecture, discuss what controls might have been missing. I believe that the system access controls were missing. Only a select few should have access to account numbers, passwords, and actual checks. The selected few should only be dealing with the dealing with the internal audits on at least I feel a monthly basis. Weekly trail balances seemed to be ignored. If those balances had been checked regularly the discrepancies could have been detected much earlier. Approve authority requirements would have prevented these withdrawals. As stated in the beginning this control would have required Ms. Gavlin to show reason and get approval for drafting these payments.
3. What steps could have been taken to prevent the fraud that was perpetrated? Implementing a reporting system. Make it run on a daily, weekly, or at least monthly basis. Make employees aware that this will be happening, so they are on notice. Hire ethical employees, Detailed background checks. Tracking of employee's vacation or insurance balances This will ensure the right amounts are being requested.
https://www.justice.gov/usao-ri/pr/bookkeeper-plead-guilty-embezzling-ttft9fififi-fraudulently- collecting-tdi#:~:text=PROVIDENCE%2fi%E2%8fi%93%2fiA%2fiformer%2fibookkeeper%2Foffice %2fimanager%2fifor%2fia,documents%2fifiled%2fitoday%2fin%2fifederal%2ficourt%2fiin %2fiProvidence