Case 3
Case 3-51
Pages 115 -117
1. Why might Koss management have placed so much trust in Sachdeva, along with minimal supervision and monitoring?
Koss management might have placed so much trust in Sachdeva because she was is such a high position. She worked in the company as Vice President, when you are that high on the totem pole, you are given trust that you know what you are doing and that you want what is best for the company. Companies don’t hand out positions to people that have no clue as to what they are doing as well as someone that they believe will ruin the company. The same thing goes along with having minimal supervision and monitoring. She was a Vice President, someone that was supposed to be trusted, someone who was a leader, someone who was supposed to set an example. It just goes to show you that it is not always the person on the bottom of chain that needs to be watched. It is easier for higher up management and owners to sneak money away than the one who have minimal access to records and bank statements.
2. What was Grant Thornton’s obligation to uncover the fraud?
Grant Thornton was Koss’s internal auditor. An internal auditor is defined as
“An independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.” (p. 23-24)
As the auditor for this business, Grant was supposed to make sure that every piece of financial information was in its right place as well as wrote and calculated right. Clearly Thornton did not do his job the right way. By looking at the numbers provided, any auditor could see that something is not right in the company. After seeing it, the auditor would address the issue and deal with it the proper way. I have a feeling he knew all along
Pages 115 -117
1. Why might Koss management have placed so much trust in Sachdeva, along with minimal supervision and monitoring?
Koss management might have placed so much trust in Sachdeva because she was is such a high position. She worked in the company as Vice President, when you are that high on the totem pole, you are given trust that you know what you are doing and that you want what is best for the company. Companies don’t hand out positions to people that have no clue as to what they are doing as well as someone that they believe will ruin the company. The same thing goes along with having minimal supervision and monitoring. She was a Vice President, someone that was supposed to be trusted, someone who was a leader, someone who was supposed to set an example. It just goes to show you that it is not always the person on the bottom of chain that needs to be watched. It is easier for higher up management and owners to sneak money away than the one who have minimal access to records and bank statements.
2. What was Grant Thornton’s obligation to uncover the fraud?
Grant Thornton was Koss’s internal auditor. An internal auditor is defined as
“An independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.” (p. 23-24)
As the auditor for this business, Grant was supposed to make sure that every piece of financial information was in its right place as well as wrote and calculated right. Clearly Thornton did not do his job the right way. By looking at the numbers provided, any auditor could see that something is not right in the company. After seeing it, the auditor would address the issue and deal with it the proper way. I have a feeling he knew all along
References: Rittenburg, Larry. Johnstone, Karla. Gramling, Audrey. (2012) Auditing: A Business Risk Approach 8e. Mason: South-Western, Cengage Learning.