Fraud Schemes Exercise
Travel Expenses Exercise 1 / 4
Identify the area(s) in which Bill Jones’ travel expenses may be misstated.
Travel Expenses Exercise 2/4
Travel Expenses Exercise 3/4
Travel Expenses Exercise 4/4
Register Disbursements Schemes—False Refunds
Your friend Bill Jensen runs a variety store from which he sells everything from toys, to shaving cream to toasters. He has come to you and stated that he thinks one or more of his employees may be stealing cash from him through fake refunds in which there is really no refund, but they steal money. You asked him a number of questions and found that
His procedure is to have a clerk (anyone currently at a register) fill out a refund form out when someone returns goods; if it is a:
Credit or debit card refund they run it through the card.
Cash refund (or lost receipt) they simply refund cash.
The store clerk giving the refund signs the refund form; names of purchasers are only obtained for the card refunds.
Refund approach related to inventory:
Broken items—ordinarily returned to the manufacturer for credit.
For non-broken items (customer simply didn’t want)—the item is placed back in inventory and the perpetual inventory item is increased; but since items are identical, one just knows how many items should be available per the records.
A. List audit procedures that you could perform to address whether someone is stealing cash through fake refunds?
B. What specific improvements would you suggest in internal control to reduce or eliminate any possible problem?
Identify the area(s) in which Bill Jones’ travel expenses may be misstated.
Travel Expenses Exercise 2/4
Travel Expenses Exercise 3/4
Travel Expenses Exercise 4/4
Register Disbursements Schemes—False Refunds
Your friend Bill Jensen runs a variety store from which he sells everything from toys, to shaving cream to toasters. He has come to you and stated that he thinks one or more of his employees may be stealing cash from him through fake refunds in which there is really no refund, but they steal money. You asked him a number of questions and found that
His procedure is to have a clerk (anyone currently at a register) fill out a refund form out when someone returns goods; if it is a:
Credit or debit card refund they run it through the card.
Cash refund (or lost receipt) they simply refund cash.
The store clerk giving the refund signs the refund form; names of purchasers are only obtained for the card refunds.
Refund approach related to inventory:
Broken items—ordinarily returned to the manufacturer for credit.
For non-broken items (customer simply didn’t want)—the item is placed back in inventory and the perpetual inventory item is increased; but since items are identical, one just knows how many items should be available per the records.
A. List audit procedures that you could perform to address whether someone is stealing cash through fake refunds?
B. What specific improvements would you suggest in internal control to reduce or eliminate any possible problem?