Fraud auditing assignment 1
Homework #1
Bonne Consulting Group
Based on the information giving, the internal controls missing in Helen’s company is the separation of duties. This company should have in place internal controls where a person works with consultant, another person or department initiate the payment process someone else authorize payments and accounting should disburse payments. Also the fact the company merge with a bigger company and no one controlled other accounts such as the Jackson & Company shows the lack of internal controls.
Due to lack of controls, Helen had the opportunity to perpetrate the fraud. Basically, she initiated, signed vouchers and disburse vendors’ payments. She also let the accounting department about the opening and closure of accounts. Furthermore, she had the bank account from the company and used for personal expenses.
If the necessary internal controls would have been in place this fraud would have been avoid. She had the opportunity to commit fraud. There are many ways that his fraud can be detected. The audit team can ask the bank for statements and/ or interview vendors. The accounting department should have make their homework where they make due diligence in vendors, match vouchers, with invoices and payments.
Johnson Manufacturing
Based on the information given, pressure and lack of internal controls in inventory led to the manager’s manipulation. Basically, the manager took the easiest way to show a better picture of the company financial performance. Unfortunately, this led to fraud
Debbie had the pressure to overstate inventory because she is no able to reduce costs to compete in the market and profitability is not maintained and probably their team would not have a good bonus.
It is probably that when she rationalizes the situation she thought that if she alters the balance sheet (inventory), she would stop the profit decline, and competitors would need to stop cutting prices and things would look better for her
Bonne Consulting Group
Based on the information giving, the internal controls missing in Helen’s company is the separation of duties. This company should have in place internal controls where a person works with consultant, another person or department initiate the payment process someone else authorize payments and accounting should disburse payments. Also the fact the company merge with a bigger company and no one controlled other accounts such as the Jackson & Company shows the lack of internal controls.
Due to lack of controls, Helen had the opportunity to perpetrate the fraud. Basically, she initiated, signed vouchers and disburse vendors’ payments. She also let the accounting department about the opening and closure of accounts. Furthermore, she had the bank account from the company and used for personal expenses.
If the necessary internal controls would have been in place this fraud would have been avoid. She had the opportunity to commit fraud. There are many ways that his fraud can be detected. The audit team can ask the bank for statements and/ or interview vendors. The accounting department should have make their homework where they make due diligence in vendors, match vouchers, with invoices and payments.
Johnson Manufacturing
Based on the information given, pressure and lack of internal controls in inventory led to the manager’s manipulation. Basically, the manager took the easiest way to show a better picture of the company financial performance. Unfortunately, this led to fraud
Debbie had the pressure to overstate inventory because she is no able to reduce costs to compete in the market and profitability is not maintained and probably their team would not have a good bonus.
It is probably that when she rationalizes the situation she thought that if she alters the balance sheet (inventory), she would stop the profit decline, and competitors would need to stop cutting prices and things would look better for her