Richard has been a highly regarded employee of the Brier Corporation for almost 20 years. Her loyalty to the company is reflected in her dedication to her job as a general accounting clerk, from which she has not taken a vacation in almost 12 years. Because of her dedication and long tenure, she has acquired many related responsibilities, which have allowed Brier Corporation to reduce its workforce through attrition, control salary expenses and become more efficient and competitive. The following describes Richard's responsibilities. Richard receives copies of credit sales orders from the sales department. She accesses the AR subsidiary ledger from her office computer and records the AR from these documents. She then records the sale in the sales journal and posts the transactions to the general ledger accounts. Cash receipts in payment of customer AR come directly to her office. She records the cash receipts in the GL cash and AR accounts and updates the AR subsidiary ledger. She then endorses the checks ‘for deposit only’ and deposits them in the bank at the end of each day. Required: 1.Based on the control problems identified above, what sorts of fraud are possible in this system? 2.What controls are needed to reduce the risk of fraud?
Richard has been a highly regarded employee of the Brier Corporation for almost 20 years. Her loyalty to the company is reflected in her dedication to her job as a general accounting clerk, from which she has not taken a vacation in almost 12 years. Because of her dedication and long tenure, she has acquired many related responsibilities, which have allowed Brier Corporation to reduce its workforce through attrition, control salary expenses and become more efficient and competitive. The following describes Richard's responsibilities.
Richard receives copies of credit sales orders from the sales department. She accesses the
Required:
1.Based on the control problems identified above, what sorts of fraud are possible in this system?
2.What controls are needed to reduce the risk of fraud?
Accounting fraud is the deliberate manipulation of financial records to provide the impression that a company is financially sound. Additionally, it entails deceiving shareholders and investors on behalf of the company, a worker, or even an accountant. By inflating revenue, leaving out expenses, and submitting false information for assets and liabilities, a company might fake its financial records.
Step by step
Solved in 2 steps
