Fraud Examination
Fraud Examination
6th Edition
ISBN: 9781337619677
Author: Albrecht, W. Steve, Chad O., Conan C., Zimbelman, Mark F.
Publisher: Cengage,
Question
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Chapter 2, Problem 10SC

(a)

To determine

Reasons to prosecute the employee

(b)

To determine

Reasons to not prosecute the employee

(c)

To determine

Actions to be taken by the employer

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CASE 1. Disobeying an Informal Order Mario is working as a clerk in a tax collector’s office. Due to staff shortage, he also performs the task of flag raising over the office building as part of his daily activities, even if it is not part of his official job description. One day, the governor of their district, Mr. Santiago passed away. Three (3) years ago, Mario’s best friend was murdered during a riot allegedly orchestrated by Mr. Santiago. Nonetheless, the state secretary passes an order to all district collectors, to keep the national flag at “half-mast” (flag flying below the summit of the pole to mourn a death of a person) over their offices. Mario have read the order of the state secretary. He felt angry with what he presumes as mockery of the national flag in respect to what happened to his best friend. He decided not to report to the office next morning and kept the door key of the rooftop where the flag was located to himself. He is confident that there will be no formal…
11.4 The assistant finance director for the city of Tustin, California, was fired after city of- ficials discovered that she had used her access to city computers to cancel her daugh- ter's $300 water bill. An investigation revealed that she had embezzled a large sum of money from Tustin over a long period. She was able to conceal the embezziement for so long because the amount embezzled always fell within a 2% error factor used by the city's internal auditors. What weaknesses existed in the audit approach? How could the audit plan be improved? What internal control weaknesses were present in the system? Should Tustin's internal auditors have discovered this fraud earlier?
CASE: You are a fraud expert and have been asked to investigate possible wrongdoing at a local nonprofit organization. You suspect that one of the workers, Stacey, has been embezzling money. After securing enough evidence to be very confident of Stacey's guilt, you speak with the president of the organization, Jamie. Jamie assures you that Stacey could be doing nothing wrong, that she has known Stacey for years, and Stacey is a good person. Further, she indicates that because of her relationship with Stacey, even if something were going wrong, no action would be taken with respect to the potential fraud. QUESTIONS: 1)How do you respond to Jamie? How do you explain to her what is at stake? 2) What monitoring and control systems should have been in place at Jamie's organization to prevent such a behavior? Explain. 3)Would you recommend an ethics audit to this company? Why?

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Fraud Examination

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