Identify the general internal control weaknesses that contributed to the fraud.

Question

Want to see the full answer?

Answer 1

Question

Chapter 7, Problem 7E

To determine

Identify the general internal control weaknesses that contributed to the fraud.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

All-Around Sound Co. discovered a fraud whereby one of its front office administrative employees used company funds to purchase goods such as computers, digital cameras, and other electronic items for her own use. The fraud was discovered when employees noticed an increase in the frequency of deliveries from vendors and the use of unusual vendors. After some investigation, it was discovered that the employee would alter thedescription or change the quantity on an invoice in order to explain the cost on the bill.What general internal control weaknesses contributed to this fraud?

An auditor suspects that certain client employees are ordering merchandise for themselves over the Internet without recording the purchase or receipt of the merchandise. When vendors' invoices arrive, one of the employees approves the invoices for payment. After the invoices are paid, the employee destroys the invoices and the related vouchers. In gathering evidence regarding the fraud, the auditor most likely would select items for testing from the file of all: Multiple Choice Cash disbursements. Approved vouchers. Receiving reports. Vendors' invoices.

What internal control or procedure(s) would provide protection against the following threats? An employee makes a credit sale to a customer who is already four months behind in making payments on his account. An employee writes off a customer’s accounts receivable balance as uncollectible to conceal the theft of subsequent cash payments from that customer Customers are billed for the quantity ordered, but the quantity shipped is actually less because some items have been back ordered. The mailroom clerk steals checks and then endorses them for deposit into the clerk’s personal bank account Goods are shipped to a customer, but that customer is not billed.