Aa205 Risk Management (Fraud)

11/10/2012

1

2

Junction Falls Finance and Accounting Services

AA205 Risk Management, Control and Ethics

Joe Metros Director

Seminar 7.1: Ethics, Fraud Risk and Communication

Libby Jones –
Chief Accountant

Group 6
Marsee Weston –
Fixed Asset
Manager

Overview

Scott Smyth –
Cash/Debt &
Investment
Manager

Scenario 1

Cathy Elgin –
Accounting
Assistant (A/R)

Scenario 2

Bob Thomas –
Accounting
Assistant (A/P)

Scenario 3

Nora Stewart –
Accounting
Assistant (A/P)

Scenario 4

Scenario 5

Chuck Sanchez –
Accounting
Assistant (Payroll)

Past Fraud
Cases

3

4

Combining Questions 1 & 2

Junction Falls Finance and Accounting Services
Absence of internal audit staff

Identify and discuss fraud factors in each of the scenarios

Audited by Watson & Watson, LLP for past 13 years
Suggest specific steps that should be taken to investigate if misappropriation or fraud is occurring

Collected $89m in gross operating revenue last year

Overview

Scenario 1

Scenario 2

Scenario 3

Scenario 4

Scenario 5

Past Fraud
Cases

Overview

Scenario 1

Scenario 2

Scenario 3

Scenario 4

Scenario 5

5

Past Fraud
Cases

6

Scenario 1 – Accounts Payable Process
Case Facts
Nora & Bob (A/P clerks) check each other’s documents for accuracy daily

Scenario 1
Accounts Payable Process

Each Tuesday, Libby (Chief Accountant)
- collects invoices to be paid for that week
- prepares documentation so that checks can be drawn and mechanically signed

Overview

Scenario 1

Scenario 2

Scenario 3

Scenario 4

Scenario 5

Past Fraud
Cases

1

11/10/2012

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7

Scenario 1 – Accounts Payable Process
Case Facts

Scenario 1 – Accounts Payable Process
Case Facts

Every Wednesday morning, Libby
After Libby got into an accident,
- collects printed checks
- verifies each check with the check register
- confirms all supporting documentation
- sends