Statement of Ethics Issue

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Oct 20 2012
Oct 20 2012
ACCT 3121
Instructor: Ms. Julie Chenier
ACCT 3121
Instructor: Ms. Julie Chenier
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Written Assignment|
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Student: Yichen Chen|

|
Written Assignment|
|
Student: Yichen Chen|

To: Manufacturing Manager
From: Becky Knauer
Date: Oct 20 2012
Subject: Action of Ethnic Issue for Mueller Imports

Dear Officer,
My name is Becky Knauer, the new controller in Mueller Imports. Being selected as an experienced automotive professional to join such a huge management team, I aim at using my objective view and competency in addition to all available sources to best assist the organization. Recently, while managing the financial statement, I realized there are several transactions that are susceptible for ethical issue. A $5000 monthly invoice billed from the jeweler was personally approved as “selling expense” by the company’s owner Frank Mueller. My investigation exposes that the red flag involves significant fraud: 1. The periodic watch offering to regional sales managers and other sales exclusives indicates the bribery. By receiving expensive rewards from Mr. Mueller, sales exclusives give biased car distribution to dealers. 2. The invoice billed by a local jeweler reveals the probability of collusion. Because the watch seller does not bill the transaction as a regular sale but explained it as a “miscellaneous service”, the jeweler has the high incentive to set the underground agreement with Frank Mueller. I suspect the indirect service charge conceals this fact. 3. The false financial statements presented by Mr. Mueller reveal the misrepresentation. Mueller’s action violates the policy of segregation of duties by overriding his right to authorize the controllable cost. His statement of this expenditure “selling expense” overstates the expense and understates the net income as well. He indirectly gains comparative advantages from the transaction called into question. Frankly, in the supply shortage...
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