Case Study 1 Fraud
Case Study1: And the Fraud Continues
A business can not work out without an account system, which includes internal. Internal controls are used by companies to make sure financial information is accurate and valid. Strong internal controls are signs of a financially healthy company and protect the company’s integrity. Strong internal controls can also increase a company’s profitability. There are several types of internal controls that companies used to protect themselves such as: Segregation of duties, asset purchases, supervisor review, internal audits and adequate documents and records. This paper will discuss several topics from a case study about And the Fraud Continues; it’s basically about a Fraud case with MCI. The following questions will be answered below 1) Discuss the internal control weaknesses that existed at MCI that contributed to the commission of this fraud, 2) Identify and justify the approach you would take if you suspected fraudulent activity within an organization where you work, 3) Critique the ethical nature of Pavlo’s actions in the case and 4) Apply one (1) theory related to crime causation to this case. The internal control weakness that exists at MCI was Pavlo; he was able to manipulate the AR (Accounts Receivable) system because he was the creator and developer. The lack of segregation of duties takes please here because the same employee is able to receive payments, update accounts receivable records and/or reconcile the company’s bank account. This gives the opportunity to be able to embezzle money from the company (http://smallbusiness.chron.com/strengths-weakensses-accounts-receivable-35111.html). Pavlo performed fraudulent activities at MCI by doing the following: 1. Identifying Accounts receivables as write off and converted them into notes receivables so that expenses are not touched and an Asset is credited in the balance sheet.
2. Unapplied cash
A business can not work out without an account system, which includes internal. Internal controls are used by companies to make sure financial information is accurate and valid. Strong internal controls are signs of a financially healthy company and protect the company’s integrity. Strong internal controls can also increase a company’s profitability. There are several types of internal controls that companies used to protect themselves such as: Segregation of duties, asset purchases, supervisor review, internal audits and adequate documents and records. This paper will discuss several topics from a case study about And the Fraud Continues; it’s basically about a Fraud case with MCI. The following questions will be answered below 1) Discuss the internal control weaknesses that existed at MCI that contributed to the commission of this fraud, 2) Identify and justify the approach you would take if you suspected fraudulent activity within an organization where you work, 3) Critique the ethical nature of Pavlo’s actions in the case and 4) Apply one (1) theory related to crime causation to this case. The internal control weakness that exists at MCI was Pavlo; he was able to manipulate the AR (Accounts Receivable) system because he was the creator and developer. The lack of segregation of duties takes please here because the same employee is able to receive payments, update accounts receivable records and/or reconcile the company’s bank account. This gives the opportunity to be able to embezzle money from the company (http://smallbusiness.chron.com/strengths-weakensses-accounts-receivable-35111.html). Pavlo performed fraudulent activities at MCI by doing the following: 1. Identifying Accounts receivables as write off and converted them into notes receivables so that expenses are not touched and an Asset is credited in the balance sheet.
2. Unapplied cash
References: Forensic Accounting and Fraud Examination - Mary Kranacher, Richard A Riley- Joseph Wells http://smallsbusiness.chron.cm/strengths-weakness-accounts-receivable-35111.html http://www.prgx/analytics/fraud-analytics/detecting-deturring-and-preventing-fraud/ http://www.articlesbase.com/criminal-articles/causes-and-opportunity-of-crime-1304864.html http://sites.tuffs.edu/amas/controls-compliance/fraud-prevention/ http://www.ehow.com/facts_5250300_examples-internal-controls.html CASE STUDY 1: AND THE FRAUD CONTINUES