Forensic Accounting

Topics: Auditing, Internal control, Internal audit Pages: 11 (2205 words) Published: February 26, 2015
1. As the auditor, list the concerns you have may suggest fraud, is occurring in the company.

1. Conflicts of interest.
The owner of the company which is Justin Bieber, frequently takes extended vacations with his family and rarely examines the books of his business. He always appoint any of the family members to monitor and take charge the position while he’s not around for business trip and outstation. 2. The participants of the governors are rarely active in managing the direction and strategy of the business compared to other organization. 3. Justin’s’ brother, Freddy which is the chief accountant held majority of a local amateur sports team, which struggled to sell tickets and is facing bankruptcy. 4. Meanwhile Justin’s auntie, Mary Ann the Senior Manager in Human Resource Department always made her own decision without prior opinion and consult with Justin about recruiting and firing employees within the company. 5. Most among of the family members in the organizations held the most important position within the company only hold at least a certificate or diploma in business administration, economics, English literature which are not fitted to the industry of Justin’s business environment which acquire expertise in designing security system for home. 6. The Compliance Unit also are not reliable because the unit is being monitored and lead by Justin’s sister, Rebecca which she only has an education diploma in Fashion that are largely away of the fields of she is currently monitored and she has no knowledge regards the key role of the position at first such the company’s compliance with standards and regulation procedures. 7. The company is hired incompetent employees according to the required position and responsibility since Mary Ann headed the Human Resource Department since the employees is significantly not performed every year through their annual report performance assessment by the supervisor. 8. The company also hires hundreds of students in case to hire cheap labor at large. Commissioned paid to the students are not properly counted and approved by immediate supervisor. Thus, they are able to receives high commissions include rewards such as cruises and new cars. 9. Anyone in the purchasing departments has an assess to a stack of blank, pre-signed checks left by Justin’s in order to facilitate quicker purchases and obtain deals from vendors. There is no manual authority being introduced for approval limit and signatory for this company. The payroll room can be easily accessed by any of the family members in the Human Resource Department for daily activities since the room is also being used as storage to keep all company’s records and documents including the financial activities.

What controls would you suggest the company put in place to prevent potential fraud from occurring for each of the concerns listed in part (a)?

1) Justin should appoint personal assistance to update him every single event and activities happen within the organization include the activities from top to bottom of management. So that he knew what is going on while he was away for outside business. Appointment among family members in the business organization is good to have faith on them. But too much trustworthy would turn them into take advantageous on Justin’s business successfulness. Specify the job task align with the credibility and have control on accessing the each of department and subordinates.

2) The governors and the rest of the major shareholders should effectively held meeting on board directors meeting to make sure that the company is sufficient and capable to arrange strategy in order to strengthen the company performances. So it will promoting strategic, tactical and operational effectiveness and efficiency. The company should put guidelines for the Bod’s in conducting and preparing the formal agenda with the minutes as part in the annual report. Thus the Bod’s will...

References: 1. Forensic Accounting and Fraud Examination, second edition, William S. Hopwood; Jay J Leiner; George R Young.
2. http://www.anao.gov.au/html/Files/BPG%20HTML/BPG_PublicSectorAuditCommittees/2_5.html
3. http://www.deloitte.com/view/en_CN/cn/services/corgov/ic/iarr/
4. https://www.aicpa.org/InterestAreas/
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