ACC XXXXXXXXXXAssessment Task Two – Session One 2019 Scenario “A” A major Australian Public Company ran promotions advertising for a number of its products through a promotions company. The promotions...

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ACC00718 - Assessment Task Two – Session One 2019



Scenario “A”


A major Australian Public Company ran promotions advertising for a number of its products through a promotions company. The promotions company falsely inflated the number of responses it received from purchasers of the company’s product. The false number of respondents was invoiced by the promotions company to the public company resulting in the overpayment of thousands of dollars. The records kept by the promotions company were those on its computer database as well as manual batch numbers of responses to the promotions.



REQUIRED



Identify five (5) procedures and checks that would have reduced the risk to the victim company?



Scenario “B”


You were engaged to conduct an examination on an Australian subsidiary of an American company following a discovery by the financial controller that freight and travel expenses were too high during a certain period. You have found the following:


The entries posted to the general ledger were examined and it was found that whereas normal expenses would be $10,000 to $12,000 for a particular month, they were in fact $33,442.19. Entries posted to the freight account were checked and in some cases there were no corresponding invoices.


Staff were frustrated in their efforts because the trade payables clerk, who was responsible for the payment of accounts and cashing of wages cheques, was either off sick or evasive when questioned.


The system for the payment of accounts was that the trade payables clerk would prepare a cheque to pay an invoice and would then present the cheque with the invoice and relevant documents for signing by two authorised signatories.


All company accounts were paid by cheque; the only cheques used to obtain cash were wages cheques. This would be done by stamping the reverse of the cheque with the words, ‘Please pay cash’; the trade payables clerk would then present the cheque to the bank and obtain the cash. Specimen signatures were, of course, held at the bank but they were rarely checked as the trade payables clerk was so well known to bank staff.


Duplicate cheques had been issued for payment of accounts already paid by the company and cashed at the bank by the trade payables clerk. The signatures on the cheques were, in some cases, forgeries and, in other cases, genuine (obviously people were signing things without due care). A payment of $6,217.60 was used to pay a travel company for a trip for two to Tahiti — the clerk had cancelled this entry with the words, ‘OK paid by me’.


When questioned, the trade payables clerk said that she had used her own cheque to pay for the travel. You checked with the travel company and found that, in fact, a company cheque had been used for the trip. You and officials of the company called in local detectives and all parties adjourned to the local police station. By this time, it was outside office hours and police were unable to contact the travel agent themselves and had no documentation to rely on to negate the clerk’s story. The clerk was released for further investigation by them, but the clerk left the country and is now living happily in Greece, $164,000 richer.



Required



1) Identify and discuss which internal control could have prevented this fraud and give five (5) examples



2) Identify and discuss five (5) procedures could have alerted the auditor to the fraud?

Answered Same DayMay 01, 2021ACC00718Southern Cross University

Answer To: ACC XXXXXXXXXXAssessment Task Two – Session One 2019 Scenario “A” A major Australian Public Company...

Soumi answered on May 09 2021
139 Votes
ACC00718 - Assessment Task Two – Session One 2019
Risk reduction procedures to safeguard a company’s economy and worth
Table of Contents
Introduction    3
Scenario A    3
Five Checks and Processes to Reduce Risk of Victim Company    3
Scenario B    4
Internal Controls to Prevent this Fraud    4
Five Ways to Ale
rt the Auditor about the Fraud    5
Conclusion    6
References    7
Introduction
Monetary frauds or accounting scandals refer to premeditated treachery to attain unlawful profit beyond the documented directories of a company, and this is a reckoning concern in the present day. Many companies and firms are the victims of fraud worldwide. Below two assessment analyses few of those delusive cases and analyses the methods to check this manipulation of financial statements.
Scenario A
Five Checks and Processes to Reduce Risk of Victim Company
Five processes that would have reduced the risk to the victim company would have been—
Internal Team – A team should be appointed by the Public company, which will contain three to four members who will work in shifts of six to eight hours each. They will be the eyes and ears of the Public company inside the promotion company. According to Kliem and Ludin (2019), they will keep track of every entry done corresponding to every new customer or respondent. Before signing off from one shift the team member will convey the details of the last user registered.
Monetary Imposing – Every profitable organisation running under the sun is concerned about one vital thing, and that is economic profit. Hence, as stated by Sommer (2015), if there is an effective means to hit a company in that sensitive spot with proper justification it can be made into a very profitable dealing. And therefore if a fine system is introduced during the very initial dealings it will incur a significant amount of caution in the promotion company before they try any form of counterfeit. A justifiably steep amount of fine per wrong entry or excess entry will be a fair decision.
Technical Implementation – The Company might as well root out the problem from its base by handing over a software or mechanism of its own, which will only be used by the promotion company. The do’s and don’ts of the job will be handled by the promotion company but the entry of each respondent will be done using the software provided by the Public company, which will have a verification system of its own and which will have its own database updated with each new registration (Eriksson & Svensson, 2016).
Direct Bypassing – One of the most preliminary or basic and technically feasible methods, which can be applied, is that any customer will be conscious about the Public company through the advertisements of the promotions company but any response done to that will be throughput directly to the server to the Public company. The promotions company can at maximum keep a copy by downloading the data sheets from the main sever. But the initial response will be received by the Public company itself and hence reduce any chance of forgery...
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