Question

An accountant with the Sports event s has been charged with stealing over $60,000 for buying a Mercedes-Benz and investing in a deposit check. Police claimed that he had produced fake invoices from two companies which had contracts with the sports committee.
He then wrote checks to pay the fake invoices and deposited them into a bank account which he had opened under one of the companies 'names. He cooperated with the police when he was arrested to the point that he told them about the fraudulent bank account and the purchase of the Mercedes-Benz. The accountant was a recent honers graduate from a prestigious university who was a very trustworthy and dedicated employee, supervisors said.

1. What fraud scheme did the accountant use to execute his fraud?
2.. What controls could have prevented his fraud?
3. What controls could have detected his fraud?

Answer 1

Answer:-

●1)The accountant created fake invoices from actual committee contractors. He then wrotechecks to pay the invoices and deposited those checks into an account he opened in the name of one of the companies.

●2)controls could have prevented the fraud

Segregation of duties could have prevented this fraud. When one employee records invoices, authorizes payment of those invoices, and writes checks for those invoices, problems can arise. Therefore, making certain that the same person does not perform authorization and custody functions or recording and custody functions could prevent this kind of fraud.

●3)Controls to detect this fraud include:

(1) invoice confirmation by vendors; (2) analytical review of expenses; and (3) reconciliation of bank statements by someone .