Question

List and briefly justify three or four specific steps that you believe would be most important for Koss Corporation to move forward after discovery of the fraud.

Answer 1

The Koss Corporation fraud resulted from too much trust placed in an employee, collusion and a lack of internal checks. To move forward and salavage its tarnished repuatation, Koss Corporation should take the following steps:

- Review its internal controls and payment approval hierarchy, as a major portion of the funds was embezzled by the authorization of cashier checks by Sue to pay her personal expenses.

- Restriction of wire transfers by the company i.e. authorization of wire transfers by atleast two top level officials of the company excluding the CFO.

- Reviewing the regular expenditures of the company and doing trend analysis to see the general expenditures of the company so that abnormal items are immediately noticed.