Reference no: EM133002577

Following are the red flags

1. The Aim Corporation President always aim high for their products. Every week they introduce a new product to the market. After their one meeting, he announce the relocation of the employees in two different regions. It makes his employees unhappy because they will build again customer relationships to attain their commission.

2.The accountant receive a tip concerning rebates and billing adjustments which appear to be unreasonable.

3. A salesperson can complete a Billing adjustment Form (BAF) for demo products that are, for example, returned to the distribution center when a new product modification occurs or the salesperson returns the old product for the new one to be placed into the demo kit. Sales manager can also do that. There is an overriding management.

4. Since shipment amounts are reported to major truck carriers as "shipping loading counts reports", the carrier normally does not count the order before it takes the products for shipment. It is an issue because the shipping department is responsible for accurate counting.

5. Customers that change their minds about a product, receive an incorrect product, or receive an incorrect quantity are to contact their salesperson to request an adjustment. However, the merchandise is either returned to the distribution center or, it possible, sold to another customer without returning to the distribution center. This shows that the salesperson creates the BAF crediting the original customers account and debiting the new purchaser's account or inventory which really cause a concern in the business.

Problem 1: Evaluate whether the possible issues (red flags) identified are indicative of fraud.

Problem 2: Describe the three elements of the fraud triangle. Categorize each potential issue