Reference no: EM132304931

Assessment Task

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?

Assessment Task requires you to read and understand a business case scenario where there are distinctly identifiable internal control weaknesses. You are required to identify these weaknesses and provide recommendations for addressing these weaknesses. Most recommendations will require approximately 100 to 200 words.

Your answer should satisfy the Marking Criteria discussed below.

Please read the instructions relating to submission very carefully and make sure that you answer all of the questions contained in the assessment

1. Understanding and discussion of the topic.

You are expected to answer each of the questions contained in the assignment. You're answer should fully address the requirements of each question and be in your own words. Simply restating the contents of the text book, study guide or PowerPoint slides does not show individual understanding of the topic.

Your answers should contain enough discussion on the question so as to clearly demonstrate your understanding of the topic area and provide sufficient detail which answers the questions to a satisfactory level.

There are no minimum word limits placed on assignment questions, however it is expected that most questions will require approximately 50 to 100 words of readable, logical and verifiable information.

2. The extent and depth of research undertaken
Your answers should show wide reading related to the question being answered. This would extend beyond the textbook to other texts, newspaper and magazines. Specific resources from the Internet could also be used. The Harvard Referencing style is the required referencing style for this assessment. Your assignment should also include a Reference List / Bibliography identifying the extent of the research undertaken. Failure to demonstrate extended research or provide a Reference list can result in the loss of up to 2 marks.

3. Presentation: overall look, format (including page breaks between questions), written content and the inclusion of title page stating your name, student ID, Assessment identification, and due date.

Your assignment should have a professional presentation with appropriate use of headings and sections and appropriate use of spelling, grammar and referencing. Marks may be deducted for excessive incorrect grammar, spelling and failing to have a page break between questions. Failing to include a Cover Sheet will result in lost marks.