Reference no: EM132999714

Question -

Q1. A procurement agent for a large metropolitan building authority threatens to blacklist a building contractor if he does not make a financial payment to the agent. If the contractor does not cooperate, the contractor will be denied future work. Faced with a threat of economic loss, the contractor makes the payment.

Required: Identify the type of fraud being depicted and enumerate at least three (3) controls that can be implemented to prevent or detect it.

Q2. Harold Olvina, the financial aid officer at a small university, manages all aspects of the financial assistance program for needy students. Harold receives requests for aid from students, determines whether the students meet the aid criteria, authorizes aid payments, notifies the applicants that their request has been either approved or denied, writes the financial aid checks on the account he controls and requires that the students come to his office to receive the checks in person. For years, Harold has used his position of authority to carry out the following fraud: Harold encourages students who clearly will not qualify to apply for financial aid. Although the students do not expect aid, they apply on the off chance that it will be awarded. Harold modifies the financial information in the students' applications so that it falls within the established guidelines for aid. He then approves aid and writes aid checks payable to the students. The students, however, are informed that aid was denied. Since the students expect no aid, the checks in Harold's office are never collected. Harold forges the students' signatures and cashes the checks.

Required: Identify the internal control procedures, as classified per the Committee of Sponsoring Organizations of the Treadway Commission (COSO), to prevent or detect the fraud in the above scenario.