Reference no: EM132512719

Question 1: List two differences between debt securities (bonds) and equity securities (stocks).

• A 10-year Bond Payable is listed on the balance sheet under the caption
• The national insurance commission for a developing country received a loan from the World Bank in 2003 to cover the cost of two events: a two-week trip to the U.S. for 8 of the top officials of the commission, to observe and learn about insurance regulation in the U.S., and follow-up training to be held in the developing country for 25 mid-level insurance managers. Of the World Bank grant, some $30,000 was reserved to cover the cost of the in-country training, with the remaining funds to be used to cover travel costs for the U.S. trip. The World Bank issued a letter to the commission that specifically directed that the 8 travelers purchase economyclass-fare airline tickets for their trip to the U.S. However, the 8 travelers felt that they were "big men" in their country and therefore should not travel in economy class, so they purchased 8 business-class airline tickets. Because the cost difference between economy-class and business-class was $3,750 per ticket, the entire $30,000 that was aside for the in-country training was used towards purchasing 8 business-class tickets. As a result, the desperately-needed in-country training was never conducted. Please note that the country still is obligated to pay back the loan in full to the World Bank. Yes, fraud did occur.

Question 2: What internal control might have prevented this situation from occurring?