Reference no: EM132183191

Fraud:

Green Grass is a small, family-operated company whose core service is in horticultural care and lawn care for customers in the local city. The owner of the company is the father of the family. He has used the company to cover the costs of his children’s college education. At the same time, he has been able to give his children some work experience and an opportunity to earn their own money to pay for school. The company has grown steadily over the last few years, and the owner has hired many employees outside of the family to be able to keep up with the demand of the increasing number of customers. The company is run from a small office building, and there is only one employee performing the managerial operations in the company office. The father had usually been in charge of this aspect of the company, but now leaves the responsibility to his trusted friend, who has experience in accounting and information systems. This employee is in charge of scheduling the routes of all the employees and is responsible for payments, receipts, and balancing the books. The company performs two major operations. First, it provides lawn care using insecticides, fertilizer, and weed killers. Eight employees are responsible for this activity. They each drive a truck and are responsible for collecting money from the customers they serve. They are also responsible for loading and mixing chemicals in the tanks they use during the day. The second part of the operation is the lawn mowing care. Usually, a four-man crew is responsible for all the machines they use, and they are responsible for taking care of Chapter 2: Why People Commit Fraud 63 Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. the lawns on their daily schedule. This is where the owner has hired his children to work, and the whole team is usually made up of younger workers than the team that works with the chemicals. Over the years, Green Grass has experienced small growth and success. Profits have increased steadily as the company has picked up new clients. However, the owner noticed that last year’s accounts were different. The revenues increased a marginal amount, while the expenses for the company increased more than they should have. The owner has noticed that his interactions with his friend in the office have been fewer and not quite so friendly. Also, his employees have been finishing their routes later in the day than they had in previous years.

1. What are some of the fraud opportunities within Green Grass?

2. What symptoms of fraud exist, and what symptoms should the owner look for if he believes fraud may be occurring?

3. What steps should be taken to make sure fraud does not occur, and what are the costs associated with these steps?