Project Work Answers -A Case of Sharolyn Grant: ACCT20079

Project Work Answers  -A Case of Sharolyn Grant: ACCT20079

Term 1 Take Home Test (Class Test) 2022
Forensic Accounting -ACCT20079
Page 1of 9
Student No. ____________
Student Name __________________________ …

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Term 1 Take Home Test (Class Test) 2022
Forensic Accounting -ACCT20079
Page 1of 9
Student No. ____________
Student Name __________________________________________
Instructions Sheet
1. Type your answer to each question in the expandable box
provided.
2. This test comprises two (2) questions. Marks for each
question are as indicated.
3. You may refer to lecture notes and the eBook, but not other
Internet resources.
4. You have 1 hour and 15 minutes (75 minutes) to complete and
submit this test paper. Late submissions will not be marked. If
you encounter problems submitting your paper to Moodle,
email it to your unit coordinator by the due time.
5. This is an individual assessment, so collaboration with other
students will result in an academic misconduct allegation for
all students involved. This may result in a fail result for this
assessment. Please note that your paper will be submitted
through Turnitin.
6. It is preferred that you type your answers in the test
document. If you wish to handwrite your answers, then print
the document, write your answers (legibly) in black pen, and
then scan it as a pdf. Allow time for scanning etc.
7. Save your completed test document with the filename:
‘ACCT20079 T122 Class Test ‘.
Submit this file through the Moodle submission point by the
due time. Do not use more than two names (first and last) in
the file.
Term 1 Take Home Test (Class Test) 2022
Forensic Accounting -ACCT20079
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TOTAL 20 MARKS
Answer ALL questions.
Question 1 10 Marks
Sharolyn Grant, a woman from Brisbane, was a shopping addict and had run up
considerable debt on excessive purchases of jewellery and clothes. She would also
go to the grocery store and use plastic, take her kids to miniature golf, and go
bowling with her husband. Christmases were a “little bigger, ”with gifts like $100
remote-control cars for her sons. Her husband was not aware of the addiction. She
made $21 an hour at work, and her husband earned a little bit more as a machinist
at an aircraft company. Family finances were aconstant balancing act.
Sharolyn turned to her employer, Singh Consulting. She raised money to pay down
her obligations by repeatedly padding the company ’s expense accounts. She took
reimbursements for trips and conferences she did not attend. In her three years of
work, she had collected a total of $240,000 from her employer. It got to the point
where she didn ’tfeel like she was doing anything wrong. When Singh found out,
Grant admitted the fraud and pled guilty to one count of fraud and said that she was
planning to pay itback.
Required:
1. What type of fraud did Sharolyn Grant commit?
(2 marks)
Type of Fraud (e.g. Employee Embezzlement, Management Fraud, etc)
The type of fraud which can be recognised in this situation is employee
embezzlement as Sharolyn Grant utilised the financial resources of the
company for her own personal use. The case clearly shows that Sharolyn
Grant utilises her position to inflate the expenses of the business to draw
out funds for meeting her personal requirements.
Question 1 continued next page
Term 1 Take Home Test (Class Test) 2022
Forensic Accounting -ACCT20079
Page 3of 9
Question 1(continued)
2. Explain any three factors/weaknesses that could have resulted in this type of
fraud:
(3 marks)
No. Factors/weaknesses
1 As per the case, the internal control settings for the business of Singh
Consulting was weak and this provide Grant the opportunity to commit
frauds. There is wide opportunity for Grant to embezzle with the funds
without any detection for the same.
2 The case shows that Singh Consulting had the policy of providing
reimbursements for trips and conferences and this was one of the areas
where Grant reimbursed funds for trips and conferences which she did not
attend. Therefore itis clear that the business did not keep aproper track on
the people who are actually attending trips and conferences
3 The senior management of the company was not as involved as itis
required in the operations of the business which also gave an opportunity to
Sharon Grant to commit the fraud.
Question 1 continued next page
Term 1 Take Home Test (Class Test) 2022
Forensic Accounting -ACCT20079
Page 4of 9
Question 1(continued)
3. Identify 4 strategies (steps) that could be used to avoid or reduce this kind of
fraud in a company? Explain in this case .
(2 marks)
No. Strategies
1 The top level management can be more committed towards fraud
management activities and ensure that proper code of governance is
followed. In the case of Sharolyn Grant, the management of Singh
Consulting need to review the expenses which Sharon showed in the books
so that proper identification could have been made at an earlier stage.
2 The management of Singh Consulting should implement regular internal
audit function in the business so that proper track can be maintained for the
activities and itcan be ensured that the governance framework is being
maintained.
3 The management of Singh Consulting should implement a proper
awareness program for the employee regarding the legal and other
consequences which may arise ifa fraud is committed and this can be a
major step in ensuring that the employee stick to the ethical code of conduct
4 The management of the company needs to strengthen the internal controls
of the organization as supervisors needs to be placed at each level so that
proper review can be done for the work undertaken and this would reduce
the perceived opportunity to commit the fraud in the first place.
Question 1 continued next page
Term 1 Take Home Test (Class Test) 2022
Forensic Accounting -ACCT20079
Page 5of 9
Question 1(continued)
4. Name the three components of the fraud triangle and describe how each one
existed in this case. Be specific.
(3 marks)
No. Components of fraud triangle
1 Perceived Opportunity refers to the opportunity which is present to the
employee to commit fraud and further keeping the risks of detection at a
minimum. Sharolyn Grant was in the position to utilise the funds of the
company for her personal use without being detected.
2 Rationalization is another factor wherein the person who is committing the
fraud justifies the act. In the case of Sharolyn Grant, her addiction to
shopping had increased her obligations and therefore taking out the funds
for settling her obligation was a priority.
3 Perceived Pressure refers to the main factor guiding the fraud in the first
place and itcan be any obligations which the person has to settle or an
expensive habit which is costly. In the case of Sharolyn Grant, the
perceived pressure are her addiction towards shopping and the obligation
which has accumulated due to such a habit of hers.
Term 1 Take Home Test (Class Test) 2022
Forensic Accounting -ACCT20079
Page 6of 9
Question 2 10 Marks
Sam was appointed treasurer for the Southside Dance Academy in 2019. The
Academy has dance classes every Thursday evening, plus a monthly dance party
and occasional additional workshops. The managing committee set entrance fees for
members and non-members, with provision for prepaid dance passes.
After 10 months of non-existent financial reports for the managing committee, Sam
decided to resign as Treasurer and hand the job over to the past-Treasurer, Peter.
Peter had earlier established procedures to record cash takings and initiate
payments to creditors, such as the owner of the hall. At each class or event, a
takings summary document was prepared by two committee members listing the
names of people attending and the amounts paid. This provided a justification for the
amount collected in cash and then banked, and recorded in the accounts. This
document also took into account the cash float of $200 in the register (left in the
drawer at the end of each event), and any payments in cash such as payments to
teachers and reimbursements for expenses, e.g. for supper, based on invoices. The
two committee members signed the taking summary, balanced the cash, and
provided these to the Treasurer for recording and banking.
All payments required a source document, such as an invoice from the insurance
company, and had to be authorised by two of the President, Secretary and Treasurer,
who also signed the cheques for payment. Payments were recorded regularly so the
accounts remained up to date.
Bank reconciliations were completed monthly. With a good set of source documents
and up to date accounts, financial reports were produced monthly for the managing
committee. These procedures provided some assurance to the committee that all
cash collected by the Academy was banked, that payments were made only for
authorised expenses, and transactions were properly recorded.
On Sam ’s resignation, Peter found that these procedures were no longer being
followed. The cash float in the register was not maintained at $200. Often, little cash
was in the register at the beginning of the night. The takings summaries were often
not dated, and were poorly completed, omitting details of cash payments for
expenses. Relevant invoices were not attached to the summaries. The amounts
banked were not consistent with the takings summaries, in some cases up to $150
less than expected. Often, the takings summaries were not signed, and the cash was
not balanced.
Payments to creditors still required two signatures from the President, Secretary and
Treasurer, but there was no folder of invoices supporting these payments. Often,
Sam had paid creditors using his credit card, and then requested reimbursement,
Question 2 continued next page
Term 1 Take Home Test (Class Test) 2022
Forensic Accounting -ACCT20079
Page 7of 9
Question 2(continued)
which was paid by cheque. The signatories saw the underlying invoices on many but
not all occasions. There were also bank transfers to other accounts listed in the bank
statement, but without invoices, it was difficult for Peter to determine what these
were for.
Peter has asked Sam in writing for the missing invoices and supporting documents.
Unfortunately, Sam has not responded to this request. Sam had not recorded any
transactions in the accounts, and so no financial reports had been provided to the
committee. Peter is worried about the upcoming audit.
Requirements:
(a) Explain the 6symptoms that may indicate fraud. What symptoms of fraud exist
in this case ? (6 marks)
Symptoms of afraud Example in this case
1Analytical Symptoms The amount which was being banked during Sam ’s
reign as atreasurer was not consistent with the
takings summaries and sometimes the difference
was as high as $150
2Accounting or
Documentary Symptoms
The case information shows that relevant invoices
were not attached to the summaries and there was
often alack of source documents when itcame to
payments
3Control Symptoms There was a weakness in the internal control
system as itcan be identified that payments to
creditors required two signatures from the
President, Secretary and Treasurer, but there is no
source folder support such payments
4Behavioural and Verbal
Symptoms
The previous treasurer of the company, Sam
resigned from his position abruptly and is further not
responding to the queries of Peter (Current
Treasurer) for missing invoices an source
documents
Term 1 Take Home Test (Class Test) 2022
Forensic Accounting -ACCT20079
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Symptoms of afraud Example in this case
5Lifestyle Symptoms The Treasurer of the business is in the position of
embezzle the cash collected from the activities and
further misrepresent the records which is a
perceived opportunity to commit the fraud.
6Tips and Complaints The unavailability of the source documents is the
main sign that the fraud is being committed and the
management is not aware of the same.
Question 2 continued on next page
Question 2(continued)
(b) What are 4specific controls that Southside Dance Academy could implement
to prevent and detect this type of fraud in the future? Be specific. (4 marks)
# Recommended Controls
1 The management of Southside Dance Academy needs to establish proper
internal control settings so that the frauds can be detected at an early stage
of operation
2 The reconciliation of the funds which is done on amonthly basis by the
management needs to be undertaken on a weekly basis so that efficiency is
maintained.
3 The management needs to appoint supervisors so that proper track can be
kept for individual role and any detection of frauds can be reported.
Term 1 Take Home Test (Class Test) 2022
Forensic Accounting -ACCT20079
Page 9of 9
4 The business can use the services of an external consultants as internal
auditors for the company so as to ensure that all processes are being
completed in an appropriate manner.
END OF PAPER

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