Embezzlement Paper

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Recommended: Ethical issues surrounding accounting scandals

Abdullah Alaskar On a separate piece of paper answer the following questions for a quiz grade. Apply the concepts from the COSO readings to the embezzlement cases. 1. Identify the failure of the internal control process in each situation and discuss possible the extenuating circumstances that led to the embezzlement. Assigning all cash related activities like signing checks, issuing cash from treasury, making payments and receiving cash from third parties – all by a single person badly affected the organizations in all three cases. In all of the three cases, these duties were performed by a single person. There were no proper checks and segregation of duties. All of the embezzlements went off the radar because all duties were performed …show more content…

Complete the following sentence: each of these embezzlement cases could have been discovered sooner if: Each of these embezzlement cases could have been discovered earlier if they reconciled Bank Statements with Books maintained by the company by different persons. 3. Recommend ideas on process improvements in order to minimize the risk of future embezzlement. Be sure to discuss the cost versus benefit aspect of any internal control. The important control is segregation of duties. Employing more officers for different tasks may increase the cost (salary expense) but this substantially decreases the chance of embezzlements. There are always limitations of internal controls like collusion between employees but one cannot simply ignore the benefits of this internal control. There is 95% chance that all roles performed by a single person will lead to embezzlement of cash. And there is also a 100% chance that segregation of duties will minimize this risk substantially. Embezzlement can also be decreased by reconciling bank statements and company’s records by different persons rather than a single person. This is one time training cost and everlasting benefit for the company. Checking mails by different persons can also decrease the risk of stealing

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