Accounting information systems - Coursework Example

There is a conflict of interest, which can create the conditions for the commission of fraud. 2. The receiving supervisor signed receiving reports showing that the total lquantity shipped by the supplier had been received. A total of 5 to 10 per cent of its shipment was diverted to the boutique. Ans. A fraudulent act. The diversion of part of the shipment is clearly fraudulent. 3. The chains buyers were unaware of the short shipments, because the receiving supervisor would enter the correct quantity on the move ticket accompanying the merchandise to the sales areas. Ans. An event unrelated to the investigation.

The activity is within the rules. 4. The chains accounts payable department paid vendors for the total quantity shown on the receiving report. Ans. Event unrelated to the investigation. Payment to vendors was based on appropriate and verified documents. 5. Based on the supervisors instructions, quantities on lthe move tickets were not compared with those on the receiving reports. Ans. Indicator of, or likely to lead to, fraud. There was laxity in the sense that a control system would require a close comparison between the move tickets and the receiving reports, but this was not done. 5.2 A small but growing firm has recently hired you to investigate a potential fraud.

The company heard through its hotline that the purchases journal clerk periodically enters fictitious acquisitions. The nonexistent suppliers address is given as a post office box, which the clerk rents. He forwards notifications of the fictitious purchases for recording in the accounts payable ledger. Payment is ultimately mailed to the post office box. He then deposits the check in an account established in the name of the nonexistent supplier. Fraud investigation is the process of a searching inquiry for ascertaining facts; detailed or careful examination related to the likelihood or incidence of fraud (See also http://dictionary.reference.com /browse/investigation) b.