Questions:
Assessment Task Description
You are required to complete the following questions, in your own words*, based on the key materials covered in Chapters 1 to 4 of the prescribed textbook. Types of plagiarism or academic misconduct: Sham Paraphrasing Material has been copied exactly from the source and has been acknowledged with an in-text citation but has not been quoted; There is a reference list. Illicit Paraphrasing Material has been paraphrased from the source without any in-text citation; There is a reference list. Exact Copying Material has been copied exactly from the source without any in-text citation; There is a reference list. No Referencing There is no in-text citations nor a reference list. Collusion Material has been copied from another student’s work; Recycling The same assignment submitted in more than one unit; Contract Cheating The assignment has been written by a third party and the students is claiming it as their own work.
In addition to the Submission Guidelines appearing on page 1, this assessment task is to be completed by individual student. The submission into the assignment drop box in Moodle is to made by ONLY the individual. This assessment task is comprised of four questions, worth 20 marks. Page 1 of your submission MUST be the Assessment Cover Sheet, signed by you (as per page 2 of this document).
Question 1 (6 marks)
Canon Pty Ltd is a large shoe manufacturing business. Its income statement is as follow:
Canon Pty Ltd Income Statement for the Year Ended June 30, 2021
Sales revenue $24,000
Less cost of goods sold $18,000
Gross margin $6,000
Expenses $3,000
Net income $3,000
Tsiaris Pty Ltd is a small accounting firm business. Its income statement is as follows:
Tsiaris Pty Ltd Income Statement for the Year Ended June 30, 2021
Sales revenue $9,000
Expenses $8,000
Net income $1,000
During the financial year ending 2021, both businesses incurred a $3,000 fraud loss.
Required
(a)How much additional revenue must each business generate to recover the losses from the fraud?
(2 + 2 = 4 marks)
(b)Why are these amounts different? (1 mark)
(c)Why would it be easier for Jucinta Pty Ltd to generate the additional revenue to recover the fraud losses? (1 mark)
Question 2 (4 marks)
The following fraud occurred in the accounts department of a large mining company. The accounts clerk, Sanjay had become such a hard-working and trusted employee that his bosses had put him in charge of paying bills, balancing and reconciling bank accounts, and handling other cash management chores, including depositing of cash at the local bank. The company didn’t realize their mistake until Sanjay took a sick leave day, and they discovered he had been stealing money for years. The money had helped maintain an extra-marital relationship that included paying rent for a luxury high rise penthouse in the heart of the city and the purchase of a Ferrari. In all, the company claims he stole about one million dollars ($1,000,000).
Sanjay pleaded guilty to one count of theft and four counts of check forgery. He was placed on 10 years’ probation.
Required
(a)What were Sanjay’s opportunities? (1 mark)
(b)What pressure(s) did Sanjay have to commit the fraud? (1 mark)
(c)How did the fact that Sanjay was a trusted employee give him more opportunity to commit fraud? (1 mark)
(d)The third element of the fraud triangle is Rationalization. Provide an example of how Sanjay might have rationalized his perpetration of the fraud. (1 mark)
Question 3 (5 marks)
If you were employed as a fraud examiner consultant, before implementing a fraud prevention program, one of the first assessments is on the culture of the organisation.
Required
(a)List the five critical elements that are the key factors in creating an atmosphere or culture of honesty and high ethics? (5 x ½ mark = 2½ marks)
(b)For each of the five critical elements mentioned in (a), in your own words explain how would you implement these elements in the organisation? (5 x ½ mark = 2½ marks)
Question 4 (5 marks)
(a)There are five different ways in which organizations can eliminate opportunities for fraud. List and in your own words discuss any three. (3 marks)
(b)Jane was the chief accountant in a large organization and the only person responsible for the recording and payment of purchase orders. Over a period of three years, she embezzled over three million dollars ($3,000,000). She took the money by creating false purchase orders and transferring the organization’s payments of these fake purchase orders into her own bank account. Whenever she was questioned about purchase order discrepancies, she usually used the excuse that “it’s a computer error.”
Required
List and in your own words explain two internal control weaknesses that allowed this fraud to happen? (2 marks)
