'Coupon Accounting Abuse Essay\r'

'The incentive, opportunity, and rationalization to commit invention excite plagued clientele organizations for many years. in that location be legion(predicate) ways that buss and employees jackpot commit cheat. This invents it a necessity for businesses to have quality inner(a) dictations that help pr yett pseudoulent activity. However, even with the best set of confines businesses are passive susceptible of guile. This paper lead revolve about on the case study concerning verifier accounting abuse and get outing make out questions pertaining to phoner controls, ways to prevent coupon abuse, parties who discolorthorn be harmed, and the type of fraud presented in the case.\r\nCoupon Accounting horror Question 1: Discuss whether the berth described raise happen to a partnership with a good control environment. It is imperative for a company to have good accounting internal controls. A company that has a good control environment lead help disapprove frau d, but these controls drive out only put forward a company with reasonable assurance. In this situation the make manager is committing the fraud. This would make it very hard even for a company with good controls to detect fraud. In what is known as way override, managers can simply circumvent a company’s internal controls.\r\nQuestion 2: Describe any stairs a company could own to prevent much(prenominal) abuse. There are many steps that a company can take to prevent fraud abuse. A company should implement a strong command of ethics policy. Every manager and employee should be trained and very aware of the policy. This will help in maintaining the integrity of the workforce. There should be a strong concealment process that includes background checks to help stop the company is hiring honest employees. There should to a fault be a segregation of duties.\r\nIn this case the commemorate manager has nail down control over estimating the coupon liability. This estima tion should be approved by another(prenominal) manager at the company. The company should predicate independent and internal auditors of the significance that coupons can have on the company’s financial statements. A find guidance group should be established whose job is to facilitate and co-ordinate the overall put on the line management process. Depending on the size and genius of the organization, the risk management group may be in the form of a committee who meet from beat to time (CIMA, 2009).\r\nQuestion 3: List those parties who index be harmed by this situation. Fraud is ofttimes mistakenly considered a victimless crime. However, fraud can have considerable social and mental effects on individuals, businesses and society (CIMA, 2009). In this situation the make manager is harming twofold parties. When the manager replaces the 4% estimated redemption respect with 2% he is increasing gross making the company look more profitable than it really was.\r\nThis is misleading to managers and shareholders who are reading the financial statements. It could be mischievous to the business if managers think a brand is doing better than it really is. The shareholder will also be impacted in the coming year because of the added liability expenses. The brand manager is putting himself at risk to be harmed because if he is caught his job will be terminated and he will be prosecuted. Question 4: Do you consider this example to be management fraud or employee fraud?\r\nI consider this to be management fraud. focal point fraud often involves senior or high level management’s intentional misrepresentation of financial statements, stealth or improper use of succeed resources. Employee fraud involves a non-senior employee theft or improper use of company resources (Gottlieb, 2011). The fraud that was committed was by the brand manager who developed a myopic judgment and knew that he would be managing another brand in the next year. This situa tion is suitable increasingly common in the workplace.\r\nIn order to combat fraud and white collar crime in businesses, a concerted effort must be exerted by the management of the business, the external auditors, and by all employees of the business. Everyone must realize that fraud is not a victimless crime. The cost of fraud and theft are shared by all through higher cost and lower corporate profits. Through competent internal controls by management, better workings environments for employees, more stringent requirements for external auditors, and codes of ethics for employees, everyone can start to combat frauds and defalcations deep down corporate America (Farrell, Franco, 1999).\r\n'