Fraud examination 4th edition solution manual

Understanding both how and why fraud is committed helps us better detect and deter it. What are the implications of this theory with respect to occupational fraud? He believed that criminals learned both the techniques of committing crimes and the value systems of criminals in small, intimate groups. This explains, in part, why prisoners frequently return to crime after they are let out of confinement. While behind bars, they talk to other inmates and learn the specifics of how to better commit their crimes.

They frequently hear about other employees who were not successful in their crimes. Rather than being discouraged by someone being caught, the potential criminal often learns a different lesson: that the method the other person used to commit fraud was faulty and that a different one must be devised in order to succeed.

They also learn the value systems that some businesses have: Profit is everything, and the end justifies the means. Such values obviously send the wrong message. Which of these three factors, if any, is the most important in causing executives, managers, and employees to commit occupational fraud? Answer: All three are equally important. A fire cannot exist without fuel, oxygen, and heat; a fraud cannot exist without motive, opportunity, and rationalization.

If a person has unlimited Should an individual have both motive and opportunity but cannot salve his or her conscience through rationalization, the crime will most likely not be committed.

Learning objectives and Cressey described a number of non-shareable financial problems that he uncovered during his research. Which of these, if any, apply to modern-day executives who are responsible for large financial statement frauds?

In the plus years since Cressey did his study, are the factors he described still valid? Why or why not? And sometimes, business reversals—from loss of a major client or contract, recessions, high costs of capital, and the like—are at the root of these so-called nonshareable financial problems. One could argue that these factors are as valid today as they were over half a century ago.

What motivates people to act changes little over time, although the methods that they use to accomplish their illegal goals e. How are they different? One of the factors, perceived opportunity, was named by both researchers.

Nearly everyone suffers financial pressures of some kind, but most do not turn to fraud in order to alleviate them. The ability to rationalize illegal conduct and personal integrity could be viewed as one and the same. However, personal integrity is difficult to measure, while specific rationalizations are easier to identify.

What are some possible explanations for this finding? This explains why executives account for the largest losses. The character of the incoming funds has an effect on how the frauds are concealed, and concealment is the crucial element of most occupational fraud schemes. Answer: When an employee skims money by making off-book sales of merchandise, neither the Therefore, the books will remain in balance.

Learning objective Under what circumstances are incoming checks received through the mail typically stolen? Steve Albrecht, Chad O. Solution manual for Fraud Examination, 4th Edition by W.

Albrecht quantity. Steve Albrecht Chad O. Albrecht , W. Steve Albrecht. If you require any further information, let me know. Read more Accept X. Sign in. Welcome, Login to your account. Forget password? Remember me. Fraud Risk Assessment Interviewing Witnesses Manual solutions provide electronic and soft downloadable products for the selected Textbooks and not the actual hard copy Materials.

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Clients who use PayPal are going to receive a payment invoice into their email which they sign up with. When a fraud takes place, the conspirator has the desire to carry out his or her own will—influence another person to act and do as the perpetrator wishes—regardless of resistance. Fraud perpetrators use power to influence and persuade individuals to participate in fraud. Fraud perpetrators can get potential co-conspirators to join the fraud by promising a reward or benefit reward power , by following the orders of a person who is in a position of authority legitimate power , by making the potential recruit feel fear for not joining the fraud scheme coercive power , or through deceiving someone because the potential recruit has a lack of knowledge expert power.

Finally, perpetrators can get potential perpetrators to join the scheme through the influence of a relationship referent power. True 2. True 3. Good controls usually decrease opportunities for individuals to commit fraud within an organization. Effective fraud-fighters put their efforts into trying to eliminate all three parts of the fraud triangle, especially reducing opportunities. True 7. True 8. Fraud perpetrators who are prosecuted, incarcerated, or severally punished usually do not commit fraud again.

True Albrecht: Fraud Examination, 4e An individual who owns his or her own business and is the sole employee probably does not need many control procedures. While such people may have ample opportunity to defraud their companies, they have no incentive to do so. Documents rarely serve as preventive controls, but they provide excellent detective controls. Power is almost always used to influence another person to participate in an already existing fraud scheme. Multiple Choice 1.

The managers of the stores should follow the authorization policy and review all requests for large amounts of credit and the approval of new credit customers. Segregation of duties and independent check on performance.

A second individual, preferably someone not in the accounting department, should perform the bank reconciliation. With respect to separation of duties, various functions should be assigned to different people.

If two separate individuals performed the record keeping and physical handling of inventory, the opportunity for theft would be greatly reduced.

With respect to independent checks, test counts of his record keeping could be performed. Adequate document and records. A well-designed document should be formatted so that it can be handled quickly and efficiently. Case 2 While many people would question whether the accounting is appropriate, there is a ready market for the refined products, and both the selling prices and the cost of refining the oil can be reasonably quantified or determined. This is a good case to debate and provides students with experience regarding the impreciseness of accounting rules.

In this instance, experts for the plaintiffs argued that the treatment was inappropriate, while experts for the defense argued that the treatment was appropriate. There are many examples concerning revenue recognition, inventory, and other issues where the proper accounting treatment is not absolutely determined. These examples show that accounting is not an exact science. It certainly was in this case. Albrecht: Fraud Examination, 4e Case 3 1.

The company lacks good control activities or procedures. Mainly, it lacks segregation of duties, a good system of authorizations, independent checks, physical safeguards, and documents or records. Helen was a trusted employee. The company also lacked good control activities. To perpetrate the fraud, all she had to do was continue to process the checks to the terminated vendor and sign the vouchers.

The fraud would have been detected if the company had possessed a good internal audit department, combined with security or loss prevention programs. A good accounting system would have helped in the discovery of the fraud and would have made it difficult for Helen to conceal. Case 4 1. Ruth Mishkin was a trusted employee and she was in charge of paying bills, balancing accounts, and handling cash management.

A gambling addiction caused Ruth to have an immense pressure to commit fraud so that she would have additional funds with which to gamble. Because Ruth was a trusted employee, her bosses put her in charge of paying bills, balancing bank accounts, and handling other cash management chores. This lack of segregation of duties provided an easy opportunity to commit fraud. When people are addicted to a vice such as gambling, they feel tremendous pressure. With so much pressure, it takes only a little rationalization and a small opportunity for someone to perpetrate a fraud.

Case 5 1. The company should implement independent checks and segregation of duties controls. The accountant should not be posting to the General Ledger, paying the bills, and signing the checks.

The CEO or someone else should sign the checks. The accountant should be prosecuted civilly and criminally for mail fraud, embezzlement, and money laundering. In addition, it would be a simple task to have the auditors run a computer analysis on the addresses of vendors to look for companies with the same addresses.

The company should implement segregation of duties controls. The warehouse manager should not be able to both receive returned items and issue the credit. Albrecht: Fraud Examination, 4e memos. The accounts receivable department should create credit memos, which are then taken to the warehouse where additional goods can be issued. In addition, another worker must process returned defective merchandise. Both the manager and the worker should sign off. The warehouse manager should be prosecuted, and his son should spend more time in the gym.

A system of authorizations should be implemented. The board should not allow the CEO to fire his employees and rehire them as contractors. The accountant who prepares payroll records should notice this problem.