Read the story of fraud investigation at this company and complete assignments based on the case.
Read this fictional case:
The Treasure House is a public retail company that sells small gifts directly to its consumers through a catalogue and online sales. The company also sells to wholesalers under special sales contracts. It maintains no retail stores. The catalogue items are similar to those advertised on most television stations for $19.95 or less.
The workforce is made up of warehouse (minimum wage) workers who fill orders from warehouse stocks, various secretaries, and three managers directly responsible for running the company’s three warehouses scattered around the U.S. Each warehouse handles an equal volume of units that are similar to one another. Warehouse employees have a high turnover because many are only working at the job until they can get a better job. They are provided with only minimum health benefits. They are supervised by the three warehouse managers who have been with the company for periods of five years or more.
The company’s central purchasing department employees are responsible for ordering products from vendors, who are mostly outside the U.S., and ensuring delivery of products to the company’s wholesale customers. All warehouse workers receive their salary every two weeks through direct deposits into their checking accounts. The company maintains checking accounts in three countries outside the U.S. The company does not have accounting audit trail software, such as mySAP, showing the authorizations for each transaction made in the company’s databases.
Beyond the CEO, Mr. Twist, the company’s other main financial officer is the CFO, Mr. Jefferson, who has been with the company for 15 years. Sales for the company in 2009 were close to $50 million. In each of the past three years, the company has received “clean” or unqualified opinions from their auditors, Blake and Blake. Mr. Blake and Mr. Twist have served on a number of the same local nonprofit boards over the years.
Your task is to analyze the case and identify three financial frauds most likely to occur in this company. Describe the frauds and explain why you think they are the most likely to occur.
Write a two- to three-page briefing paper in Word format. Apply current APA standards for writing style to your work.
•Identified three frauds most likely to occur in the case.
•Supported identification of frauds with case information and financial statement analysis.
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