ACCOUNTING For this assignment, you will be demonstrating your knowledge/understanding in the…

ACCOUNTING For this assignment, you will be demonstrating your knowledge/understanding in the…

ACCOUNTING

For this assignment, you will be demonstrating your knowledge/understanding in the field of accounting.

Successful completion of this assignment will require students to evaluate anti-fraud deterrents and controls and the fraud examination plan for an organization’s accounting systems and processes and recommend improvements.

Scenario: You take your car into Ray’s Automotive Repair for your 60,000 mile tune up. After seeing your bill and taking five deep breaths, you call the shop to discuss the $500 “balance” you were carrying on your account. After being transferred four times (twice to the same person), you finally get through to Ray and explain that since you are a first time customer, it is not possible for you to have a balance.

Ray apologizes profusely. “That’s the tenth call this week about a billing error. Yesterday, I got a late payment notice from the credit card company and I have no idea how the garage’s checking account was overdrawn last week. We’re doing better business than ever!”

As an auditor, your interest is piqued. After some tough negotiation, you and Ray work out a barter deal (you make it clear that both you and Ray must include the fair market value of the services in your respective income): You will figure out what is going on in Ray’s accounting department and Ray will change your oil and provide tune ups for the life of your car.

You show up at Ray’s garage on Saturday to get to work. You are shocked by his accounting “department.” Susan, the bookkeeper, eyes you suspiciously when you tell her why you’re there. She explains that everything is in order and that the customers are simply wrong.

Irritated, but undaunted, you tell Susan you need her to show you the books and then you need to meet with the accountant, Phil. As it just so happens, Phil is Susan’s husband.

After five aspirin, six cups of coffee and four long walks to “clear your head,” you put together a list issues you saw on this first visit. You found:

· Susan does almost everything except signing checks and taxes

· Outdated computers and software with no password requirements

· Petty cash kept in an envelope in Susan’s right hand drawn (no lock or records)

· Shoe boxes stuffed with receipts and stacked in the corner with a space heater

· A safe that is locked at the end of each day (but the combination is written on a post-it note that is stuck to the wall)

· The only locks in the entire building are a knob lock on the front door to the office and the garage door

You have an appointment scheduled with Ray to go over your concerns and to provide recommendations, but you are called out of town on an auditing engagement that you know will take at least three months. Rather than put it off and allow the situation at Ray’s to further deteriorate, you decide to create a video presentation. In that presentation, you should cover the following:

1. Define and explain the most common forms of financial fraud experienced by small business owners. How are these frauds identified?

2. The “red flags” you found and why they are of concern

3. What is a control? Which controls do you recommend for Ray? How will they address the red flags?

4. Discuss any ethical concerns you have related to Susan and Phil. Provide recommendations, but be sure to explain them so that Ray understands

Create the video using PowerPoint 2010 or later and upload to your YouTube channel according to the instructions on the next page. This assignment requires a very commonly used skill in management. A polished, professional video could provide you with a strong representation of your presentation skills. It could also be included in your professional portfolio.

Answers with reference.

ACCOUNTING For this assignment, you will be demonstrating your knowledge/understanding in the…

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