supplies sold by the company. The agent directs a disproportionate number of pur
ID: 415765 • Letter: S
Question
supplies sold by the company. The agent directs a disproportionate number of purchase orders to a supply company owned by the agent's brother in law, which charges above-market prices for its pro- ducts. The agent's relationship with the supplier is unknown to his employer. Required What type of fraud is this, and what controls can be implemented to prevent or detect the fraud? 3. MAIL ROOM FRAUD AND INTERNAL CONTROL Sarat Sethi, a professional criminal, took a job as a mail room clerk at Benson & Abernathy and Company, a large department store. The mail room was an extremely hectic work environment consist- ing of a supervisor and 45 clerks. The clerks were responsible for handling promotional mailings, cata- logs, and interoffice mail, as well as receiving and distributing a wide range of outside correspondence to various internal departments. One of Sethi's jobs was to open cash receipts envelopes from customers making payments on their credit card balances. He Copyright 2016 Cengage Learning. ALI Rights Reserved May epi Editoriil review has decised il y suppressed coatent does not nul 138Explanation / Answer
1. Sethi has a false identification with the name of John Benson. Whenever he found a check made to “Benson” (instead of the full company name) or a check where payee section would was left blank, he used to steal the check along with the remittance advice. Later, he used to make the check payable to J. Benson and cash them. Since, there was no remittance advice with the accounts receivable department, no discrepancies could be identified. Although it seems like a foolproof scheme. But, after the completion of a month, when the accounts of the customers will not be updated and they will receive the pending bills, then they would have complained it to the authorities and Sethi could be caught. Due to this reason, Sethi limited himself to only one month's activity before leaving the town.
2. Benson & Abernathy could implement the following steps to prevent the incident from taking place again:
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