Fraud: Green Grass is a small, family-operated company whose core service is in

Question

Fraud:

Green Grass is a small, family-operated company whose core service is in horticultural care and lawn care for customers in the local city. The owner of the company is the father of the family. He has used the company to cover the costs of his children’s college education. At the same time, he has been able to give his children some work experience and an opportunity to earn their own money to pay for school. The company has grown steadily over the last few years, and the owner has hired many employees outside of the family to be able to keep up with the demand of the increasing number of customers. The company is run from a small office building, and there is only one employee performing the managerial operations in the company office. The father had usually been in charge of this aspect of the company, but now leaves the responsibility to his trusted friend, who has experience in accounting and information systems. This employee is in charge of scheduling the routes of all the employees and is responsible for payments, receipts, and balancing the books. The company performs two major operations. First, it provides lawn care using insecticides, fertilizer, and weed killers. Eight employees are responsible for this activity. They each drive a truck and are responsible for collecting money from the customers they serve. They are also responsible for loading and mixing chemicals in the tanks they use during the day. The second part of the operation is the lawn mowing care. Usually, a four-man crew is responsible for all the machines they use, and they are responsible for taking care of Chapter 2: Why People Commit Fraud 63 Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. the lawns on their daily schedule. This is where the owner has hired his children to work, and the whole team is usually made up of younger workers than the team that works with the chemicals. Over the years, Green Grass has experienced small growth and success. Profits have increased steadily as the company has picked up new clients. However, the owner noticed that last year’s accounts were different. The revenues increased a marginal amount, while the expenses for the company increased more than they should have. The owner has noticed that his interactions with his friend in the office have been fewer and not quite so friendly. Also, his employees have been finishing their routes later in the day than they had in previous years.

1. What are some of the fraud opportunities within Green Grass?

2. What symptoms of fraud exist, and what symptoms should the owner look for if he believes fraud may be occurring?

3. What steps should be taken to make sure fraud does not occur, and what are the costs associated with these steps?

Explanation / Answer

1) A. The companion who keeps the books does not have any other person additionally checking the books to guarantee that the accounting is done legitimately

B. Also the workers who are at work locales don't have any methods responsibility. They could be checking out late in the wake of leaving the activity site or not working all and additionally taking pointless long breaks.

An extortion opportunity inside the Green Grass organization is that the noble man in the workplace works alone and does the greater part of the workplace work. There is no detachment of obligations for this labourer. Likewise, the refined men who deal with the yards are inadequate with regards to a detachment of obligations. They take every necessary step and gather the cash

2) Symptoms that exist in Green Grass are that the proprietor of the organization isn't seeing or connecting with his companion (responsible for all budgetary/bookkeeping obligations). Another manifestation may incorporate that the records appear to be unique than they did a year ago, particularly with regards to costs. The clear above typical costs may show that the confided in companion may be over expensing certain costs and taking the cash that was not required.

1)Segregation of obligations

2)Overriding frameworks set up

3)Proper documentation

B. Analytical Irregularities

C. Accounting Abnormalities

3) I think use about some inside controls could be utilized to counteract misrepresentation.

Know Your Employees

Misrepresentation culprits frequently show conduct qualities that can demonstrate the goal to confer extortion. Watching and tuning in to representatives can enable you to distinguish potential extortion hazard. It is essential for administration to be required with their representatives. Regularly, a state of mind change can educate you to a hazard. This can likewise uncover interior issues that should be tended to. For instance, if a representative feels an absence of gratefulness from the entrepreneur or outrage at their supervisor, this could lead him or her to submit misrepresentation as a method for vindicate. Any state of mind change should make you consider that worker. This may limit a misfortune from extortion, as well as can improve the association a, more proficient place with more joyful representatives.

2. Make Employees Aware/Set Up Reporting System

Mindfulness influences all workers. Everybody inside the association ought to know about the extortion chance strategy including kinds of misrepresentation and the outcomes related with them. The individuals who are intending to confer misrepresentation will realize that administration is watching and will ideally be discouraged by this. Legitimate workers who are not enticed to submit misrepresentation will likewise be made mindful of conceivable indications of extortion or robbery. These representatives are resources in the battle against extortion. As indicated by the ACFE 2014 Report, most word related extortion (more than 40%) is recognized because a tip. While most tips originate from workers of the association, other imperative wellsprings of tips are clients, sellers, contenders and colleagues of the fraudster. Since numerous workers are reluctant to report episodes to their managers, think about setting up an unknown revealing framework. Workers can report fake action through a site protecting their character or by utilizing a tip hotline.

3. Execute Internal Controls

Inward controls are the plans and additionally programs actualized to protect your organization's advantages, guarantee the honesty of its bookkeeping records, and stop and identify extortion and robbery. Isolation of obligations is a vital part of inward control that can decrease the danger of misrepresentation from happening. For instance, a retail location has one money enrol representative, one salesman, and one administrator. The money and check enlist receipts ought to be counted by one worker while another ready the store slip and the third conveys the store to the bank. This can help uncover any errors in the accumulations.

Documentation is another inner control that can help lessen extortion. Consider the case above; if deals receipt and planning of the bank store are reported in the books, the entrepreneur can take a gander at the documentation every day or week by week to confirm that the receipts were saved into the bank. Likewise, ensure all checks, buy requests and solicitations are numbered continuously. Use "for store just" stamps on every single approaching check, require two marks on checks over a predetermined dollar sum and abstain from utilizing a mark stamp. Additionally, be cognizant to new merchants as charging plan thief’s setup and make instalments to invented sellers, generally sent to a P.O. Box.

Inside control projects ought to be checked and changed consistently to guarantee they are viable and current with innovative and different advances. If you don't have an inside control process or misrepresentation avoidance program set up, at that point you should contract an expert with involvement around there. A specialist will examine the organization's approaches and strategies, prescribe proper projects and help with execution.

4. Screen Vacation Balances

You may be inspired by the representatives who haven't missed multi day of work in years. While these may seem like steadfast representatives, it could be an indication that these workers have a remark and are concerned that somebody will identify their misrepresentation on the off chance that they were out of the workplace for a timeframe. It is additionally a smart thought to pivot representatives to different occupations inside an organization. This may likewise uncover fake action as it enables a second worker to audit the exercises of the first.

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