Deficiencies in and circumvention of internal control

Deficiencies in and circumvention of internal control -...

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Running Head: DEFICIENCIES OF INTERNAL CONTROL 1 Deficiencies of internal control Students Name Tutor Course Number and Title Institution Date
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DEFICIENCIES OF INTERNAL CONTROL 2 Deficiencies in and circumvention of internal control QSGI company under the leadership of Sherman who was the company’s CEO was aware about the falsification of the company’s books of accounts. This is because the company had been filed for bankruptcy because of the losses it had made before it was noticed by external auditors. The company was to acquire for a loan through a credit facility institution but because the CEO knew of the company’s operations and how the activities had turned out to be, he opted to provide wrong information about the company’s account receivables and records of inventory in order to be allowed to access a loan so that it can finance the losses it had as (Rezaee, 2005) noted. The chief executive officer ensured that the external auditors were materially misrepresented so that the they had the misleading information which will make them look to be on the safe side to be allowed to borrow a loan. Sherman ensured that the accounts receivables figures were accelerated so that it can show that it has more assets that is out being held by people. Therefore, most of the people recorded as debtors had no idea about the issue in the company and about them being debtors. This shows that the company’s inventory was being used by the employees in the wrong way for personal interests and which describes why there no sales being recorded thus making them to accelerate the figures of the receivables account.
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  • Summer '14
  • Prof.EmmaNgure
  • Balance Sheet, International Financial Reporting Standards

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