Buena_Compny - Source::CasesandCommentary Abstract...

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Manager Persuades Employees to Unknowingly Allow Embezzlement Making Detection of Embezzlement Difficult by Misappropriating Financial Records Source:  Ethics and Fraud in Business: Cases and Commentary. 
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Abstract Businesses today rely heavily on computers to cut costs, increase transaction speed, create competitive  advantages and store vital information. This embrace of computer technology often means moving to large  systems and networks. Although these systems and networks come with built-in controls, such as  segregation of duties, they can never replace honest management. In this case, a manager under financial  pressure used his influence over his employees to bypass the system controls. He was able to embezzle  money until one employee courageously stood up to his questionable procedures. Background Buena, Inc. owned several media businesses, such as newspapers, radio stations and magazines. It  operated in many of the largest markets in the United States and Canada. The company had grown  primarily through acquisitions over the past ten years and still used several of the acquired business  systems. Last year, the company decided to  centralize all of its accounts payable processing , such as purchase   orders, vendor maintenance, invoice processing and check printing . To accomplish this centralization plan,  the company purchased the latest technology. Following the purchase, training sessions were held to  ensure all processors and management could use all of the system's functions. This technology included a robust database software package. The software provided  internal controls including  matching invoices to purchase orders and receiving reports signature dollar limits segregation of  processing duties and a controlled vendor list . All of the internal controls associated with the software were   adequately designed . They were tested and found to be functioning properly within the system. Before the centralization, Buena, Inc. had eight separate accounts payable departments throughout the  subsidiaries that processed approximately 7,000 transactions per month. At month-end, each department  had to submit a consolidation package to corporate accounting. After the centralization, the accounts  payable department was processing approximately the same number of transactions but was staffed with  fewer full-time employees. Also, the consolidation process had been reduced to one package each month  instead of eight. Buena, Inc. had realized the planned cost savings and management was delighted with the  results.
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The Problem Steve Blanquet  was a senior manager supervising the accounts payable process
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This note was uploaded on 03/23/2010 for the course ACCT 409 taught by Professor Ra during the Spring '10 term at University of Nevada, Las Vegas.

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Buena_Compny - Source::CasesandCommentary Abstract...

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