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Unformatted text preview: 956 There are several fraud risk factors involved here. The first thing that stands out is that Kent states “We don’t have any specific duties regarding fraud. If we find it, we’ll deal with it then.” That is not the appropriate attitude to be taken when preparing for an audit. One should go in expecting the worst and looking for any and everything. Also the fact that Green and Mint have been good friends for quite some time could lead to a conflict of interest. It appears as though Smith is more concerned with what is going to happen to SCS in the future and can they keep up to what they are promising and forecasting. Kent, on the other hand just wants to go in, get it done and over with. Smith is aware there are big layoffs coming, yet there is an expected 30% earnings increase. Why is this happening? What is going on in the company that would lead to layoffs, yet a 30% earnings increase? There are problems with management with the company that need to be addressed and resolved by the auditor. One particular instance that needs to be resolved is the fact that there is no segregation of duties. As Smith said “..even a clerk could write a check for anything..” This is not good for business in any way, shape, or form. 960 1. C. There is nothing fraudulent or illegal going on. 2. B. While there is nothing wrong with giving employees bonuses, it should raise a red flag that they were given so early and yet everything else is still correct and current. 3. E. 8. e. ...
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This note was uploaded on 05/06/2011 for the course ACCT 410 taught by Professor David during the Spring '10 term at Kaplan University.
- Spring '10