Assignment 3-3 Week 3 Discussion Issues

Assignment 3-3 Week 3 Discussion Issues - 1Assignment 3-3...

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1Assignment 3-3 Week 3 Discussion Issues Assignment 3-3 ACCT341-E1WW Professor Filler
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2Assignment 3-3 CHAPTER 4: 4-3. What is the purpose of a shell company, and how is it normally formed? A shell company is a fictitious entity created for the sole purpose of committing fraud. They may be nothing more than a fabricated name and a post office box that an employee uses to collect disbursements from false billings. A person can set up a shell company by either forging a certificate of incorporation or simply applying for one through his or her state and paying a small fee. 4-4. There are four ways that fraudulent invoices are approved for payment. What are they? (1) Self – Approval – In a large percentage of shell companies, the fraudster was in a position to approve payment on the vary invoices he was fraudulently submitting. (2) “Rubber Stamp” Supervisors – If an employee cannot authorize payments himself, the nex best thing is if who has that authority is inattentive or overly trusting. (3) Reliance on False Documents – when an employee does not have the approval authority for purchases and does not have the benefit of a rubber stamp supervisor, he must run vouchers through the normal accounts payable process. (4) Collusion – collusion among several employees is sometimes used to overcome well designed internal controls of a victim company.
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3Assignment 3-3 CHAPTER 6: 6-1. According to this chapter, what are the three main categories of payroll fraud? (1) Ghost Employee Schemes- A ghost employee is someone on payroll who actually doesn’t work for the company. In order for this scheme to work 4 things must happen: (1) the ghost must be added to the payroll, (2) time keeping and wage rate information must be collected, (3) a
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Assignment 3-3 Week 3 Discussion Issues - 1Assignment 3-3...

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