Discussion question

9. What is conversion?

10. 10. Psychopaths feel no guilt because they have no conscience.

 

SHORT CASES

Case 1

Cal Smith Jr. is the night manager at a local doughnut shop that is doing very well. The shop sells doughnuts 7 days a week, 24 hours a day. Cal runs the graveyard shift by himself since none of the other employees want to work at night. Since opening six months ago, Cal has not been able to find anyone to work for him and therefore has never missed one day of work. Cal makes his bank deposits every morning before going home.

Cal feels that he is overworked and underpaid. The franchise owner, Kenny Jones, has praised Cal for his hard work and dedication to the company. Kenny’s only concern is that, once or twice a week, an entire batch of traditional glazed doughnuts has been thrown away because of overbaking. Despite these problems, Cal maintains a clean work environment and is consid- ered a valuable employee.

Recently, Cal has yelled at people on shifts before and after him for seemingly insignificant reasons. He was hired as manager because he gets along with everyone and is usually easygoing. His recent irritability could stem from the fact that business is slowing down, and he does not have much interac- tion with anyone at night. He also has been com- plaining that he has not been getting very much sleep. One day, Cal came to work in a new BMW, the car of his dreams. Cal said that his dad helped him buy the car.

1. What areas of the business are most at risk for fraud?

2. Identify any symptoms of fraud that appear to exist at the doughnut shop.

3. What steps could be taken to reduce opportunities for fraud?

4.

 

 

Case 5

There once was a corporation from Nantucket, Its controls leaked like holes in a bucket. Smelling trouble with the buyer, And with the supplier,

They determined to fix it or chuck it.

This limerick accurately depicts Bucket Corp., which manufactures wood furniture. Bucket has enjoyed several years of good profits but has recently seen some alarming trends in its bottom line. Although not drastic, Bucket’s profits first stagnated and are now beginning to decline. After some cost analysis and investigation of financial records, the company has determined that the problem may be coming from the procurement division of operations. On the

 

 

 

 

 

 

following page is a small random sample of invoices from various vendors:

1. What could the CFO do to investigate the potential problems in the procurement department of Bucket Corp.?

2. Doyouthinkitispossiblethereisfraudinvolved?Why?