Question

REVIEW QUESTIONS biective 9-1) What are the five categories o misappropriate noncash tangible assets 9.2 (Learning objective Fraud Survey, how do with cash misappropriations i misappropriated? (Learning objective 9-1) What are of schemes used to misappropriate All of ABC's lumber and other building materials are stored in identified in this chapter? a central warehouse and are relased upon signed without eaming objective 9-2) According to the 2011 Global from job-site supervisors as needed. Able requests twice the Survey, how do noncash misappropriations compare amount of lumber that is actually needed for a particular job. misappropriations in terms of frequency and cost? He uses the excess materials to build a new deck on his home. How would Able's scheme be categorized? What two types of noncash assets were most commonly 9-6 (Learning objective 9-9) What is shrinkage? 9.7 (Learning objectives 9-8 and 9-10) Baker works in the 0.1 (Learning objective 9-3) What are some examples of sales department of ABC Company, which manufactures com asset misuse? Give at least three. puter chips. Baker creates false documentation indicating that XYZ, Inc. (a nonexistent company has agreed to purchase 9.4 (Learning objective 9-4) What is an unconcealed larceny a large quantity of computer chips. The computer chips are scheme? shipped to XYZ, Inc. "headquarters, which is really Baker's house. How would Baker's scheme be categorized, and what 9.5 (Learning objective 9-6) Able is a job-site supervisor for are some red flags that might occur as a result of the scheme? ABC Construction. Able is responsible for overseeing the con 9-8 (Learning objective 9-7) How do employees use falsified struction of a number of residential homes and for making sure receiving reports as part of schemes to steal inventory? each of his crews has sufficient materials to complete its work.

for review questions, I would appreciate if you could assit with answering 9-5 & 9-7 and 9-1 & 9-6 for discussion board respectfully.

Answer 1

Review questions

9-1.  The five categories identified in this chapter are misuse, unconcealed larceny, asset requisitions and transfers, purchasing and receiving schemes, and fraudulent shipments.

9-2.  According to the 2011 Global Fraud Survey, cash schemes were much more common than non-cash schemes. Eighty-two percent of asset misappropriations involved the theft of cash, whereas only 20 percent involved the theft or misuse of non-cash assets. In terms of median loss, cash schemes were also costlier: cash schemes had a median loss of $100,000, while non-cash schemes had a median loss of $58,000. Physical assets, such as equipment and inventory, were the most frequently targeted type of non-cash asset in the study, with 75 percent of non-cash cases involving the misappropriation of a physical asset.

9-3.  There are many ways in which non-cash assets are misused by employees without being stolen. Company vehicles can be used for personal trips. Computers, supplies, and office equipment can be used by employees for personal work on company time. Employees might also take home tools or equipment for a personal project, then return them.

9-4.  An unconcealed larceny scheme is one in which an employee takes property from the organization without attempting to conceal the theft on the organization’s books and records.

9-5.  Since Able was able to us requisitions and documentation to allow the building material to be moved from the central warehouse and stole some of it in the process, he committed an asset requisitions and transfers scheme.

9-6.  The unaccounted for reduction in an organization’s inventory that results from theft. Shrinkage is usually an indicator of fraud. Companies should conduct physical counts of assets on hand to detect shrinkage.

9-7.  Since he produced false documentation to support the shipment of themerchandise to his house, this would be considered a fraudulent shipment scheme.

Red flags:  The “customer” has the same address as Baker, an employee.

The “sale” was fabricated, meaning any support documents and/or authorization for the sale were bogus.

Since the customer does not exist, no credit check could have been done on XYZ prior to the issuance of this sale on credit. (The sale had to have been on credit since XYZ, a nonexistent company, could not have paid for the chips.)

Presumably, XYZ’s account will age and eventually need to be written off as uncollectible.

9-8.  Falsified receiving reports are sometimes used as part of a purchasing and receiving scheme. The perpetrator—typically a warehouse employee—falsifies records of incoming shipments by marking them “short” (meaning that items were missing) or by listing certain items as being damaged or substandard. The perpetrator then steals the unaccounted-for items. For instance, if 1,000 units of an item are received, the fraudster indicates that only 900 are received, then steals the 100 “missing” units.

Discussion issues;

9-1. Jones' main priority is the management and success of ABC Auto Repaid as manager of the facility. Jones appears to have a conflict of interest with regard to his freelance auto work. Jones could be referring business away from ABC Auto Repair and onto his freelance work which is a loss to his primary employee with regards to sales and profits. In addition, Jones' use of ABC facilities and tools for these jobs increase the supply costs for ABC Auto Repair which also lowers profits because Jones is not compensating ABC Auto Repair for the use of the facilities and tools. Finally, ABC Auto Repair would be liable for any accidents happening on its facilities during the freelance work which increases their exposure for unforeseen expenses.

Note.

Questions(Discussion issues) 9-6 is partially given.so, not answered and questions(Discussion issues) 9-5, 9-7,are not visible here i.e.not given.except those, all others are answered.