Coupon Accounting Abuse Essay

The incentive, opportunity, and rationalization to commit wile have plagued business organizations for many years. in that respect are numerous ways that managers and employees can commit fraud. This makes it a necessity for businesses to have quality upcountry controls that help prevent fraudulent activity. However, even with the best set of controls businesses are still susceptible of fraud. This news report will concentrate on the case study concerning coupon bill abuse and will closure questions pertaining to go with controls, ways to prevent coupon abuse, parties who may be harmed, and the type of fraud presented in the case. coupon Accounting Abuse irresolution 1 Discuss whether the situation described can happen to a company with a good control environment. It is imperative for a company to have good accounting inborn controls. A company that has a good control environment will help warn fraud, but these controls can only provide a company with reasonable assurance. In this situation the grunge manager is committing the fraud. This would make it very hard even for a company with good controls to detect fraud. In what is known as management everywhereride, managers can simply circumvent a companys internal controls.Question 2 Describe any steps a company could take to prevent such(prenominal) abuse. There are many steps that a company can take to prevent fraud abuse. A company should implement a strong code of ethics policy. Every manager and employee should be trained and very aware of the policy. This will help in maintaining the integrity of the workforce. There should be a strong screening process that includes background checks to help ensure the company is hiring honest employees. There should in like manner be a segregation of duties.In this case the blade manager has complete control over estimating the coupon liability. This estimate should be approved by another manager at the company. The company should propound independent and i nternal auditors of the significance that coupons can have on the companys financial statements. A guess management group should be established whose task is to facilitate and co-ordinate the overall essay management process. Depending on the size and nature of the organization, the risk management group may be in the form of a committee who meet from time to time (CIMA, 2009).Question 3 List those parties who force be harmed by this situation. Fraud is often mistakenly considered a victimless crime. However, fraud can have extensive social and psychological effects on individuals, businesses and society (CIMA, 2009). In this situation the brand manager is harming denary parties. When the manager replaces the 4% estimated redemption rate with 2% he is increasing revenue making the company look more profitable than it really was.This is misleading to managers and shareholders who are reading the financial statements. It could be baneful to the business if managers think a brand is doing better than it really is. The shareholder will also be impacted in the coming year because of the added liability expenses. The brand manager is putting himself at risk to be harmed because if he is caught his job will be terminated and he will be prosecuted. Question 4 Do you consider this example to be management fraud or employee fraud?I consider this to be management fraud. Management fraud often involves senior or high level managements intentional misrepresentation of financial statements, theft or improper use of abide by resources. Employee fraud involves a non-senior employee theft or improper use of company resources (Gottlieb, 2011). The fraud that was committed was by the brand manager who developed a myopic view and knew that he would be managing another brand in the next year. This situation is becoming increasingly common in the workplace.In order to trash fraud and white collar crime in businesses, a concerted effort must be exerted by the management of t he business, the external auditors, and by all employees of the business. Everyone must realize that fraud is not a victimless crime. The cost of fraud and theft are shared by all through higher cost and lower corporate profits. Through adequate internal controls by management, better working environments for employees, more plastered requirements for external auditors, and codes of ethics for employees, everyone can start to combat frauds and defalcations within corporate America (Farrell, Franco, 1999).