Coupon Accounting Abuse

Submitted by: Submitted by

Views: 253

Words: 691

Pages: 3

Category: Business and Industry

Date Submitted: 11/18/2012 12:24 PM

Report This Essay

Coupon Accounting Abuse - Case Study #1

ACCT 326 - Accounting Information Systems

“Coupon Accounting Abuse”

Businesses have had to deal with fraud both internally and externally for many years. Managers and employees have a number of ways to commit fraud so a company has to have quality internal controls to deter fraudulent activity. However even companies that have internal controls and consequences still have incidences of fraud. Let’s concentrate on answering questions regarding the type of abuse known as coupon accounting, company controls, parties harmed by coupon accounting abuse and ways to prevent abuse.

Any company should implement and use internal accounting controls to protect itself from fraud. To help deter fraud any company should have a good control environment. According to Turner and Weickgenannt (2012), “The control environment sets the tone of an organization and influences the control consciousness of its employees” (p. 93). A good control environment will include “ethical values, competent employees, a management philosophy, a way the management assigns responsibility, organizes and develops its employees and how the company pays attention and gives direction provided by the board of directors.” Having these types of controls will only give the company some protection. In this case study, the brand manager is committing the fraud of adjusting his coupon rate to make his profit look better than it really is. This would be reasonable assurance. Managers set the guidelines the employees must follow however managers can change or override the internal controls so that it benefits them and their bonuses.

There are steps a company can take to prevent abuses by using control activities. Any good control environment should have these. Some of the control activities are authorization of transactions, segregation of duties, adequate records and documents, security of assets and documents, and Independent checks and...