Acc Case Study

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Category: Business and Industry

Date Submitted: 11/25/2012 07:19 PM

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Fraud has become a major occurrence over the years. There have been numerous documented cases of accounting fraud. One case is from “Coupon Accounting Abuse, “where a brand manager for a major consumer product firm commits fraud. The manager receives an end of the year bonus every year and this year he was not going to make his quota. He took it upon himself to change the anticipated redemption percentage rate on his estimate sheet from 4% to 2%, in-order to show an increase in revenue associated with a discounted coupon that the company was offering.

Accounting fraud could happen to a company with a good control environment. Just because a company has rules and regulations does not always mean people follow them to the “T”. Even though a company with a controlled environment rigidly enforces their policies, people tend to still break the rules and not follow policies and procedures. Sometimes these employees get caught right away and other times it takes awhile to be caught, but they always get caught and are dealt with accordingly.

A company can take certain steps to try and avoid this situation such as background checks, contacting previous employers, and references. A company could do an in-depth background check to obtain and criminal record or and record for that matter that a potential employee might have. Also contracting previous employers would give you an idea of the potential employees work ethic and if they were ever fired from a job. Lastly a company could also contact references the potential employee listed on their resume. By contracting those references an employer will also be able to determine what type of person they might be hiring.

Due to Larry’s greed and changing the expense estimate from 4% to 2% so it will show on the product profitability report that there was an increase in revenue associated with the coupon drop, this will have a big effect on numerous parties. The company itself will be affected by Larry’s actions, its...