Madon Oilfield Services, Inc.
Part 1
1. Sherika Spies is the head of payroll. She is also the wife of Tim Spies who is the Lafayette Branch Manager.
2. Sherika could write extra payroll and bonus checks for her and her husband, which could easily be done since Bernie was usually out of the office and she also had his signature on a rubber stamp. Sherika could set up a ghost employee as well as write other employees an extra payroll or bonus check for them and receive a kickback from that employee.
3. Ghost employees are fake employees or employees that have been terminated and are used to cut a payroll check to, to take money from the company.
4. Check for multiple employees using the same address or the same bank account.
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2. Any of their sales transactions to vendors for their products, especially sales requiring timely delivery.
3. Since Bernie makes his employees work hard, some of the employees might feel like they deserve the extra compensation. Since some of these vendors have been in business with Madon for several years, none of the employees will ask questions about the invoices form Madon. This allows the people in the scheme to make extra money from it.
4. Employees in the account receivable department, Mary Gonzalez as well as Sherika, and other employees in the accounts payable department.
5. No because the amount of the invoice fluctuates for the same product in this type of scheme and therefore it would be difficult to figure out how much the invoice should have been made out for.
6. There has been a rapid growth in the valve revenues due to the new oil shale discoveries in Louisiana and Texas; therefore it would make it hard to find a false billing scheme because the revenues are rising anyway. In this case, companies are willing to pay a lot of money for a product, making it difficult to find the difference in high dollar invoices between invoices for quick deliveries or for false billing schemes.
7. There should more separation of duties to help with this issues as well as a better process put in place for deposit reconciliations. There should also be an approved vendor list as to whom Madon does business
This shows that invoices were made twice for large amounts possibly by fraudsters that have approved the transactions. It’s very clear that the invoices were recorded this way.
Today a mishap transpired with an order that appeared to be incomplete. Although, this had not been caught until the entire order was on the truck. All the contents were cleared to find the two missing boxes, which caused three extra hours of unnecessary work. However, this occurrence rarely happens and can be avoided in the future by double checking orders to their invoices.
Several of the officers of the company seem reluctant to contact the processor even though the math on the invoice is not correct. The invoice indicates that approximately $500,000 of the sales (2,000 items) are at 0.1% plus $.22. This would be the interchange price for a regulated debit card after add a markup of .05%. It also shows approximately $ 150,000 (300 items) at 1.48% plus $.05. When you do the math, you conclude that the total cost should be $3,175. You would expect this amount to carryforward to the front of the invoice, but it does not.
Company X pays approximately $2 million in invoices each day. Using proper internal controls, you can ensure that goods and services are received, and payments are properly processed.
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Is the work performed by the workers a key aspect of the business? This could mean the worker is most likely an employee.
Secondly, it is the company’s accountant which deals with the company’s annual finance. However under Mr Blacks assistant it is the manager who is given the role to take care of the company’s day to day finance. Under the manager there are four people, firstly it is the employees the people who stock the shelf and assist and help the customer’s. Secondly, it is the cashier who works at the till and scans the items and takes the money of the customers and gives them change if needed. Thirdly, it is the stock keeper he is in charge of keeping track of the stock. Fourthly, it is the suppliers the people or company that supplies item to mobile lunches 4u.
The room starts filling up. Ms. Rogers says: ‘‘I look forward to continuing our conversation during lunch, if you would care to join me at my table. But now I need to start this session.’’ Ms. Rogers walks to the front of the room, welcomes the firm’s newest employees, allows the employees to introduce themselves, and jumps right into training mode. ‘‘I want to see how much you learned in college,’’ she says. ‘‘You will start by auditing reported revenue at College Business Computers (CBC) for the year ended December 31, 2008. In our training simulation, CBC is a private company. We first train you to audit private companies. For these companies, we must comply with the auditing standards of the American Institute of Certified Public Accountants (AICPA). In subsequent training sessions, we will focus on public companies that are regulated by the Public Company Accounting Oversight Board (PCAOB). Here is a printout of the CBC sales journal. I will now tell you about the client’s sales process.’’ Ms. Rogers pauses as we turn on our laptops to take notes. ‘‘This is what I know,’’ she continues. ‘‘CBC creates a sales order when a customer places an order by telephone. The sales department forwards one copy of the sales order to the warehouse and a second copy to the accounts receivable department. When the goods are shipped to the customer, the warehouse creates a shipping
Employees could take the paycheck of another employee who is absent, and then cash the check for themselves.
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Studies show that eight billion invoices paid by check cost U.S. businesses $100 billion in annual processing costs.[1]