Question

In: Computer Science

Harold Jones, the financial aid officer at a small university, manages all aspects of

Harold Jones, the financial aid officer at a small university, manages all aspects of the financial aid program. Jones receives requests for aid from students, determines whether the students meet the aid criteria, authorizes aid payments, notifies the applicants that their request has been either approved or denied, writes the financial aid checks on the account he controls, and requires that the students come to his office to receive the checks in person. For years, Jones has used his position of authority to perpetrate the following fraud. 

Jones encourages students who clearly will not qualify to apply for financial aid. Although the students do not expect aid, they apply on the off chancethat it will be awarded. Jones modifies the financial information in the students’ applications so that it falls within the established guidelines for aid. He then approves aid and writes aid checks payable to the students. The students, however, are informed that aid was denied. 

Because the students expect no aid, the checks in Jones’s office are never collected. Jones forges the students’ signatures and cashes the checks.

 

Required 

Identify the internal control procedures (classified per COSO) that could prevent or detect this fraud.

Solutions

Expert Solution

The tasks in the financial aid process are performed entirely by Mr. Jones. As a minimum, the following tasks should be performed by separate individuals:

• Receipt of applications 

• Approval of applications

• Check processing

• Distribution of check to recipient (by mail or direct deposit)

 

Independent Verification Control:

• Financial information presented in financial aid applications should be verified through credit agencies.

• Prior to awarding any grants, the financial aid department should verify that the student is still enrolled and in good standing. 

• The internal auditor should periodically confirm the receipt of cash awards with the financial aid recipients.


Related Solutions

Stephanie owns a rental property as a 100% interest-holder. Her daughter, Liz, manages all aspects of...
Stephanie owns a rental property as a 100% interest-holder. Her daughter, Liz, manages all aspects of the rental and collects rent. Stephanie lets Liz keep half of the rental income for her work. Also, Stephanie intends to give the rental property to Liz sometime soon. How much of the rental income will each taxpayer report on Schedule E, Supplemental Income and Loss? Stephanie will report 100% of the rental income and Liz will report no rental income. Liz will report...
A company secretary works for a small company and is also the financial officer for the...
A company secretary works for a small company and is also the financial officer for the company who generally advises the directors on the day-to-day operations of the company. The company has a constitution, which limits the ability of the company secretary from borrowing any amounts over $5,000 without the matter being referred to a meeting of the board of directors. The company specifically created a constitution because the shares are all held by family members and the company secretary...
What is the best way for senior project managers to ensure that all the financial aspects...
What is the best way for senior project managers to ensure that all the financial aspects of a project are completed and documented
Please show all work. As Chief Financial Officer (CFO), you are responsible for your firm’s investment...
Please show all work. As Chief Financial Officer (CFO), you are responsible for your firm’s investment choices. You are considering whether or not to choose a project that will require a $15 million investment today and will generate $1 million in Year 1, $3 million in each of Years 2 through 5, $7 million in each of Years 6 through 8, and $12 million in each of Years 9 through 10. The appropriate interest rate is 15%. Find the discounted...
Considering both financial and non-financial aspects, advise with reasonings if JAL should purchase or lease the aircraft given the current market conditions. Show all workings where calculations are required.
“Amazon's Battle for the Air Just Got Easier; Airlines are dumping old planes, giving the e-commerce giant the perfect opportunity to expand its cargo fleet at a time of constrained supplyWall Street Journal; New York, N.Y.; 01 May 2020.…Due to Covid-19, airlines are now dumping older planes. According to international advisory firm Ishka, lease rates are down: Renting a Boeing 747-8 freighter is 13% cheaper than in January. Amazon might even consider using some of its vast cash holdings—$27 billion...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT