In: Accounting
Steven was Sales VP for Rales, Inc. a middle-market advertising firm that he joined 20 years ago. Due to his tenure, Steven had personal relationships with the Board of Directors and other C-Suite executives, and he used his positon to intimidate other employees especially when he felt challenged.
As a result of Steven's frequent travel, he frequently submitted sizeable expense reports. He often submitted delinquent expense reports which made it difficult for the accounting department to match the business purpose of the expenses he submitted. When questioned about an expense report item, he became rude which made people not want to challenge Steven.
Rales, Inc. hired John, a recent graduate, as accounting manager. Rather than backing off after being unfairly ridiculed by Steven, John decided to perform a comprehensive audit of several years of Steven’s expense reports and uncoveredfictitious receipts, mileage for travel never taken, and numerous personal expenses. Uponbeing confronted, Steven claimed that these items were merely “perks” for his great performance and company longevity.
(a) Explain what may cause Steven to commit fraud.
(b) Explain what fraud controls Rales, Inc. should implement
(a)Steven was the Sales VP for Rales Inc. The reason why Steven may commit fraud are as follows:
(b)The various fraud controls that Rales Inc should put in place are as follows: