Question

Jack Winters owns a small business, offering construction services for Disney. To save money on his bids, he subcontracts all of the painting out to another company called Painters Inc. While balancing QuickBooks from the actual “job invoices” and receipts, Jack notices a discrepancy. Painters Inc. was issued a check for $14,125, but the job invoice shows that the job was finished for $12,125. Jack contacts Painters Inc, who provides proof that they received payment for $12,125. Besides Jack, only one person had access to the accounting software. You have been called to investigate.

Write a one-page report detailing the steps Jack needs to take to gather all of the appropriate evidence and protect his company.

Answer 1

As given in the case above, Jack noticed some discrepancy in a transaction with Painters Inc. On investigating he found that the amount for which work was done was $12125 and the payment made by Jack's business was for $14125.

On investigating with Painter Inc. it was found that it received s payment of only $12125.

This shows that there is fraud going in the company. Jack should immediately take the step to investigate in this matter.

First he should ask the person who got the cheques sactioned for a greater amount than what was being amounted. Either he did this by himself or was instructed by someone to collect the amount.

Also, it should be noted that the person updating the costs and amounts in the accounting software must match the amount received for payment and the amount actully to be given. It is mentioned in question that only Jack and one more person has access to accounting software. Therefore it is more likely that the other person is busy doing fraud. He sactioned cheques for greater amount and updated that same amount in the software and credited less amount to the Painters Inc.' account.

So, the next step Jack should take is to ask that other person about this wrong transaction being added in the software. It may be possible it was his mistake in updating amount or it may be also possible that he did it intentionally.

Jack should collect the invoices of the work that is being done by the company to have a proof of actual amount that is charged by the company for doing work. Also he should ask the company to give detail and proof for the amount of payment it received.

Also, he should have the proof of the amount being sactioned through cheque by his business for this particular work. Now procurring all these documents will prove that the amount to be received by Painters Inc. was $12125 and they received the same amount. But the amount which was sanctioned from the business was more than the actual amount.

In any case , Jack should look into the matter properly and accordingly update all the records. After investigating the matter , if the other person is found guilty he should be punished or otherwise he should be advised to do his work with full accuracy.

Jack should always keep a check on acconts and always cross checkcheck acc for the safety of the organization. Also the department sactioning cheques for payment should check the actual amount demanded and the amount being asked to santioned.

Following all these steps can safegurd his business.