Question

Jim Coleman, was appointed the manager of Maris Properties, a recently formed company that manages residential rental properties. Linda Grider is the accountant. She prepared a chart of accounts based on an analysis of the expenditures of the company. One of the largest expense categories is Travel and Entertainment. Mr. Coleman believes that it is important to maintain a presence in the social life of the city. In this, he sharply differs from his father, Randall Coleman. Randall has set up Maris Properties in order to test his son's management skills before allowing him to manage the more lucrative commercial property business. Randall provided the capital for Maris, and maintains close contact with the company. He allowed his son, however, to hire his own employees.

Mr. Coleman has asked Linda, the accountant, to change the name of the Travel and Entertainment account to Property Development. He hopes to distract his father's attention away from the amount he has spent on travel and entertainment until he has proven that his methods work. When Linda resisted, he reminded her that he, not his father, hired her. He also reminded her that she had been enthusiastic about his business plans when she was hired

Required

a. Who are the stakeholders in this situation?

b. Should Ms. Grider agree to the change in the Travel and Entertainment account to Property Development? Explain.

c. What controls can be recommended by Linda to ensure that such frauds do not occur?

Answer 1

a) stakeholder is a person who can directly influence the working of the business, in that case, the stakeholder in this situation is

1. Mr. Jim Coleman

2.Linda Grider

3. Randall Coleman

b) Ms. Linda Grider should not agree with Mr.Jim Coleman, because Mr. Coleman is trying to deceive a person who has the right to know the business affairs. as an accountant, she must present a true and fair financial statement. by changing the name the statement should be fraudulent. although Mr. Jim Coleman is the manager of the firm and also Ms. Linda Grider was hair by Mr. Jim Coleman so she may have to agree with his business methods and she is not a party to such fraudulent activities

c) 1. periodical auditing of books of accounts

2.  Auditing book and account using a certified  external auditor

3. Set Up Reporting System to prevent fraudulent activities

4. monthly inspections

5. Publication of financial statement to the public

6. separating departments and management, accounts, etc