Question

1, What is collusion? why it's difficult to detect?

2. What are the signs that an employee is stealing? (red flags) Behavior and accounting

3. look for an article of accounting fraud or computer crime and summarize it.  Use the internal control information to explain how they detected it??

Answer 1

1. Collusion is agreement between two parties which is kept as a secret so that they can limit the competition in the market i.e.w hen rivial firm joins hands to work together. It is generally done by fraud or misleading activity. This limits the oppurtunities for the other firms in the open market.

It is difficult to detect due to changing market trend, inflation or any hi-low in markets.

2. Employee fraud is the most expensive liability of any organisiation. The signs of employee is stealing are as follows:

-Change in employee behaviour.

-Change in work habbits.

-Purposefully trying to work independently.

-Problems with payroll & etc.

3. An employee who manipulates company's account to cover up theft or uses company's payables and receivables to commit fraud is considered accounting fraud. Generally employees who have access to companys account commits these type of fraud.

For eg: Personal purchase

Here the employee uses company's funds to pay his personal expenses and records the payment as legimate business expenses in the books of account.

It can be prevented by implementing tight internal control, by rotating the duty of employees on specific basis, by conducting random audits, etc.