Question

In: Accounting

Analyze the following case from Turner, Weickgenannt, & Copeland (2017): After spending approximately 10 hours calling...

Analyze the following case from Turner, Weickgenannt, & Copeland (2017):

After spending approximately 10 hours calling on previous sponsors, Cody felt that he had hit a brick wall. For many reasons, most of last year's sponsors were unwilling to continue their involvement with this annual fund?raiser. Cody needed to look for additional sources of funding. He spent several hours researching potential new contributors and finally located a database containing a list of businesses within the local zip code. Since the list included e?mail addresses, Cody developed a letter of request and e?mailed it to all these businesses.

The response was overwhelming. Cody collected over $3,000 from this new pool of business contacts. While compiling the checks received to turn over to the fraternity treasurer, Cody noticed that one business had made its $200 check payable to Cody personally. Rationalizing that the additional time he had spent on the project and the success he was able to achieve were worthy of compensation, Cody decided to keep this one check. He wrote a letter of acknowledgment to the donor and deposited the $200 in his personal account. (p. 101)

Discuss whether or not you think Cody's actions were justified. What would you have advised him to do in this situation? What internal control activities could the fraternity have implemented to prevent Cody's actions? Can you think of a detective control that could uncover the omission of the $200 check?

Solutions

Expert Solution

No, Cody's activities were not justified for the fact that he didn't utilize the donated funds for the purposes,they were collected. Since Cody spoke to the contributors that the monies were to be utilized for a charitable reason, he was bound by a moral commitment to satisfy that dedication. Despite the fact that he contributed additional time than he arranged, he realized that his efforts were not to be adjusted. This is a variety of an employee fraud.

The society ought to have required its treasurer to deal with the money receipts identified with this gathering pledges crusade. This would isolate the authority of the money receipts from the recordkeeping that Cody was leading.

A review of all receipts or in this case, affirmation letters could be performed and accommodated to the money commitments records. Unless Cody hid the letter kept in touch with the benefactor of the $200, that was deposited to his personal account, such a compromise system would reveal the distinction.


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