Question

Please can i get an answer on this Finantial account question?

loan officer reviewing the application have sufficient information to detect fraud or falsified information?

Assume the bank officer was unable to detect any foul play. What other stakeholders or related parties could be negatively impacted by the actions of Carl Montague?

What kind of adjustment to Cost of Goods Sold (debit or credit) would have the effect of boosting earnings?

This discussion will address the following Module Outcomes:

MO5-1: Analyze merchandising operations and the two types of inventory systems. (CO #1)

MO5-2: Explain the method applied to adjust and close the accounts of a merchandising business. (CO #4, CO #5)

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Answer 1

What other stakeholders or related parties could be negatively impacted by the actions of Carl Montague?

The loans and advances given by the bank officer must be audited through concurrent auditor of the branch and also with the Revenue auditor. Where concurrent auditor monitors all the bank transactions which includes reviewing the loan accounts . Where revenue auditor monitors the revenue leakages to the bank. In view of these internal controls and audit procedures to be applied in the bank transactions which is inadvertently failed by the bank officer and also failed in applying evaluating merchandize transactions . THere by also failed in evaluating and atleast applying two types of inventory systems say FIFO or LIFO.

What kind of adjustment to Cost of Goods Sold (debit or credit) would have the effect of boosting earnings?

Decreasing the cost of goods sold either by valuing the inventory less, purchasing the rawmaterials more, increasing the value of closing stock etc...results in the boosting earnings. By applying the above process of lowering or increasing boosts the value of earnings which implies worth of closing stock is more than the loan provided by the banks, credibility of the customer with wrong figures.