HW #3g
Name: ____________________________
1. An accountant with the Atlanta Olympic Games was charged with embezzling more than
$60,000 to purchase a Mercedes-Benz and to invest in a certificate of deposit. Police
alleged that he created fictitious invoices from two companies that had contracts with the
Olympic Committee: International Protection Consulting and Languages Services. He
then wrote checks to pay the fictitious invoices and deposited them into a bank account
he had opened under the name of one of the companies. When he was apprehended, he
cooperated with police to the extent of telling them of the bogus bank account and the
purchase of the Mercedes-Benz and the CD. The accountant was a recent honors
graduate from a respected university who, supervisors stated, was a very trusted and
loyal employee. Adapted from the CIA Examination.
a. How does the accountant fit the profile of a fraudster? How does he not fit the profile?
b. What fraud scheme did he use to perpetrate his fraud?
c. What controls could have prevented his fraud?
d. What controls could have detected his fraud?
2. You are the president of a multinational company where an executive confessed to kiting
$100,000. What is kiting and what can your company do to prevent it? How would you
respond to the confession? What issues must you consider before pressing charges?
Adapted from the CIA Examination.
3. You were asked to investigate extremely high, unexplained merchandise shortages at a
department store chain. Classify each of the five situations as a fraudulent act, an
indicator of fraud, or an event unrelated to the investigation. Justify your answers.
Adapted from the CIA Examination
a. The receiving department supervisor owns and operates a boutique carrying many of
the same labels as the chain store. The general manager is unaware of the ownership
interest.
b. The receiving supervisor signs receiving reports showing that the total quantity
shipped by a supplier was received and then diverts 5% to 10% of each shipment to
the boutique.
c. The store is unaware of the short shipments because the receiving report
accompanying the merchandise to the sales areas shows that everything was received.
d. Accounts Payable paid vendors for the total quantity shown on the receiving report.
e. Based on the receiving department supervisor’s instructions, quantities on the
receiving reports were not counted by sales personnel.
