Follow the Money
Keywords:
Case Study, accounting systems, safeguarding assets, separation of duties, employee theftAbstract
Although the names have been changed, this case is based on actual events that occurred at a small college between 1987 and 2003. The college operates a child development center under the auspices of its Child Development Department. A faculty member whose child is at the center discovers that her checks are not being cashed on a timely basis and complains. The college accountant discovers that funds are being misdirected and deposited in an unauthorized bank account. She also discovers that the program revenues are $12,000 short out of a budget of just over $50,000. It is further uncovered that a long term employee of the college opened an unauthorized bank account over 15 years ago and has embezzled almost $200,000 over that period. This employee kept records of all transactions and the methods and extent of the fraud are explained in the case. The issues of internal control and adequacy of policies and procedures are presented. Students are asked to present their analysis of the current accounting procedures, along with recommendations for improving the procedures to prevent future fraud. Students are also asked to address the responsibilities of the colleges auditors. This case is suitable for undergraduate classes where the topics of internal control and accounting systems are presented. Safeguarding of assets, separation of duties and employee theft are possible topics for discussion. Students will analyze the current flow of accounting information and address inadequacies in the current system.
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