Melanie Johnson ACC555 Assignment 1 Unit 4
Melanie Johnson ACC555 Assignment 1 Unit 4
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Date Created: 11/09/15
Melanie Waghalterjohnson Unit 4 Assignment 1 Melanie Waghalter Johnson Unit 4 Assignment 1 Professor Cynthia Waddell ACC555 Fraud Examination How to Steal a Million Dollar Without Taking the Cash Melanie Waghalterjohnson Unit 4 Assignment 1 Seneca Staunton was an overwhelmed accounting clerk at Carlton Chemicals His job was to deal with AR collection customer service issues process payments and keep the AR records straight He was a quiet man who preferred to work alone than with others and this was his down fall with Carlton Chemicals The only time that Seneca was vocal was when his department was audited He would get upset and complain about the added work load caused by the auditors He would delay getting reports and other paperwork to them causing issues with completing the audit itself When the reports finally got to the head auditor there were discrepancies in the reports The senior auditor took her concerns to Seneca s boss Max Fairchild because the reports would not reconcile and she was concerned After being brought the discrepancies in the reports Max spent several hours in trying to figure out what Seneca had done He was unable to find if the money was missing by embezzlement or misapplied funds All he knew at this point is that Seneca was the only one to apply the payments and that he was the one to answer the questions Waiting until the next afternoon Max spoke with Seneca who immediately admitted that he had misapplied the funds but had not stolen any of the money Max had decided to write a reprimand on Seneca stating he had not followed proper procedure in applying the funds Seneca asked for another chance and stated he would clean up accounts if given that chance Together they came up with a plan to clean up that included adding temporary assistance all future payments applied Melanie WaghalterJohnson Unit 4 Assignment 1 properly and monthly audits Max left that day thinking he would see Seneca in a new light and attitude in the morning He was wrong Upon arrival the next morning Seneca clocked in and 30 minutes later clocked out He had not spoken with anyone just came in cleared his desk and left This added new concerns to Max as they had just yesterday agreed to work on getting the account files corrected At this Max decided it was time to talk with Patrick Dawley concerning the issues that had occurred Patrick was one of the owners of Carlton Chemicals and usually did not deal with daily office things unless there was issues that needed to be dealt with He was kind of a troubleshooter Patrick and Max brought in Alexa Hoffwire to find out where the money went and who was involved with the deceit She discovered that it was just Seneca involved and that no others were involved she also agreed with Seneca that no money was actually taken it had just been misapplied The next steps where to hire an outside accounting firms and have them find the missing money Patrick also hired a private detective who was also a retired IRS agent to investigate Seneca The detective s investigation uncovered that Seneca had no stolen any money that he was telling the truth of being overwhelmed and basically not qualified for the position and demands that came with that job Patrick hired an outside CPA firm to assist in putting the accounts together properly It was discovered that 500 of the AR accounts had misapplied payments had taken undeserved discounts and had some old invoices written off simply due to Seneca not wanting to chase the 3 Melanie Waghalterjohnson Unit 4 Assignment 1 money Some of the customers were not cooperative in the search for the money and matching the invoices to the actual payments was difficult They had to prove that either payment was short or not made at all in order for some customers to cooperate in the fiasco It took six months for the entire mess that Seneca left to be repaired Some of the issues that came with the mess were that he did not follow up on unpaid invoices he misapplied payments to cover that he had not collected on the invoice credit memos off set short or unpaid accounts The lack of supervision and Seneca s lack of experience compiled the mess that he left behind For the weekly meetings he would adjust the numbers on Friday to match what he thought they should be because he was not double checked it had gone on the entire time he was employed at Carlton Chemicals Carlton had an insurance policy that Patrick thought was there to assist in such a case as they were dealing with at the moment It cost 125000 alone for the research and corrections to be made to the account receivable department They had a total loss of 14 million not including the 125000 for the reconstruction The insurance company was fighting the estimated 15 million saying Carlton did not follow procedure in contacting them before fixing errors They settled for the cost of the reconstruction 125000 and 400000 of the 14 million loss in invoice amounts That left Carlton showing a 1 million in loss for the year which was higher than a good profit year
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