ACC 206 Week 2- Fraud Case 14-1
ACC 206 Week 2- Fraud Case 14-1 fin571
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Date Created: 11/11/15
Fraud Case 141 Fra nk LOU ACC206 Principles of Accounting 11 AU Fraud Case 141 Frank Lou had recently been promoted to construction manager at a development rm He was responsible for dealing with contractors who were bidding on a multimillion dollar excavation job for the new high rise Times were tough several contractors had gone under recently and the ones left standing were viciously competitive That morning four bids were sitting on Frank39s desk The deadline was midnight and the bids would be opened the next morning The rst bidder Bo Freely was a tough but personable character that Frank had known for years Frank had lunch with him today and after a few beers Bo hinted that if Frank inadvertently mentioned the amount of the lowest bid he d receive a quotbirthday cardquot with a gift of cash After lunch Frank carefully unsealed the bids and noticed that another rm had underbid Bo39s company by a small margin Frank took Bo39s bid envelope wrote the low bid amount in pencil on it and carried it downstairs where Bo39s son William was waiting Later that afternoon a new bid came in from 8039s company The next day Bo39s company got the job and Frank got a birthday card in his mailbox Requirements 1 Was Frank39s company hurt in any way by this fraudulent action 2 How could this action hurt Frank 3 How can a business protect against this kind of fraud Fraud Case 141 Solution 1 Frank s company was not hurt by the immediate effects of this action However if this kind of fraud becomes detected there may be criminal penalties or lawsuits 2 Frank could be convicted of criminal fraud if detected But even if not detected Bo could use this situation to pressure Frank in future circumstances even to the extreme of blackmail 3 Controls over bidding procedures can be strengthened by separation of duties All bids should be sent to one person who logs them in by date and time That person should not be involved in the evaluation or selection of winning bids
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