Week 5 notes
Popular in Financial Accounting
Popular in Business
This 2 page Class Notes was uploaded by Charles Miller on Saturday October 1, 2016. The Class Notes belongs to COB 241 at James Madison University taught by Dr. Irving in Fall 2016. Since its upload, it has received 7 views. For similar materials see Financial Accounting in Business at James Madison University.
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Date Created: 10/01/16
Week 5 Fraud Embezzlement, Pyramid Schemes, etc… Fraud Triangle (Donald Cressey) o Pressure o Opportunity o Rationalization Asset Misappropriation Stealing or diverting assets Fraud Triangle Pressure The reason the fraud is triggered o Feeling underpaid, bills, pressure to support a family Opportunity Availability of assets to steal o Person who has gained a high level of trust o Internal controls either weak or nonexistent Rationalization logic behind thinking fraud committed is ok o Lack of ethics throughout an organization o Justification excuses management sucks, i'm underpaid, etc… Statistically most frauds are committed by middle aged men Ways to prevent Fraud Good corporate Governance o CEO and CFO are motivated to maximize shareholder wealth o Independent board of directors Strong System of internal controls Separation of Duties o Whoever receives cash should not record the cash o You need a third person who then deposits the cash Prenumbered Documents o Sequential numbering of checks helps to prevent fraud
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