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This 2 page Class Notes was uploaded by Seon Notetaker on Saturday March 5, 2016. The Class Notes belongs to ACCT 2810 - 001 at Auburn University taught by Jennifer Norheim Cornett in Fall 2015. Since its upload, it has received 32 views. For similar materials see Fundamentals Of Accounting in Accounting at Auburn University.
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Date Created: 03/05/16
The owner was very irresponsible because he trusted one person with his money that he made from his property management company. The net income was very high but there was no cash to prove that. He hired an accounting firm but he just made them review it. There was no cash flow statement. With a cash flow statement, it would have been easier to detect where exactly the money was going. The owner should have done a better job at monitoring. With monitoring he would of recognize the warning signs such as abrupt change in lifestyles like driving a new Lexus and missing documents such as the pages that were missing from the bank statements. Another element of internal control is control environment. The owner’s management philosophy and operating style should have been better by emphasizing control policies. I feel like he was right not to prosecute the fraudster because he knew her for a long time and even knew her parents. The money its going to take to get a lawyer and go through trial would have cost a lot of money so that’s also something to take account for. I think that she learned from her mistake because her parents got a second mortgage on there house so she wouldn’t go to jail. So that’s a reminder to her everyday.