Internal Controls and Fraud Detection

The assignment content discusses a case of fraud committed by a bookkeeper at Reliable medical supply, affecting the company's bank balance, capital, accounts payable, and cash/bank transactions. The internal control measures were lacking, specifically completeness, authorization, accuracy, error handling, validity, physical safeguard and security, and segregation of duties. The importance of these elements is highlighted, emphasizing that a single person should not be responsible for conducting all business transactions.

Running Head: MODULE ONE HOMEWORK
Accounting Controllership
Subject Code- ACC340
Trimester No.-
Student’s name-
Word Count -300
Professor –
University –

MODULE ONE HOMEWORK 2
Due to the fraud, Reliable medical supply’s bank balance, its capital, accounts
payable and the cash/bank transactions were affected (Haller, 2016).
The basic motto of an internal control is to minimize the potential threat of theft, loss
or any form of misappropriation. The seven elements of internal control ensure that it will
succeed in the setup of compliance, measurability and keen observance in the course of
operations of a business (Bragg, 2011). Based on it, controls which were missing are:
Completeness: The bookkeeper has omitted the required transactions from the accounting
records.
Authorization: The bookkeeper has forged her boss’s signature and there was no one to cross
check her activities (Haller, 2016).
Accuracy: It ensures that the transactions are consistent and accurate in nature and recorded
timely. In the given case, the transactions were omitted or not recorded by the bookkeeper.
Error Handling: Any error detected is immediately reported for the purpose of verification to
the management. In this case, it was lately detected and recovery of money is still a question
(Haller, 2016).
Validity: The accounts of this concern fails to reflect true economic events and not as per the
management’s authorization.
Physical Safeguard and Security: The access to information system and assets were not
restricted to the bookkeeper of which she took extreme advantage (Bragg, 2011).
Segregation of duties: The maker and checker were the bookkeeper herself and the
organization failed in this particular element.

MODULE ONE HOMEWORK 3
Segregation of duties is a necessity. The organization reflects lack of ample staff or
resources which has led to this fraud. Compensating control can be implemented where an
individual is required to conduct all business transactions for a department. Trusting
employees is a good sign but one should not avoid the practical nature of the business.
Objectivity and experience should not be undermined as it is the most trusted ones who
commit fraud (Bragg, 2011).

MODULE ONE HOMEWORK 4
References
Bragg, S. (2011). The Controller's Function: The Work of the Managerial Accountant.
Hoboken, New Jersey: John Wiley & Sons, Inc.
Haller, T. (2016, January 24). Bookkeeper allegedly stole more than $1.5M from Brooklyn
Park employer. Retrieved from Fox9: http://www.fox9.com/news/bookkeeper-
allegedly-stole-millions-from-brooklyn-park-employer