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The A/P clerk of a company writes the checks for vendors, and the controller signs the checks. The A/P clerk has devised a plan to give herself a raise. She creates a new vendor for her friend's...

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The A/P clerk of a company writes the checks for vendors, and the controller signs the checks. The A/P clerk has devised a plan to give herself a raise. She creates a new vendor for her friend's business and creates two purchase orders for random car detailing services for $75 and $70. She writes the checks to pay these new vendors knowing the controller will only pay close attention to checks over $100. She delivers the checks to her friend to deposit in his bank account, and then he writes her a personal check for the full amount of $145.

Respond to the following in a minimum of 175 words:

  • Eventually, what will be the effect of her actions?
  • What can the company do to prevent this type of behavior?
Answered Same Day Aug 03, 2021

Solution

Sumit answered on Aug 03 2021
132 Votes
1. The effect of her actions will be:
(a). The expenses of the company will be inflated. By issuing two cheques for a total amount of $145, the expenses of the company will rise and therefore will reduce the tax liability of the company.
(b). If this fraud is caught in future by the auditor, the company will...
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