PABLO MEDIAVILLA MARTÍ
By submitting this exam, I am attesting to the fact that I have not discussed it with anyone.
1. Discuss the key events that occurred and how they related to opportunities to prevent or detect the fraud.
The key events that occurred are:
Bobby Cohen told Mary about the irregularities in theaccounts carried out by Andrew. This prompted Mary to begin the research so she can detect fraud. Perhaps it was the most significant fact.
Maria was not pleased with Andrew’s practice of downloading accounting reports
to Excel spreadsheets and making accounting adjustments prior to showing the numbers to her or to the Board. Andrew said to Maria that the accounting system is DOS based and thepercentages on the reports don’t add up correctly.
Mary learns of the existence of a credit card, which investigates and finds out that is in the name of Andrew. This card will bea proof of the fraud committed by Andrew.
Kris, an employee at the Club, called Maria concerned about her 401K matching. Kris tells Mary that their percentages are not correct and that they must return $ 35,000. This was dueto an error of Andrew, which modified the percentages manually. The accounting firm of Mark Roberts and Associates make the annual audit and review the Club’s internal controls. Mark’s team find a number of issues of concern including a check with Andrew’ssignature and a second unrecognizable signature. This prompted a more thorough audit by Mark Roberts’ office, which result in an adverse opinionon Blackhawk’s Financial Statements. The poor internal control can lead us to think that someone is taking advantage of this situation, such as in this case.
The Andrew's computer password is "millions" what is very suspicious
María found out that Andrew had a criminal record
Mary learns that Andrew had stolen from a previous employer, Cumming, Inc. and was put on probation for 10 years, backin 1996. So he could return to be committing crimes.
Each event led Mary to believe in the possibility that you someone committing fraud in her company. Mary was looking at every detail and discovering amazing events that led him to discover Andrew´s crime. Mary did not have the ability to prevent fraud but to stop him, as he did.
2. Analyze the corporate governance environment al BlackhawkA cooperative governance must:
• Protect the rights of shareholders.
• To ensure equitable treatment for all shareholders, including minority and foreign.
• All shareholders should have the opportunity to obtain effective redress for damages for violation of their rights.
• Recognize the rights of third parties and to promote active cooperation between them and the societies in creatingwealth, generating employment and achieving sustainable financial companies.
• Ensure that there is an adequate and timely disclosure of all issues relevant to the company, including financial situation, performance, shareholding and management.
• Ensure the strategic guidance of the company, effective monitoring of the management team by the board of directors and the responsibilities of theBoard of Directors shareholders.
Blackhawk fails to meet several of these points, so we can say that they don´t have a good corporate governance.
3. Apply the Fraud Triangle as a means of analyzing what happened at Blackhawk.
The situation that we think makes us the possibility of the existence of fraud.
We can see these indicators in blackhawk.
Indicators of Opportunity
There are someindicators of fraud such as: Overconfidence is one of the most significant indicators of the chance of fraud and usually occurs close to some employees who, as "trusted people" have the manager approval to imitate the signature, "supposed" to streamline the administrative documentation, what motivates great problems and surprises for the owner of the document, it will find documents not...