Question Regarding Misssappropriation of Assets

  • Creator
    Topic
  • #196145
    drichter321
    Participant

    So I am using Becker, and got this question on fraud risk. The book, nor the answer explains why this is true and i am memorizing the answer rather than understanding it which is a problem.

    Question: Which of the following situations represents a risk factor that relates to misstatements arising from misappropriation of assets?

    A. Lack of independent checks. Program just says its an opportunity for misappropriation of assets, but I do not understand it.

    Any help for this?

    BEC: Need to pass, lost creedit.
    FAR: Need to pass. MY MOUNT EVEREST
    Reg: Need to pass, lost creedit.
    AUD:Ā  Need to pass, lost creedit.

    BEC: 75 lost credit, could not pass far šŸ™
    AUD: 76 lost credit could not pass far šŸ™
    FAR: 74, FML. Next exam 06/14/23
    REG: 75 lost credit could not pass far šŸ™

Viewing 5 replies - 1 through 5 (of 5 total)
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  • #687184
    Anonymous
    Inactive

    I'll do my best here.

    ABC company keeps a certain amount of cash in the vault. If they do not segregate duties with respect to this cash, there is a risk that an employee could walk away with it. Someone who has nothing to do with spending the money should be assigned to account for it along with any receipts.

    Does this help?

    #687185
    spatel15
    Participant

    Another simple method: there are only really 3 factors that related to fraud risk:

    1. Opportunity

    2. Pressure/Incentive

    3. Rationalization

    Comprehensive Example: “Misappropriating” Your Roommate's Milk =)

    1. If your roommate's got some milk in the fridge, and he/she isn't checking the level, who's gonna notice if ya steal a glass every now and then. =P

    2. If your weirdo coach demands that you drink 5 glasses a day or you're off the team, there's your pressure.

    3. Maybe the milk always goes bad, so hey, is it really stealing? If anything you're preventing waste. Voila Rationalized.

    Anyone individual factor standing alone can bring about fraud risk. Though altogether, you're almost guaranteed fraud.

    Final Tip: Just make sure you never take the first or last glass =P

    #687187
    Skynet
    Participant

    Let's make it simple.

    You go out on date with a hot girl flaunting your bling, bling and shiny car. Don't be surprised if the next morning your wallet, valuables, and car is gone : )

    AUD - 90
    BEC - 78
    FAR - 84
    REG - 87
    World Domination Plan

    Phase I : Pass CPA Exams - Complete
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    Phase V : TBD

    BEC : 78
    REG : 87
    FAR : 84
    AUD : 90

    World Domination Plan

    Phase I : Pass CPA Exams - Complete
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    Phase IV : Megan Fox & Scarlett Johansson Lingerie Pillow Fight
    Phase V : TBA

    #2582202
    Jaynel
    Participant

    “Lack of independence checks” means there are no checks & balances being performed; no independent checks on performance/work.

    AUD - 73
    BEC - NINJA in Training
    FAR - 77
    REG - NINJA in Training
    "The best view comes after the hardest climb"
    #2582292
    Me.
    Participant

    If you want to read an interesting real life case regarding this type of fraud look up Rita Crundwell of Dixon Illinois. She alone stole more than $54 million dollars from the city. Everyone trusted her and never questioned her for 20 years! It was found when she was out of the office and someone filled in for her and found irregularities. Just crazy!

    REG - 50, 64, 73, 76
    FAR - 67, 65, 67 Ugh!!!
    BEC - 65
    AUD - November 30

    "You just can't beat the person who never gives up." -Babe Ruth

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