In One of the Case Studies in the Textbook, Ernie

question 9

Multiple Choice

In one of the case studies in the textbook, Ernie Phillips was a CPA who had fallen on hard times both financially and personally. He eventually got a job as a controller for a friend who had just been named as the receiver for a financial services company. Within a short period of time Phillips began writing checks to himself that had nothing to do with payroll. Control weaknesses that facilitated the commission of this fraud include which of the following?

• A) The bank statements were sent directly to Phillips.
• B) Phillips had check signing authority.
• C) There was no separation of duties between accounts payable and the treasury department.
• D) All of the above

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Definitions:

Foreigners

Individuals who come from a different country or nation than the one being referred to.

Carry Trade

A financial strategy that involves borrowing at a low interest rate and investing in an asset that provides a higher rate of return.

Interest Rates

Interest rates represent the cost of borrowing money or the return on invested funds, expressed as a percentage of the principal.

Borrowing

The act of receiving something with the intention of returning it or its equivalent, often referring to money with interest.