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:

Zircon

A mineral belonging to the group of nesosilicates, often used in jewelry as a diamond simulant and in various industrial applications.

Liability

The legal obligation to answer for one's actions, chiefly in matters concerning debts or legal responsibilities.

Misrepresentation

The act of providing false, misleading, or incorrect information about a material fact, intentionally or unintentionally, leading another to act to their detriment.

Agent's Liability

The legal responsibility an agent may have for their actions or omissions in the course of their agency relationship.