Sharon Is the Receptionist and Office Manager for the Best

question 131

Essay

Sharon is the receptionist and office manager for The Best Construction Company. Sharon handles all of the office duties including billing, cash receipts, payroll, depositing checks and preparing the monthly bank reconciliation. She also prepares all of the checks for disbursements and is an authorized signer on all checks under $25,000. For checks above this amount, two signatures are required. She has been a trusted employee of The Best Construction Company for many years, but still makes just a small amount above minimum wage. She is even the godmother to two of the owner's children and often watches them while their parents go on exotic vacations. Sharon is such a good employee that she rarely takes vacations. Since the owner trusts her completely, he concentrates on the construction business and leaves all of the office work to Sharon. He would never interfere with her work since he has very little accounting knowledge. Sharon has recently become a grandmother and enjoys buying her grandchildren expensive toys and clothes. She has just bought a new Hummer for herself and an exclusive condo in the Virgin Islands.
What are the three elements of the fraud triangle? Which element(s) of the triangle are present in this case? Explain briefly.

Relate vocabulary richness to perceptual acuity.

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Definitions:

Credit Memorandum

A document issued to a customer by a seller, crediting the customer's account due to a return of goods or an overcharge.

Customer Allowance

A reduction in the selling price of goods or services, often granted to rectify complaints or fulfill contractual agreement terms.

Sales Discount

A reduction in the price of goods or services offered to customers, typically to prompt early payment or promote sales.

Net Income

The total profit of a company after all expenses, taxes, and costs have been deducted from total revenues.