Bill Dodds Was the Accounts Payable Manager of Big Build

question 61

Essay

Bill Dodds was the accounts payable manager of Big Build Property Management Ltd. Bill started with the company as a bookkeeper and worked up to his current management position. He was promoted due to his dedication to the company and his reliability- he often worked evenings and weekends, rarely called in sick and he never took holidays. Despite making a good wage, Bill enjoyed living large, and the majority of his paycheque went to pay for his luxury car and designer clothes. As Bill was living paycheque to paycheque he was disappointed he did not have a "nest egg" set aside for retirement or emergency purposes.
Big Build Property Management had a history of profitability. To reward its employees, the company had established a bonus scheme for meeting profit targets. It was a shock to all employees when at the end of 2020, the company announced it had had the worst year in the company's history. The losses were significant and the company planned significant lay-offs in an attempt to turn this situation around. As a result, the accounting department was reduced by 35%, and the remaining staff was asked to do more. Bill found not only was he managing an unhappy accounts payable group, he was also now signing cheques, processing payables, and reconciling the bank account. This meant Bill was required to work even more without any pay increase or bonus in sight. For the first time in his career at Big Build, Bill was unhappy. While he was fearful further lay-offs may be coming, he also felt unappreciated and after all of his hard work, he was unhappy he was being asked to do more.
Required:
Discuss the incentives, opportunities and rationalizations to commit fraud in this case.

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Definitions:

Public Good

A public good is a product or service that is non-excludable and non-rivalrous, meaning it can be used by many people simultaneously without diminishing its availability to others.

Nonexcludable

A characteristic of a good or service where it is impossible, or highly costly, to prevent someone from using it once it has been provided.

Nonrival

A characteristic of a good where one person's consumption does not diminish the utility or availability of that good for others.

Marginal Cost

The cost added by producing one additional unit of a product or service, a critical concept in economic theory for optimal production levels.