Read the following case study:
After working for his company for three years, Charles received the promotion for which he had been working so hard, and he had a very promising future at the company. With the new promotion, Charles and his wife, Julie, purchased a new home, two new cars and, shortly thereafter, found out Julie was pregnant with their fifth child. Charles told Julie that since he was doing so well at his company, she did not have to return to work after the birth of their child. So, Julie quit her job to stay home with their children.
After about 18 months of Charles being in his new role, a new competitor developed a product that had a severe negative impact on Charles's company. His pay, which was based on commission, was reduced nearly 50 percent. Charles continued to work for the company as he looked for employment elsewhere so that he could return to the salary to which he and his family had grown accustomed. Unable to find another job, Charles resentfully decided he would stay with the company even with the lower pay.
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Not long after he started receiving lower commissions, Charles realized that, although he was in control of his department's $5,000 petty cash fund, no one ever questioned him about purchases made from the fund, and he was the one who reconciled the fund when it was time to replenish it. Whenever he incurred shortages, he would just submit a journal entry to the accounting department to write off the shortage. Julie's birthday was coming up and Charles realized that he had not bought her a present and, with the significant decrease in his salary, he did not have money to buy the new $800 smartwatch she wanted. Charles decided that he would take the money out of the petty cash fund and just put it back the next time he was paid. However, by the next paycheck, Charles' car needed new brakes, for which he did not have the money to pay his mechanic. So, once again, Charles "borrowed" from the petty cash fund. Charles continued to "borrow" from the petty cash fund. Every time he would try to put the money back, something happened that kept him from being able to do so.
One day, another employee noticed Charles taking some cash from the fund and putting it in his wallet. When questioned, he simply stated that it was a reimbursement the company owed him for supplies. The employee who saw Charles taking the money still felt uneasy about what she saw and contacted the company's anonymous hotline, and an investigation began that discovered the fraud.
Prepare a detailed analysis of the scenario by incorporating your responses to the following questions in well-developed paragraphs (do not use a question-answer format).