Case study: Tough Choices

Tough Choices – Case Study Your Name Course and Section Professor's Name November 25, 2024 1. Internal Control Weaknesses and Fraud Risk Factors Millers and Borman fraud triangle presents opportunity, pressure, and rationalization as the pillars of management fraud. In this case, there were areas for improvement in internal control systems, such as a lack of proper supervision and no provision of checks and balances, such as having different personnel handling different responsibilities. For instance, unfettered transactional liberty exposed possible interference with the financial options without being detected. This was compounded by poor monitoring to prevent the development of a situation where discrepancies go undetected. Sometimes, the pressures arise from personal financial issues, and the organization imposes unrealistic targets, which makes the employee begin thinking of cutting corners. The last one is rationalization, where the employees may find justification for defrauding, for instance, assuming they are due for pay. These weaknesses, if not remedied, lead to the vulnerability of organizations to suffer severe financial and reputational loss. It has been found that the effectiveness of controls, good tone at the top, culture, and effective monitoring must be strengthened to combat fraud risks effectively. 2. Role of Management Accountants in Fraud Prevention Management accountants are responsible for reducing and discovering fraud by applying internal controls and analytical techniques. A system of separation of duties applies to each employee to avoid having the entire process of handling the finances of a company. Audits are essential to make peop...