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Analysis of "The Importance Of Timing"

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I need help in understanding what is the:

Scope of the accounting fraud examination, factors aiding the examination, and limitations on the examination of the below case. Thanks!!

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CASE STUDY: THE IMPORTANCE OF TIMING

What about a scheme in which nobody gets any money? One that was never intended to enrich its players or to defraud the
company they worked for? It happened in Huntsville, Alabama, on-site at a major aluminum products plant with over $300 million in yearly sales. A few shrewd men cooked the company's books without taking a single dime for themselves.

Terry Isbell was an internal auditor making a routine review of accounts payable. He was running a computer search to look at any transactions over $50,000 and found among the hits a bill for replacing two furnace liners. The payments went out toward the last of the year, to an approved vendor, with the proper signatures from Steven Leonyrd, a maintenance engineer, and Doggett Stine, the sector's purchasing manager. However, there was nothing else in the file. Maintenance and
repair jobs of this sort were supposed to be done on a timeand-material basis. So there should have been work reports,
vouchers, and inspection sheets in the file along with the paid invoices. But there was nothing.

Isbell talked with Steven Leonyrd, who showed him the furnaces, recently lined and working to perfection. So where was the paperwork? "It'll be in the regular work file for the first quarter," Leonyrd replied.

"The bill was for last year, November and December," Isbell pointed out. That was because the work was paid for in
"advance payments," according to Leonyrd. There wasn't room in the work schedule to have the machines serviced in
November, so the work was billed to that year's nonrecurring maintenance budget. Later, sometime after the first of the year,
the work was actually done.

Division management okayed Isbell to make an examination. He found $150,000 in repair invoices without proper documentation. The records for materials and supplies, which were paid for in one year and received in the next, totaled
$250,000. A check of later records and an inspection showed that everything paid for had in fact been received, just later
than promised.

So it was back to visit Leonyrd, who said the whole thing was simple. "We had this money in the budget for maintenance
and repair, supplies outside the usual scope of things. It was getting late in the year, looked like we were just going to lose those dollars, you know, they'd just revert back to the general fund. So we set up the work orders and made them on last year's budget. Then we got the actual stuff later." Who told Leonyrd to set it up that way? "Nobody. Just made sense, that's all."

Nobody, Isbell suspected, was the purchasing manager who handled Leonyrd's group, Doggett Stine. Stine was known as "a domineering-type guy" among the people who worked for him, a kind of storeroom bully. Isbell asked him about the arrangement with Leonyrd. "That's no big deal," Stine insisted. "Just spent the money while it was there. That's what it was put there for, to keep up the plant. That's what we did." It wasn't his idea, said Stine, but it wasn't really Leonyrd's either, just a discussion and an informal decision. The storeroom receiving supervisor agreed it was a grand idea, and made out the documents as he was told. Accounting personnel processed the invoices as they were told. A part-time bookkeeper said to Isbell she remembered some discussion about arranging to spend the money, but she didn't ask any questions.

Isbell was in a funny position, a little bit like Shakespeare's Malvolio, who spends his time in the play Twelfth Night scolding
the other characters for having such a good time. Leonyrd hadn't pocketed anything, and neither had Stine; being a bully was hardly a fraudulent offense. There was about $6,000 in interest lost, supposing the money had stayed in company bank
accounts, but that wasn't exactly the point. More seriously, this effortless cash-flow diversion represented a kink in the handling and dispersal of funds. Isbell wasn't thinking rules for their own sake or standing on ceremony?money this easy to come by just meant the company had gotten a break. The next guys might not be so civic-minded and selfless; they might start juggling zeros and signatures instead of dates.

Under Isbell's recommendation, the receiving department started reporting directly to the plant's general accounting division,
and its supervisor was assigned elsewhere. Doggett Stine had subsequently retired. Steven Leonyrd was demoted and transferred to another sector; he was fired a year later for an unrelated scheme. He had approached a contractor to replace
the roof on his house, with the bill to be charged against "nonrecurring maintenance" at the plant. But the contractor alerted plant officials to their conniving employee, who was also known to be picking up extra money for "consulting work" with plant-related businesses. Several names may have been changed to preserve anonymity. Thought: foiled again.

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Solution Preview

Running Head: FRAUD EXAMINATION

Importance of Timing

Introduction
Accounting fraud examination can be defined as the discipline that is used to resolve the allegations of fraud from the financial statements of a business. The fraud examination process involves obtaining of evidences in documentary forms, information from witnesses about potential aspects. The skill for fraud examination also involves report writings, testing of the findings so that fraud in the accounts can be detected and prevented. Fraud examination is a wide area in comparison of auditing as it is not only limited to the review of the financial data. This process is conducted with the sufficient predictions only (Kranacher, Riley & Wells, 2010).

Scope of the Accounting Fraud Examination
The main purpose of the fraud examination is to resolve the fraud examination. This process helps to determine where the fraud has occurred and who is responsible for it. The scope of fraud examination includes all the actions that are essential to resolve allegation of fraud (v, 2009). The scope of the fraud examination was as follow -
? Determine the possible misappropriation of payment transaction of Huntsville, Alabama. The examination is predicated upon an anonymous ...

Solution Summary

An analysis of "The Importance of Timing" is examined.

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See Also This Related BrainMass Solution

Stars Hollow Hat Company Case job descriptions

Stars Hollow Hat Company

Company History

The Stars Hollow Hat Company was founded in 2005. The company embroiders and sells hats to clients consisting of athletic organizations and other companies who want to give their employees hats with their company logo. Up until December of 2006, the company had 6 employees, including the owner. 1 Customer Service / Sales Representative and 4 Production staff (they make the hats). Since this time, the business has grown and the owner hired 6 additional customer service / sales representatives. In February of 2007, the Director promoted one of the customer service / sales representatives to Supervisor. Also, since February, each customer service / sales representative has taken on additional duties which vary between positions.

Community Profile

In 2007 the City of Stars Hollow had a population of 1,500 and County Milky Way, of which Stars Hollow City is the County Seat, had a population of 5,000. Given current trends, the City is expected to achieve a population of 2,300 by the year 2010. Stars Hollow City is located on the South West region of Wisconsin. Agriculture is the primary industry and a major component in the economy of the Stars Hollow City and the North East region.

Current Situation

Since the company has increased its customer base and added employees to meet the demand, the owner would like to have the jobs analyzed and determine a hierarchy (job family). She thinks that she will be adding even more reps in the next few months who will be focused more on the sales side.
The Customer Service / Sales Supervisor perceives that some of the sales/customer service representatives are not motivated to do the "sales" side of their job and up-sell current customers who call in to place orders. Those individuals who are not motivated to sell have shown excellent skills on the customer service side of the job (problem solving, managing conflict), but they don't necessarily possess the skills for sales. She thinks that possibly separating the duties and creating two job families, one for customer service and one for sales may be beneficial.
Today, the Company employs 1 Customer Service Supervisor, 6 customer service / sales representatives, 8 production staff, and one (1) administrative assistant. 3 months ago the owners niece, who is an HR Manager for a large company in Kansas, offered to help out and conducted a functional job analysis of the customer service / sales representative job. A copy of the job analysis may be found in Appendix "A." The functional job analysis consisted of an interview with the Customer Service Supervisor (Subject Matter Expert) who described the functions of the job, as well as the KSAs. In addition, as part of the analysis, the Customer Service Supervisor rated the importance and level of difficulty of each function and KSA. This allows the analyst to identify and prioritize the "essential" functions and KSAs. Only "essential" functions and KSAs are transferred to a job description.
As a next step in the project, the owner would like to use the information from the job analysis to create job descriptions. She would also like to establish Job Families: Customer Service and Sales. She needs your help!

Assignment:

The owner's niece does not have the time to complete the rest of this project. The owner has asked you to help her out. The owner thinks the company will continue to grow and she wants to be prepared for adding more staff. Therefore, it makes sense to her to create a job family that establishes a hierarchy and creates opportunity for promotions. Ultimately the job family will be used as a way to determine the level of compensation too. But, that is down the road. Today, the owner would like you to utilize the Functional Job Analysis, as well as the company information provided in the case, and outline what the job families may look like for both customer service and sales. She realizes that you will need to make some assumptions (how many levels), but would like an idea of what the job families could look like. Further she would like you to create one job description for customer service representatives and one for sales representatives.
Prepare:
 Job Description for Customer Service Representative
 Job Description for Sales Representative
 Sample Job Family for Customer Service
 Sample Job Family for Sales Representative

You'll find a Job Description Template under Appendix B below.

Appendix A
Job Analysis
Position Title: Customer Service / Sales Representative
Subject Matter Expert: Customer Service Supervisor, Stars Hollow Hat Company
This job analysis is based on input from the subject matter expert(s) (SME) named above. The purpose of this job analysis is to identify the functions (group of tasks) performed by the job, and the competencies (knowledge, skills and abilities) necessary for successful performance at Stars Hollow Hat Company. Once the functions and associated competencies are confirmed by the SME, a job description will be created. Only those functions and KSAs that have CRIT scores of 15 or above are considered "essential." Essential functions are used as part of the Job Description. Further, if there is no incumbent in the position, selection exams (based on the criticality scores) may be created as part of the hiring process.
Functions: Functions performed by this position include, but are not limited to, the list that follows. The functions are to be rated by the subject matter expert on a scale of 1 to 5, with 1 representing the lowest and 5 representing highest level for their importance to the job (IMP) and their difficulty of learning (DIFF). Their criticality (CRIT) is derived by multiplying the importance rating by the difficulty rating. Thus, if a function is important but easy to learn, it has a low criticality score and may not considered critical to include in a job description.

Essential Knowledge, Skills, and Abilities: The following is a list of the knowledge, skills and abilities needed to do the functions involved in the position. There are 22 KSAs included in the list; you may not need to use all the core KSAs or you may need to add additional KSAs.

The column labeled "Functions" contains the function number of the representative functions requiring the particular KSA. These function numbers are to be referenced to the function list above. If you do not need to use a particular KSA, you should indicate not applicable (n/a) in the functions column for that KSA.

The column labeled IMP contains the average importance rating of the KSA on a scale of 1 to 5, with 5 representing most important to doing the job. The column labeled DIFF contains the average rating of the difficulty in learning or making a significant improvement in the KSA. The column labeled CRIT contains the criticality measure obtained by multiplying the importance rating by the difficulty rating. If a KSA is important and difficult to learn, it will be considered critical to include in an assessment for selection in this position.

The last column labeled ENTRY is the level of the KSA needed at hire. These will be rated on a 1 to 5, with 1 representing little or none of the KSA needed and 5 representing a high degree needed. Those KSA determined to be needed at hire will be weighted accordingly when scored.

Appendix B
Job Description Form
{Enter Company/Subsidiary Name}
Job Title ________________________________
Date ____________________
Department ________________________________________
O Exempt O Non-Exempt
Job Reports To _____________________________________
Job Summary (Briefly describe what the position was created to accomplish.)

Functions (List in order of importance the essential functions of the job and the approximate percentage of time spent on each of the activities; describe what must be accomplished, not how it must be done; include supervision or management responsibilities, quality and quantity standards, physical, mental and perceptual functions of the job.)
% Time

Essential KSAs

Essential Mental Functions

Essential Physical Functions

Working conditions

Equipment Used:

Minimum Education and Experience (type and number of years):

Additional Comments

Approved by _________________________________ Date ___________________
Note: Nothing in this job description restricts management's right to assign or reassign duties and responsibilities to this job at any time.

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