A major Australian Public Company ran promotions advertising for a number of its products through a promotions company. The promotions company falsely inflated the number of responses it received from purchasers of the company’s product. The false number of respondents was invoiced by the promotions company to the public company resulting in the overpayment of thousands of dollars. The records kept by the promotions company were those on its computer database as well as manual batch numbers of responses to the promotions.
Answers
Answer:
This case scenario is presented but you did not write the question.
No worries, according to your question,
Question:
1) Identify and discuss which internal control could have prevented this fraud and give five (5) examples?
Explanation:
- What are internal controls in this case?
Internal controls are the plans which are used to safeguard the assets of ones company. This is done to ensure the integrity of the accounting records of the company, also to deter and detect fraud and theft.
What can be done?
- The Australian Company could have Segregated duties to help reduce the risk of fraud from occurring at the hands of this promotions company.
-Next time they must do a complete background check on any type of company that they may hire to prevent any frauds from occuring. Because its not possible that this type of a company might have done this fraud for the first time.
- Strengthen the documentation team who can keep an eye on whats happening at all times.
-Even keep an eye on the P.O Box billing schemes which are used by some frauds to embezzle money.
-Internal controls must be monitored and revised on constant basis.
-Hire an expert to help ensure company policies.