Simon Blank Construction Company has two divisions. Thepresident (Chris Simon) manages the roofing division....

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Accounting

Simon Blank Construction Company has two divisions. Thepresident (Chris Simon) manages the roofing division. Simondelegated authority and responsibility for management of themodular manufacturing division to John Gault. The company has acompetent accounting staff and a full-time internal auditor. UnlikeSimon's procedures, however, Gault and his secretary handle allbids for manufacturing jobs, purchase all materials withoutcompetitive bids, control the physical inventory of materials,contract for shipping by truck, supervise the constructionactivity, bill the customer when the job is finished, approve allbid changes, and collect the payment from the customer. WithSimon's tacit approval, Gault has asked the internal auditor not tointerfere with his busy schedule. Give this scenario a letter gradebased on risk management through internal controls and identify twopotential frauds that could occur based on the current structure.Suggest at least one improvement to reduce the risk of fraud.

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In the given scenario the internal controls in the modular manufacturing division are very weak John Gault and his secretary handle all the work in the department including purchasing all the materials without any competitive bids control the physical inventory of See Answer

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In: AccountingSimon Blank Construction Company has two divisions. Thepresident (Chris Simon) manages the roofing division. Simon...Simon Blank Construction Company has two divisions. Thepresident (Chris Simon) manages the roofing division. Simondelegated authority and responsibility for management of themodular manufacturing division to John Gault. The company has acompetent accounting staff and a full-time internal auditor. UnlikeSimon's procedures, however, Gault and his secretary handle allbids for manufacturing jobs, purchase all materials withoutcompetitive bids, control the physical inventory of materials,contract for shipping by truck, supervise the constructionactivity, bill the customer when the job is finished, approve allbid changes, and collect the payment from the customer. WithSimon's tacit approval, Gault has asked the internal auditor not tointerfere with his busy schedule. Give this scenario a letter gradebased on risk management through internal controls and identify twopotential frauds that could occur based on the current structure.Suggest at least one improvement to reduce the risk of fraud.