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Read the section entitled Ghosts on the Payroll on p. 663 in Ch. 20 of Auditing and Assurance Services.

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Question;Read the;section entitled Ghosts on the Payroll on p. 663 in Ch. 20 of Auditing and;Assurance Services. How could the company reasonably have prevented the issues;presented in the case?;Other Requirements: Melvin Turner was;extremely ill and needed expensive medicines to treat his condition. He was;responsible for recording payroll hours and preparing payroll records at the;not-for-profit organization where he was employed. A separate employee was;responsible for adding and deleting employees to the payroll system. However;Turner circumvented this control by looking over her shoulder to steal her user;ID and password, allowing him to add fictitious employees to the payroll.;After adding the ?ghost? employees to the payroll, Turner entered wage and;other relevant information and arranged for direct deposit of the fictitious;employees? pay to his own bank account. He also created fictitious;documentation for the ghost employees? work, as well as file copies of the;paychecks.;The fraud was detected by the organization?s external auditor who noted that;the file copies of the fictitious checks were white, but the file copies of;legitimate checks were green. Several additional clues indicated the presence;of the fraud;? Multiple direct deposits were made to the same bank account but under;different employees? names.;? None of the fake employees had a personnel file or amounts withheld.;? Employee numbers for the ghost employees were higher than those of other;employees.;Confronted with the evidence, Turner pleaded guilty to the charges. Under a;plea bargain agreement, he was ordered to make restitution and was sentenced to;15 years of probation.

 

Paper#39848 | Written in 18-Jul-2015

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