Reference no: EM132786700
Question - FRAUD, ETHICS AND CONTROLS
Stephen Joy is a recent accounting graduate from Victoria University of Wellington. He was employed as a junior accountant for Accounts Receivables at Stevens & Sons Limited, a company that specialises in importing and selling construction materials and equipment.
Having his first job as a junior accountant, Stephen finds it hard to make ends meet, especially as he also has to support his partner who is studying full time. He was recently invited to come to his best friend's wedding in Fiji. He loves to go, but needs to find the money to afford the airfares and accommodation.
At work, the billing coordinator, Christine, has gone on maternity leave for four months. Finding a short-term replacement for Christine has proven to be difficult, and hence Stephen has been assigned to take on part of her work, which is receiving customer payments and making bank deposits, arranging and tracking payments to creditors, creating and authorising credit notes. He has never done this before but he has sought help from his uncle, who is a finance manager in a different company.
Stephen sometimes also receives customer payments in cheques alongside remittance advices though most of them often send payment through direct internet banking. Stephen is debating with himself whether he could take some of these cheques for himself without anybody knowing about it. He told himself that he would only take the cheques with a small amount of payment, so that the company's financial statements will not be materially distorted.
Required -
1. Identify the Fraud triangle in this case.
2. Identify the key ethical dilemma facing Stephen in the scenario above.
3. Identify and Explain the key ethical principles that are potentially violated in the scenario above.
4. Discuss THREE alternative courses of action that Stephen could undertake and evaluate them based on i) the impacts on the relevant parties and stakeholders, and ii) the ethical principles that are breached or preserved.
5. Choose and Justify the Best course of action that Stephen should undertake.