NAME : FIRDA ARFIANTI

NIM : 2301949596
CLASS : LA53
GSLC 1 Assignment
Chapter 4 – Preventing Fraud

Joseph Gonzales recently bought a new business that included a small 20-room motel and
coffee shop. He hired a young couple to run the business and plans to pay them a monthly
salary. The couple will live for free in a small apartment behind the motel office and will be
in charge of the daily operations of the motel and coffee shop. They will also be responsible
for hiring and supervising the four or five part-time employees who will help with cleaning
the rooms, cooking, and waiting on customers in the restaurant. The couple will also maintain
records of rooms rented, meals served, and payments received (which can be in the form of
cash, checks, or credit cards). They will make weekly deposits of the business’s proceeds at
the local bank. Joseph lives about six hours away and will only be able to visit periodically.

1. What are your two biggest concerns about possible fraud on the part of the couple?
Answer:
The first biggest concerns about possible fraud on the part of the couple is about the
proposed business model is that Joseph Gonzales lives away from the business
location and can only visit the business periodically so that the total system will be set
up and controlled by the couple to commit and execute the fraud and in the process,
the spouse may involve a part-time employee who will ruin Joseph Gonzales'
business. The second concern is the fact that it has not imposed any structured system
to track business volume. Therefore, there is every possibility that the couple will not
reflect the income collected correctly, but will hide the real amount to deceive Joseph
Gonzales in terms of financing.

2. For each concern, identify a possible control that could reduce the risk of fraud.
Answer:
The first concern can be addressed by shifting the location of Joseph Gonzales. Close
surveillance would have helped Joseph Gonzales to prevent the man from committing
fraud, with part-time support staff.

Meanwhile, the second concern can be addressed by implementing a system in which

it will be notified of business details such as the number of customers, customer
details, services chosen and consumed by them, and hence the legitimate amount it
must pay. Staying near the motel will help him because it will prevent both scams
from happening.

Reference:
Albrecht, W. S. (2019). Fraud examination. Australia: Cengage.