A N ATO M Y O F F R A U D

CASE OF MAUREEN FRUGALI AND COLOSSAL HEALTH

16 March
2022

Presentation By TEAM
10
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OUR MEMBERS
TẠ NGỌC NGUYỄN HOÀNG
KHÁNH NAM

ĐOÀN HOÀNG TUẤN NGUYỄN QUỲNH

LINH CHI

NGUYỄN TUẤN TRẦN ANH

MINH TÚ
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CONTENTS

1 2 3

SUM M ERIZIN POINTING SOLUTION

S
G THE CASE OUT THE
FRAUD
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1.
S U M M E R IZ ING
THE CASE
Maureen Frugali was a training supervisor
Maureen Frugali was able to create fictitious
claims.
Maureen Frugali let Accounts Payable pay fake
claims for her.

Total lost: $11

MILLION
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2 . POINTING O U T W H E R E T H E F R A U D IS

ESTABLISH OF
RESPONSIBILIT
Y
- Not adequately restrict the responsibility
for authorizing and approving claims
transactions.
- The training supervisor should not have been
authorized to create claims in the company’s
“live” system.
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3. SOLUTION

1. Segregation of duties
Segregation of Duties is indispensable in
an internal control system.

2. Segregation of related
activities

Segregation of Related activities is

indispensable in an internal control
system.
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3. SOLUTION

3.1. Segregation How?

Segregation of Duties is indispensable in
of an internal control system.
2 common applications of this principle

duties
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EXAMPL
E
Approves the
purchase of goods
or services

NOT reconciles the monthly

financial reports
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EXAMPL
E
Opens the mail and
prepares a listing
of checks received

NOT maintains the accounts

receivable records.
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3. SOLUTION

3.2. Segregation How?

Segregation of Related activities is

of related indispensable in an internal

control system.

activities
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#1 PURCHASING
ACTIVITIES
Ordering merchandise

Approving orders

Authorizing payment

Paying for goods or services Warning

Various frauds are possible when one person handles related
purchasing activities
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EXAMPL
E
Order goods without obtaining
supervisory approval

Purchasing agent -> receiving kickbacks

from suppliers
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EXAMPL
E
Person who orders goods also
handles the invoice, receipt and
payment authorization

He might authorize payment for

a fictitious invoice.
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#2 SALES
ACTIVITIES
Making a sale

Shipping (or delivering) goods

Billing customers

Receiving payments Warning

Various frauds are possible when one person handles related
sales transactions.
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#Example

IF A SALESPERSON
Can make a sale without obtaining
supervisory approval, he or she
might make sales at unauthorized
prices to increase sales
commissions.
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A SHIPPING CLERK A BILLING CLERK

who also has access who handles billing and
to accounting records receipt would understate
could ship goods to the amount billed for
himself sales
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SOLUTIONS FOR
EXAMPLES:
Company should divide the sales
tasks

The salespeople make -> THE SALE

The shipping department ships -> THE

GOODS on the basis of the sales order

The billing department prepares -> SALES

INVOICES
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Conclusion
THE WORK OF ONE EMPLOYEE SHOULD, WITHOUT A
DUPLICATION OF EFFORT, PROVIDE A RELIABLE
BASIS FOR EVALUATING THE WORK OF ANOTHER
EMPLOYEE.
 T h a n k Yo u
for
listening