Accounting Assignment Help

Accounting Assignment Help 

1. Explain relevant theories, concepts and frameworks of forensic accounting and evaluate major causes of corporate, bank and financial scams.

2. Investigate different fraudulent accounting practices and suggest measures for their deterrence.

Please read the below case and complete these tasks.

Task 1:

Critically evaluate the fraud scheme used by the perpetrator

Task 2:

Perpetrators of fraud often display “red flags” or warning signs. Discuss common red flags being associated with the fraud perpetrator in the above case.          

Task 3:

Apply the fraud triangle to the above case and discuss various aspects related to each triangle in detail.

Task 4:

Discuss the possible solutions of how to prevent such cases in future and also few lessons learned from the given case.                                      

CASE

Misplaced trust

Church leaders drain at least $673,000 from accounts.

On Dec. 8, 2014, Onondaga County Court Judge Joseph E. Fahey spoke out at the sentencing of John Osborn when he tried to weasel out of a predetermined guilty plea. "I have to tell you, Mr. Osborn, I was born at night, but it wasn't last night, okay. …" Fahey said. "And what it tells me more than anything else is something that I think I already knew from looking at this scam and from looking at your history, is that you're a conman and have been a conman for most of your adult life. You conned these poor people out here in the church. You conned other people in the past … and now you are attempting to con me and the court system. And it isn't going to happen this morning. Your day of reckoning has arrived. Upon your plea of guilty to grand larceny in the second degree, it is the sentence and judgment of the Court you be sentenced to a minimum of five years and maximum of 15 years."

The church

The unnamed church is a small United Methodist congregation in upstate New York, which has served the community for 150 years and operates on an annual budget of less than $200,000. The members created — mainly through bequests in their estates — a series of endowments to fund a variety of needs within the church. Over the years, the endowment had grown to more than $600,000.

The players

Osborn, born in 1958, was a self-employed local businessman and financial advisor in Syracuse, New York. His wife, Mary Meyer, born in 1956, was a Certified Public Accountant (CPA) and an attorney. Meyer became a CPA in 1980, and after graduating from Syracuse Law School in 2000, she was admitted to the bar. She was the chief financial officer of the Central New York Community Foundation — a charitable organization with assets of $133 million.

In early 2000, John Osborn and Mary Meyer joined the congregation. By 2008, Meyer had volunteered to become the church's treasurer. Osborn was the church's lay leader and sometimes delivered a Sunday sermon. When the church needed someone to manage its money, Osborn told the church leaders that he would "gladly" volunteer as the head of the finance committee. The church leadership was thankful to Meyer and Osborn because no one else had the expertise or desire to manage these duties. The congregation explicitly trusted Osborn and Meyer to responsibly handle the financial affairs of the church.

Discovery of a guilty past

Four years after Osborn and Meyer assumed their roles, the church began to experience unexplained shortfalls. Bills were not being paid on time and vendors were sending late notices. The church pastor said she wasn't being paid consistently. Some members of the church council were growing concerned. Osborn and Meyer assured them everything was fine and supported this lie with a spreadsheet that showed no money was missing.

In June 2012, Osborn asked a fellow parishioner for a $60,000 loan to help out one of his business partners. (See accused church embezzlers were each other's check and balance, by John O'Brien, Syracuse.com/The Post-Standard, and Oct. 20, 2013.) Osborn didn't repay the money on the promised due date of the loan.

As time passed, the parishioner decided to contact his lawyer who hired a private investigator to research Osborn. Together they discovered that 13 judgments totaling $275,000 between 1990 and 2006 had been filed against Osborn. These included U.S. Internal Revenue Service tax liens of $42,000 and 11 lawsuits mostly from broken business promises and unpaid debts.

According to the Syracuse.com/The Post-Standard article, they learned that Osborn pleaded guilty in 1992 to stealing $120,000 from the Camillus Housing Authority when he was the agency's treasurer. He was convicted of "falsifying business records," sentenced to five years of probation and ordered to repay the money.

The attorney and private investigator met with the church pastor and told her that they believed that the church's financial problems were because of Osborn's thefts. After the Onondaga County District Attorney's Office's further investigation, it determined that Osborn and Meyer embezzled approximately $673,000 during their time managing the church finances.

CHURCH LEADERS SHOULD’VE REQUIRED OSBORN AND MEYER TO PERIODICALLY REPORT TO THE BOARD, NOT JUST SIMPLY ASSURING THEM ALL WAS WELL WITH BOGUS SPREADSHEETS."

The tawdry details

According to the grand jury indictment, the church's cash assets were comprised of a checking account at Alliance Bank together with an investment account at RBC Wealth Management. The investment account was segregated into a variety of program efforts — the New Building Fund, the Parsonage Fund, the Maintenance Fund and the Memorial Fund — but totaled more than $600,000. Osborn had signatory control over all of these accounts and was able to transfer funds from the RBC investment account into the Alliance checking account.

Between January 2008 and February 2013, Meyer wrote and signed as treasurer — and Osborn cashed — 298 checks totaling $505,754. Similarly, between June 2008 and December 2012, Meyer wrote, signed and cashed 17 checks — totaling $29,754, — payable to her personally. 

Also, between January 2008 and May 2010, Meyer signed 27 checks, totaling $278,000, payable to Alliance Bank. Osborn used these checks to Alliance Bank to purchase Alliance Bank official checks — made payable to Ashton Holdings, LLC — an entity that Osborn owned.

According to James Paliotta, senior investigator - fraud, economic & financial crimes at the Onondaga County District Attorney's office, the purpose for using these funds to buy Alliance Bank checks made out to Ashton Holdings, was to "obscure the trail of money and make it harder to follow." Paliotta also determined that the couple used some of the money from these checks to pay legitimate church expenses but pocketed the remaining money. So, authorities couldn't determine the exact amount Osborn and Meyer stole.

Sentencing and restitution

On June 5, 2014, Osborn pleaded guilty to two counts of grand larceny in the second degree and one count of grand larceny in the third degree. As we learned from Judge Fahey in the beginning of this article, in December 2014, Osborn was sentenced to five to 15 years in state prison, the maximum punishment under New York State law.

He was ordered to pay restitution in the amounts of $392,000 and $81,090. At his sentencing, Osborn said "there was never an intention to deprive the members of the church." He said he and his wife "had financial issues," and he made decisions he thought would help.

Osborn entered the Franklin Correctional Facility in Malone, New York, on July 9, 2015. His earliest release date is Dec. 15, 2019, according to the New York State Department of Corrections and Supervision.

On June 23, 2014, Meyer waived her right to a jury trial and pleaded guilty to one count of grand larceny in the second degree. In December 2014, she received a sentence of three to nine years in state prison and was ordered to pay restitution of $200,000. She entered the Albion Correctional Facility in Albion, New York, on Jan. 20, 2015, and her earliest release date is Dec. 6, 2017.

Meyer is listed in the New York State registry of Certified Public Accountants as "not registered." We don't know why her license hasn't been revoked, which would appear to be the proper description based on the instructions outlined in the Office of the Professions page at nysed.gov. According to the New York State Unified Court System, Meyer was disbarred on July 29, 2014.

Breach of trust

At Osborn's sentencing, Beth Van Doren, the assistant district attorney for Onondaga County who prosecuted the case, said, "The first question Osborn asked the church when he joined the congregation was which position he could hold that would allow him to be on every committee within the church."

Osborn clearly desired to be put in a position of trust within the church. The church council fortified his position by electing him the chair of the finance committee and granting him the power to oversee several church functions. Meyer's appointment as church treasurer compounded the situation.

A small organization often doesn't have adequate segregation of duties, but a finance committee can create suitable internal controls over the treasurer's duty of maintaining the books. However, Osborn's and Meyer's tight management of church funds completely circumvented any possible controls. The arrangement enabled the couple to commit and perpetuate the embezzlements.

How could this have possibly happened?

How can an organization that has amassed a small fortune to further its mission suddenly find itself unable to pay its utility bill? Shouldn't it have been able to prevent this or at least discover the problem and mitigate its losses? How did the facts and circumstances align to allow this fraud?

Unfortunately, this case really isn't that unusual. Nearly any accountant or fraud examiner can recount a similar situation in which a manager, bookkeeper or board member took advantage of a not-for-profit organization — a church, civic league, youth group or municipality. These unique characteristics enable fraud:

•           A trusting environment. When an organization is small, the members or employees know and trust each other. They often are united in a common activity or desire to accomplish a common mission. They want to think the mission equally motivates everyone. Employees often accept below-market salaries simply because they're sold on that mission. Also, dedicated volunteers handle some functions.

•           The organization allocates a minimum of resources for administration because every dollar spent on that is one less dollar to accomplish the precious mission.

•           Lack of formal written policies and procedures and little chance of a specific fraud deterrence policy. Again, the organization perceives that it's better to spend more time accomplishing the mission and less time on writing clear policies.

•           Lack of basic internal controls for safeguarding the organization's assets, and assuring proper reporting and compliance with outside laws and regulations. Often the organization also lacks separation of duties — one person is performing too many functions, and the operation doesn't have any checks and balances. If one person can do it all, why bother to hire other people?

•           The organization's board believes in its mission but lacks the full complement of skills to effectively manage.

How could this fraud have been prevented?

Any experienced fraud examiner will tell you it's impossible to prevent all frauds, but all of us certainly are advocates for installing systems that will deter fraud or eliminate the possibility for certain instances of frauds. If the church leaders in this case had implemented key anti-fraud elements, they would've prevented the fraud or noticed the cash shortfall much earlier.

For example, had the church council or management simply undertaken a formal background check on the couple, Osborn's prior conviction and numerous legal entanglements would've surfaced. These two definitely wouldn't have ended up in positions of trust.

If the church had a more formal system of internal controls and separation of duties, it would've prevented the embezzlement of funds or at least discovered them sooner. Simply requiring the bank to mail statements directly to one board member and reconciling them by another would've at least prevented the fraud from perpetuating beyond the initial unauthorized withdrawals or possibly prevented the crime entirely if Osborn and Meyer had known they would be discovered.

Church leaders should've required Osborn and Meyer to periodically report to the board, not just simply assuring them all was well with bogus spreadsheets.

If the members of the board of directors had more diverse backgrounds and capable skill sets, perhaps they could've installed systems to deter the fraud. Instead Osborn and Meyer led these well-meaning people — with limited financial and managerial expertise —into the devastating scheme. Perhaps if the church had implemented an effective whistleblower policy and/or had a fraud hotline, members of the community who knew about Osborn's checkered past would've come forward and tipped off the church.

All not-for-profit organizations, local municipalities and civic groups should know that they are easy targets, and fraudsters — with practiced acting talents — are quite willing to take advantage of them.

https://www.acfe.com/article.aspx?id=4294994725

GUIDELINES

Task 1:

•           Students are expected to discuss briefly the importance of the concept of financial frauds in the present-day context followed by the background of the given case which includes brief summary of the fraud committed and details related to fraud scheme used by the perpetrator(s).

Task 2:

Students are required to discuss common red flags being associated with the fraud perpetrator in the above case.   

Task 3:

Students are required to critically evaluate the fraud triangle in above case and discuss potential deficiencies.

Task 4:

•           This section should succinctly summarize the results of the fraud examination and in terms of lessons learnt from the above analysis.

Deliverables

Submission

Submission of the Individual report will be done via Turnitin Link on MOVE. At the time of submission, you need to make sure that the assignment is your own and all the sources have been acknowledged.

Is there a word limit (Number of Words ± 10%)?

3000

What do I need to do to pass? (Threshold Expectations)

•           Information search should be evident and address at least some tasks. Information should support the task.

•           Some sources ofinformation should be contemporary.

•           General understanding of the various issues and also related theoretical background should be evident.

•           Use of a range of appropriate sources should be evident.

•           General critical stance and limited critical evaluation in some areas should be evident.

•           Discussion of the ideas should be clear and the report should be readable.

•           Some compliance to HARVARD STYLE referencing is must.

•           At least few references quoted which are should be in consistent with the amount of literature used in the report.

How do I produce high quality work that merits a higher grade?

•           Critical reasoning is consistently evident across the discussions.

•           The tasks should have exemplary discussion and detailed narration

•           Use of a wide range of appropriate and current sources, focusing on research based reviews indicating personal research and critical awareness of their status and relevance.

•           Evidence of exemplary understanding of relevant theory and research.

•           Reference to appropriate theoretical background provides support to the discussion.

•           Illustrations should be  provided that amplify the theoretical background

•           The structure should be exemplary. Execution should be excellent. Discussions should be freefrom grammar or writing errors.

•           A clear layout should augment the presentation.

•           Overall organization of the report should be excellent.

How does assignment relate to what we are doing in scheduled sessions?

During the class sessions, guidance and help relating to cybercrimes will be given. The class sessions/support sessions should be used to prepare the assignment with the peers. Note that you will also be expected to work outside of the class sessions.