50.1K

Verified Solution

Link Copied!

Fraud Risk Factors Discussion

Review the case scenario below. In your initial discussion post, identify and list the potential fraud risk factors present in the case and indicate how you would categorize each factor in terms of the fraud triangle (incentive/pressure, opportunity, or attitude/rationalization).

Case scenario

Elsie and John Driggs founded the Grand Candy Company on January 1, 2018. Elsie began making candy in her kitchen in 2015 while her husband, John, was starting an electrical contracting business. As word of her candy-making skills spread, Elsie began receiving orders from gift shops and other regional retailers.

As business grew, Elise found her kitchen was too small for increasing production demands, and she was too busy making candy to keep up with the financial responsibilities of operating a business (which she had little understanding of to begin with). In addition, she had no time to develop new treats something she felt important to ensure the companys continued success. So, John sold his contracting business; they invested the proceeds in Grand Candy and moved into larger facilities. John now runs the financial side of Grand Candy, and Elsie is free to concentrate on expanding products. John likes the challenges with his new role and is determined to see the company succeed. He has visions of being able to retire in 10 years and to be able to travel the world.

By the end of 2022, production was again near capacity. John knows they need to expand, but they do not have cash available. Elsie agrees, but dislikes borrowing money. She agreed to borrow small amounts in the past, but that still made her uncomfortable. Elsie is adamant about not borrowing more. John convinces Elsie to consider an initial public offering (IPO) of stock for Grand Candy so they can obtain cash without having to borrow money from a bank. Then they can still be majority shareholders and run the company. They are currently going through the IPO process now.

When grading your discussion posts, I consider the quality of your responses including evidence of critical thinking and consideration given to the questions as well as ability to tie in relevant points from readings and videos, ability to draw in evidence from experiences, and ability to tie together course concepts.

Answer & Explanation Solved by verified expert

See Answer