Internal Control Deficiency: Frank James, a highly competent employee of Brinkwater Sales Corporation, had been...
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Accounting
Internal Control Deficiency:
Frank James, a highly competent employee of Brinkwater Sales Corporation, had been responsible for accounting-related matters for two decades. His devotion to the firm and his duties had always been exceptional, and over the years, he had been given increased responsibility.
Discussion: Both the president of Brinkwater and the partner of an independent CPA firm in charge of the audit were shocked and dismayed to discover that James had embezzled more than $500,000 over a 10-year period by not recording billings in the sales journal and subsequently diverting the cash receipts.
What major factors permitted the embezzlement to take place?
(please also add / specify any noted internal control deficiencies/ weaknesses in any of 5 areas of internal control structure components, in Brinkwater internal control process)
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