Accounting - Auditing

Accounting - Auditing

Type Of Asset Misappropriations And The Factors That Contributed To It

Asset misappropriation schemes incorporate frauds that involve the trickery or deceit of perpetrator for stealing or misusing the assets or resources of an organization (Albrecht, Kranacher, & Albrecht, n.d). The case of asset misappropriation that I am going to discuss in this paper was happened in the Knottyville Country Club in 2007. Knottyville Country Club is one of the biggest clubs that is privately owned and caters around 1,800 dues-paying full members, 800 associate members as well as their guest. Fancy Rockbottom is one of the employees of country club for almost 22 years, and dealt in various areas including the bookkeeping function. For the last six months of her job, she served as the general manager while being consistent with her bookkeeping job for the Club. Her duties also include the ordering of all supplies, where, two signatures were required by the management on checks for supplies: one from Fancy (being a general manager) and other from Sarah or Robert (other two employees).

While being on duty, Fancy often asked Sarah to sign blank checks in order to avoid any delay in supplies and pay bills instantly. Furthermore, Fancy maintained the accounting records, and therefore was in charge of bank reconciliation at the end of each accounting period. She also took care of financial statements of the company, and thereby presented an annual budget to the approval board of the Club. In addition, she also charged some additional dollars to some of members' monthly bar and restaurant bills. If members did not note, they pay the bills which were kept by Fancy; while if any member complains she blamed the system for errors i.e. punching wrong member number.

Eventually, Fancy Bottomrock was found at many lottery/gambling places by some of the employees, showing her mild gambling addiction. She was also seen at exotic vacation places while having expensive sport cars. Furthermore, it was also revealed in court (later on) that she paid off enormous amount of her personal credit card loans using stolen money. The bank official finally got suspicious and alerted the Club President, who later on after investigation found out that Fancy was depositing large amount of money in her personal account from stolen money of the Club. Thus, she was terminated and eventually held sentenced for 15 years due to her grand theft (asset misappropriation).

In this case it is clearly apparent that lack of management played a huge role in this asset management case, as there must be a segregation of duties i.e. bookkeeping must be performed by one person and then checked by a supervisor, blank checks must not be signed in except for severe cases, there should be an account officer to keep check and balance, there must be proper internal and external audit committees for conducting quarterly or annual audits, the management must supervise or observe day to day activities of employees, etc. Thus, the negligence of all these ...