Week 3 - Boutique Technology

There has been some cases of fraudulent activities at Boutique Technology (BT), involving payroll and software products. I found a number of practices that could have contributed to these actions as summarised in the table below:

Management has little regard for policy	Rationalisation that if CEO is policy-adverse, he is deserving
Low base pay, big bonuses	Incentive to take short-cuts to make bonus targets
Only one staff member each for accounting, finance & HR	Opportunity for fraud due to no checking or segregation
Focus on low cost output	Pressure to keep time spent low leads to short-cuts

 

I have prepared financials and tax returns for a small company (<10staff), who, to keep costs low, had one person paying and recording all bills and payroll, like in BT. We found a discrepancy in the accounts, and upon looking into it, the client found out that the accounts staff was making payments out to her son’s bank account.

In regards to the above problems, to prevent future fraud, using COBIT practices, I would do the following:

1.      Monitor and evaluate internal controls more effectively in regards to payroll

2.      Implement an IT system that would help raise ‘red flags’

3.      CEO to emphasise improved policies and procedures to staff

4.      ID all inherent risks in the business and seek to implement IT systems to help improve these

 

220Words