Koss management Case Essay

1. wherefore might Koss forethought know nursing homed so a good deal invest in Sachdeva, on with minimal supervision and supervise?Koss direction might consecrate placed so real much trust in Sachdeva because she was is such a high position. She sounded in the company as immorality President, when you atomic number 18 that high on the totem pole, you argon assumption trust that you know what you are doing and that you want what is better for the company. Companies dont hand out positions to people that pass water no clue as to what they are doing as salubrious as soulfulness that they think will ruin the company. The same thing goes along with having minimal supervision and monitoring. She was a feebleness President, mortal that was supposed to be trusted, some atomic number 53 who was a leader, some one and only(a) who was supposed to fructify an example. It just goes to show you that it is non always the person on the bottom of chain that needs to be watc hed. It is easier for higher up caution and owners to sneak specie away than the one who put one over minimal access to records and bank avouchments.2. What was throw Thorntons obligation to uncover the fraud?Grant Thornton was Kosss internal audited accountor. An internal meeter is defined as An independent, objective assurance and consulting activity designed to enlarge value and improve an physical compositions operations. It helps an organization accomplish its objectives by bringing a systematic, check approach to evaluate and improve the effectiveness of venture management, control and governance processes. (p. 23-24) As the auditor for this origin, Grant was supposed to make sure that either establish of financial information was in its near place as well as wrote and calculated right. clear Thornton did non do his job the right way. By looking at the numbers provided, any auditor could see that something is not right in the company. afterward seeing it, th e auditor would address the issue and postulate with it the proper way. I tolerate a persuasion he knew all along what was going on only when was too afraid to open his mouth.3. Why should Sachdevas plenteous lifestyle have increase suspicions? Why might it have been ignored or explained away by her professional colleagues?Sachdevas lavish lifestyle should have raised red flags before long after it started to happen. It shouldbecause most people that work in a company roughly know how much each person makes. After seeing her pass along the money she was someone should have investigated a slim much than. I mean it is possible for a Vice President of a company to be rich, tho for a life style to go to the utmost(prenominal) as spending $1.4 million on a shopping spree is headable. One of the number one ways to detect fraud is by a change in lifestyles. Her new lifestyle could have been ignored because of her job title. No one wants to question their boss, allow alone so meone higher up in management. By doing that, all you are communicate for is to get fired. In the book it says that people fictitious she used family money or her husbands, but not one person questioned her about it. (p. 116) No one wanted to be the one that was questioning the boss. It is much easier to turn and look the other way than stomach up in what you believe.4. How could management, the audit mission, and the auditors have been more professionally skeptical in this situation?The audit committee and the auditors could have checked financial more very much than what they did. When they noticed that the in summon was dropping quite a bit each year, they should have started looking at documents more closely as well as more often. The audit committee is supposed to enunciate with management on their findings. Well instead of talk to the President and Vice President, they should have only talked to the President. at that place was really no communication in this business when it came put down to financials. It was basically whatever Sachdeva said was right. No one stepped up to double check her work and no one questioned it. Being a larger company, more than one person should have contumaciously doubled checked the financial statement.5. What was the audit committees obligation to notice that something looked amiss in the financial statements?The audit committees responsibility was to look over the accounting and financial inform process as well as the financial statement audits appoint, compensate and oversee the external auditor and to ensure that the company has a whistleblower program. (p. 52) At first glance the committee could notice that something was not right with the companys financial records. save nothing was done and nothing was said.6. Sachdeva paid for her purchases employ corporate cite observances. What internal controls could the company have used to prevent inappropriate use of the credit cards?One thing internal controls could have done was make Sachdeva turn in receipt along with a credit card statement at the end of eachmonth. By doing this, every dollar spent on company card can be accounted for. You can see not only where the money is going but what the money is spent on as well as the date and time it was spent. This is just one plain way to keep fraud down. Many companies overlook this every month with their employees. For every trans achievement where a receipt cannot be present is deducted from their pay check. another(prenominal) thing the company could have done is set a limit on the card. By scene a limit, you can make sure amounts are not being spent that shouldnt be.7. some(prenominal) reports have described Sachdeva as having a very dominating personality, and revelations were made about the fact that she would often be verbally abusive of her subordinates in attend of top level managers at Koss. How should top-level managers have responded to this behaviour? What actions could the subordinates have taken to respond to this behavior?Top-level management should have put a stop to it right at the start. By allowing it to happen, shows her that it was ok. If they would have stated something in writing and verbally, she may have either halt or possibly could have be let go. Also by allowing this to happen, shows other employees that it is completely ok to act the way to other employees as well as people above her. Some actions that defiantly should have been taken would be to sit her down and just talk to her and let her know that it is not acceptable in the company, especially to her bosses. The next action would be like I said to have something in writing and have her sign it. not only does this cover the companys butt, but you have the proof that you said something to her. By doing this, she cannot come back and say that she wasnt aware she was verbally abusing anyone and that nothing was brought up to her.ReferencesRittenburg, Larry. Johnstone, Karla. Gr amling, Audrey. (2012) Auditing A Business jeopardize Approach 8e. Mason South-Western, Cengage Learning.