Koss Corporation Case Study Case Study

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Koss Corporation Case Study

Fraudulent activities

Just as many other businesses, Koss Corporation had an internal control system meant to protect the organization's assets. The fraudulent activities, which occurred, include misuse of petty cash, large payments by wire transfer or check, unprepared account reconciliation, outdated computerized accounting system, and minimal management review of official statements (Anderson, 2013).

Problems in the corporate governance and/or organizational structure

However, the computerized accounting system of Koss Corporation was nearly thirty years old and did not have sufficient controls. Its accounting systems could not lock out changes made after every end month since the audit trails were not available. Julie and Sue made undetected post closing adjustments to the accounting records without Michael's knowledge. Julie covered up the embezzlement done by Sue who forged entries to match the firm's cash account balance with the cash balance in the bank and held back receivable to match the amount of money shortfall (Anderson, 2013). Moreover, Julie failed to record internet sales or retail sales to cover up the cash shortfall.

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How the corporate management and the accounting function would be better organized

The account reconciliations of Koss Corporation were not maintained or prepared as part of the company's records. From the level that the reconciliations were done, Mulvaney and Sachdeva carried out the transactions poorly. This enabled these people to manipulate the reconciliations to cover their fraudulent entries. Michael Koss did not verify that the company's accounting systems were adequately monitored or secure. The company's computer system lacked an audit trail usage since records of individuals who made entries in the accounting system lacked (Anderson, 2013). Michael Koss could have regularly changed the password for accessing the accounting and computer terminals that were locked when unattended. The company did not have IT controls and security policies to log and monitor application and network security violations to the management. The company's financial information would be retrieved and used by unauthorized persons, be changed, lost, and programs destroyed or interfered from the lack of access controls.

What Julie Mulvaney should have….....

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https://www.aceyourpaper.com/essays/koss-corporation-case-study-125415
   

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