BUS FPX 4068 Assessment 3 Forensic and Non-forensic Audits
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BUS FPX 4068 Assessment 3 Forensic and Non-forensic Audits

BUS FPX 4068 Assessment 3 Forensic and Non-forensic Audits


Capella university

BUS-FPX4068 Contemporary Auditing Using Investigative Accounting Practices

Prof. Name


Case 1:

1. Possible Check Fraud Schemes and Control Processes:

The company could potentially fall victim to various check fraud schemes, including check tampering, check washing, or check laundering. Check tampering involves an employee cashing legitimate checks for personal gain using false identities. Check washing entails chemically altering checks to modify payee names or amounts. Check laundering involves using checks for unauthorized purposes, relying on lax scrutiny of authenticity or accuracy (Hopwood, Leiner, & Young, 2012). Implementing control processes such as automated check verification systems at the point of sale or having salespersons initial received checks can deter such fraudulent activities.

2. Employees in a Position for Check Fraud:

Various employees, including salespersons, department managers, general managers, and controllers, may have access to checks and could participate in check fraud schemes. Without a verification or accountability system at the point of sale, pinpointing where a check was swapped for a fraudulent one becomes challenging.

Case 2:

1. Acceptability of Heather’s Options under GAAP:

None of the options Heather is considering would be acceptable under generally accepted accounting principles (GAAP). Adjusting the estimated percentage of completion to conceal contract losses contradicts GAAP, which mandates recognizing losses. Premature revenue recognition and using mark-to-market methods are also deceptive and fail to provide stakeholders with accurate financial information (Hopwood, Leiner, & Young, 2012).

2. Financial Statements Fraud:

Premature revenue recognition and misstating the percentage of completion would constitute financial statement fraud. Both actions misrepresent the company’s financial performance and integrity (Hopwood, Leiner, & Young, 2012).

BUS FPX 4068 Assessment 3 Forensic and Non-forensic Audits

3. Handling the Situation:

If in Heather’s position, prioritizing honesty and integrity would be paramount. Disclosing the loss of previous owners and engaging stakeholders transparently would be essential. Exploring alternatives to compensate for losses, such as incorporating the defaulted recreational vehicles into remaining inventory or considering relocation to Mexico, would be prudent. Decision-making should focus on long-term sustainability and maintaining stakeholder trust.

Case 3:

1. Feasibility of SOX 404 Compliance for a Three-Person Company:

Achieving SOX Section 404 compliance for a three-person company is challenging but feasible, given special considerations for small companies. Such companies, categorized as micro-cap companies, must adhere to scaled-down requirements compared to larger firms (Hopwood, Leiner, & Young, 2012).

2. General Steps for Compliance:

The siblings must prioritize strong leadership involvement, establish an effective board of directors, and compensate for limited segregation of duties and technological resources. With fewer resources, each member must excel in their roles, overseeing multiple aspects of financial reporting and operations (Hopwood, Leiner, & Young, 2012).


Hopwood, W. S., Leiner, J. J., & Young, G. R. (2012). Forensic accounting and fraud examination (2nd ed.). McGraw-Hill.

Paull, L. (2018). Provisions for estimated contract losses. LaPorte CPAs & Business Advisors. Retrieved on June 12th, 2022 from https://laporte.com/knowledgecenter/audit-andassurance-services/provisions-for-estimated-contract-losses

BUS FPX 4068 Assessment 3 Forensic and Non-forensic Audits

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