And the Fraud Continues

Case Study 1: And the Fraud Continues

Discuss the insepar fitted control weaknesses that existed at MCI that contributed to the commission of this fraud.
Walt Pavlo would not have been able to commit fraud if MCI had better inhering controls. Because of the weaknesses in MCI internal control he was able to defraud the company fall out of approximately 6 million dollars. Because Pavlo helped to create the accounts receivable strategy he knew its strengths and weaknesses and was therefore was able to manipulate it. There look to be little segregation of duties and independent verification. Two controls totally could have prevented the fraud. Pavlo had the ability to modify the accounts receivable balances and also discover customer payments. A supervisory-level employee not involved in transcription transactions in the accounts receivable organization should have reviewed and veritable adjustments to customer accounts. Because he was not forced to get favourable reception from someone else for what he was doing the fraud went uncovered. A system persist of all manual adjustments recorded in the accounts receivable system should be generated for review and approval by someone who was high up and/or was not involved in arranging accounts receivable transactions.
Where were the internal auditors at MCI?



There internal auditors were prudent for ensuring that all internal controls are put in can to prevent errors or corruption like these from occurring and that they controls are carrying into action properly. It was their job to search for any errors or fraud that may be occurring. The internal auditors should have been randomly combing by the accounting records without notifying the employees. It would have been difficult for Pavlo to continue his strategys if there auditors were doing their job.
come out of Pavlos fraud included lapping in which he would use the cash from one customer to pay raft a debt of another. In order for a lapping scheme to continue Pavlo couldnt miss a day of work of it...If you want to get a full essay, order it on our website: Ordercustompaper.com



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