QUESTION

ACT 2025 Fraud Examination Case Studies

Fraud Concerns at a Property Owners’ Association

The Spanish Town Builders subdivision opened in early 1988. Located in an upscale suburb of a major metropolitan area, the subdivision started with plans for 133 custom homes. The common properties of the subdivision included a park with a playground, a full-sized pool, a baby/wading pool, and a building that housed restrooms and showers. After approximately 50 homes were sold, the developer created a property owners’ association called Spanish Town Property Owners’ Association (STPOA). (The definition and operation of a property owners’ association are discussed in Appendix A.) Seven owners volunteered to serve— four as officers and members of the board, one as a member of the board, and two as the architectural control committee. The association needed a president, vice president, secretary, treasurer, and one additional board member to prevent any tie votes on decisions. Two of these volunteers were a married couple.

 

These charter officers worked hand in hand with the developer to file an application and the association’s articles of incorporation with the relevant government ministry. Being the first board members of a new property owners’ association required a great deal of time to create the bylaws and policies for the association and to locate and engage service providers to maintain the common properties. The board members were a congenial group and enjoyed working together. To some extent their meetings were like a productive social event. Some of the policies and procedures established by the board included the following:

 

Treasurer:

 

• A checking account would be opened in the name of Spanish Town Property Owners’ Association. The treasurer would be on the signature card and be responsible for recordkeeping for the account. 
• All receipts and disbursements of cash would be made by the treasurer from this account. The treasurer would provide a list of all cash receipts and disbursements and present it along with the monthly bank statement reconciliations to the board members at their quarterly meetings.
• Annual dues owed by each property owner would be $4,500 a year. A notice would be mailed by the treasurer in January of each year stating the amount due and the due date. A stamped, return envelope addressed to the treasurer would be included with the notice. Checks would be payable to the Spanish Town Property owners’ Association. The treasurer would purchase a stamp to use to endorse checks for deposit to the association’s checking account.

 

President:

 

• The president would approve cash disbursements. The president would initial invoices as evidence of authorization and give them to the treasurer to pay.
• The president would be responsible for making sure all maintenance work was completed on time and to specifications.
• The president would be responsible for calling board/officer meetings as needed. These meetings were usually to discuss maintenance issues.

 

Vice President:

 

• The vice president would act in the place of the president in the event of the president’s absence or inability to act and perform any other duties as requested by the board members.

 

Secretary:

 

• The secretary would prepare minutes of the board meetings. This person would send the minutes to the members of the board and provide copies to any association members who requested them.
• The secretary would provide jerk chicken at the board meetings. The vice president would bring the beer.

 

Board Members:

 

• The board members would determine any special assessments or changes in dues.
• The board members would decide what maintenance work to do and what service provider to use.

 

Subsequent Events

 

By 2009, the five original volunteer board members were ready to pass on their responsibilities. Surprisingly, there had been no turnover in these positions in the approximately 20 years they had served. The group was dedicated to making their subdivision a pleasant place to live and enjoyed working together. Also, they were smart enough to realize the better their subdivision was maintained, the greater the chance their property values would remain stable or even increase.

 

 

 

 

Robert, an affable resident of the neighbourhood who owned a struggling pool business, stepped up to become the new president of the association.  Most of the residents were happy and grateful that someone was willing to volunteer for this position. To streamline operations and save on the cost of maintaining a post office box for the POA, Robert had all bank statements and bills sent to his home address. He was able to quickly hand-pick four volunteers to replace the others,

i.e., three officer/board members and one board member. 

 

Robert felt it was important for the volunteer board members to feel comfortable serving on the board, so he made sure that the insurance to limit the liability of the board members was kept up to date. Robert has remained president of the POA to the present day. During the middle of 2020, it came to some of the residents’ attention that not all was well with the POA. Below is a recount of recent events.

 

 

December 2019

 

Robert held a special meeting for all the property owners to vote on a 10 percent increase in the annual dues, which had not increased since 2004. Robert pointed out the costs of maintaining the common areas had increased while dues had not. Also, repairs were needed to the pools and the playground equipment, all of which had been in use for 27 years. Because swimming pools were Robert’s area of expertise, he spent most of the meeting talking about the pools. Although the pools appeared in general to be in good repair, several problems needed to be addressed. 

 

The rebar was coming up through the big pool in two places and in the baby/wading pool in one place. Those needed to be fixed and the pool resurfaced. Several tiles were broken or loose; the pool needed an acid cleaning; the filter equipment was in danger of failing; pumps were wearing out; and the safety covers on all the drains needed to be replaced. Also, the baby/wading pool had a leak. The bottom line, according to Robert, was that without an increase in dues, the pools would have to be filled in.

 

Robert passed around a list of property owners’ names with two boxes to the side of each name for a yes or no vote for the dues increase. The increase passed unanimously.

 

 

 

 

May 2020

 

The POA held a meeting for members of the board and the property owners. Again, swimming pool issues were the major topic. Property owners complained that during the off-season of October to April none of the pool repairs discussed at the December 2019 special meeting had been done despite an increase in dues to cover them. It was now May and time for the pools to open so the repairs could not be made for another six months. Robert took this as an insult and a criticism that he was not doing a good job as president of the association. 

 

Robert countered that he had been taking care of the association for several years with no pay and no show of appreciation from the property owners. He justified the need for the increase in annual dues by saying the pool maintenance company, which was not Robert’s company, was charging the POA $6,500 per month. He failed to mention the pool maintenance contract was for only six months per year because no pool maintenance was performed from October to April. He also pointed out that during the off-season he had the leak in the baby/wading pool fixed and resurfaced at a cost of $50,000 to the association. Robert stated that the water bills from the National Water Commission the previous months were unusually high because of the leak in the baby/wading pool.

 

A property owner suggested that Robert get other property owners to help him with things like neighbourhood beautification and social activities, whereupon Robert appointed two property owners to be additional members of the board. One would be an advisor and the other (who ran a semi-successful website building company) would handle the website. Robert appointed a long-time POA board member as the Architectural Control Committee chair.

 

When a property owner asked Robert to produce the bylaws for the POA, Robert waved the property owner’s concerns away and said they were ‘‘in his head.’’ The meeting was adjourned without a vote on the new board members and their assignments.

 

 

June 2020

 

A resident who used the pool regularly for lap-swimming exchanged pleasantries with the owner of the maintenance company on a sunny Saturday morning. During their conversation, the resident found out that the pool maintenance company had not been paid the $6,500 per month agreed to orally by the pool company owner and Robert. 

 

 

 

When the resident complained about the cost of resurfacing the baby pool by Robert’s pool company, the pool maintenance company owner exclaimed that if the cost for the job quoted by the resident was correct, then the repair cost approximately four times what it should have.  He told the resident that, to his knowledge, no request for bids had been sent out, and currently his company was trying to repair the same leak ‘‘fixed’’ by Robert’s company.

 

A board member who was handling the landscaping contract became frustrated because Robert did not respond to her requests for records; he held special board meetings without her knowledge; and he made personal attacks against her in emails sent to other board members. Consequently, she resigned from the board and started airing her concerns to other property owners.

 

 

August 2020

 

The pool maintenance company stopped servicing the pools due to nonpayment from the POA. The owner of the company sent copies of his invoices and his notice that he would no longer provide services to the POA to a concerned resident who had been trying to determine how and to whom bills were paid. Robert did not respond to requests for records of cash disbursements, and the new treasurer had neither seen the books nor had been asked to pay any bills. 

 

Robert explained he had not paid the pool company because the company billed some large maintenance repairs that were not cleared by Robert prior to the repairs being completed. While all this was going on with the pool maintenance company, the landscape company complained to another resident that payment of its fees had not been made in a timely manner.

 

 

Late August 2020

 

Property owners discovered Robert had gone before the Spanish Town Municipal Council to request funding to paint bicycle lanes and parking spaces along the main road that ran through the subdivision. Robert told members of the Municipal Council he represented the POA and that the property owners agreed to this project. 

 

A property owner who just happened to be at the meeting announced at this same municipal council meeting that this was the first he had heard of the project. Nevertheless, after working with a Municipal council member, Robert was able to get the funding for this project.

Early September 2020

 

Several concerned property owners contacted the accounting firm that prepared financial statements for the POA. The sole proprietor of the firm lived in the subdivision. She told the concerned property owners they could come to her office in three days to review the books, but they would not ‘‘find what they are looking for.’’ The property owners visited the accounting firm only to find receipts and checks from the manual ledger missing, payments made to board members without receipts, and purchases made without justification, e.g., $6,000 paid to Robert each May for the pool opening activities including the purchase of a new grill and coolers every year. 

 

Other questionable payments included a payment of $2,500 to the son of one of the board members for picking up trash in the neighbourhood and the purchase of some corrugated metal for the pool area that ended up in the pool area of a board member’s home. After the property owners had reviewed the records for about an hour, the accountant demanded they leave. She turned off the air conditioner and the lights—effectively shutting down their investigation.

The accountant later issued a ‘‘compilation’’ that claimed she was ‘‘not independent’’ and disclaimed the information provided for her report. This was sent to the concerned property owners shortly after their visit to her office.

 

 

Mid-September 2020

 

Representatives from 11 families in the neighbourhood met to discuss the next steps. They hired a lawyer at their personal expense who specialized in property owners’ association disputes. The lawyer suggested the following actions:

 

1. Do research to determine the legal standing of the POA and follow up on some of the irregularities found by various property owners.
2. Prepare a report and official letters to board members, including Robert, outlining concerns and requesting a response within ten days.
3. Request minutes of board meetings, audit reports, election results, bank statements, and bids and contracts related to major maintenance projects.
4. In the event the records are inadequate and/or not produced, send a notice of an intent by the property owners to file a lawsuit against the POA board.

 

If these actions did not resolve the problems with the POA, then a potential lawsuit with forcible removal of the board members might be required. Included in this series of events would be a possible investigation into the alleged fraudulent activities by the board members.

In the meantime, a property owner went to the Municipal Council to tell them Robert did not represent the property owners with regard to the street striping project as no survey of the property owners had been made prior to the application for the funding. The Municipal Council members requested a survey be made of the property owners before the project moved forward. 

 

The Municipal Council requested this because two years prior, the city had to rip out speed bumps in another neighbourhood at the city’s expense because the POA president improperly claimed to represent the wishes of the property owners. The city stood to lose either way. If the property owners voted against the project, then the funding would be returned; if the project moved forward without the proper approval of the property owners, then the city could incur expenses for removing the paint.

 

 

Early October 2020

 

Robert sent a newsletter to all property owners advising dues would be increased again pending a series of meetings later that year to gather votes for the increase. The newsletter announced that bicycle lanes and parking spaces would soon be painted on the main road into the subdivision. Robert claimed the vote for this project was unanimous by the POA board.

 

Meanwhile, the property owner who had informed the City Council that POA members had not been given the opportunity to vote on the street striping project mailed a survey to the property owners asking if they were for or against the project. More than half of the 133 property owners responded to the survey. Ninety percent of those were against the project.

 

 

Mid-October 2020

 

The first round of research by the lawyer for the concerned property owners discovered the following:

 

• The POA was involuntarily dissolved in 2000 because the POA board did not file the proper forms. The statutory forms were not filed in 1996, and the POA was dissolved after the four-year grace period expired.
• Forms required by the Tax Department were missing.
• The POA (if it legally existed at all) was out of compliance with recent POA legislations.  Until legally reinstated, any business activity conducted by the POA was void.
• The board members could be personally liable for fraud.

 

 

The Next Steps

 

This scenario is ongoing. A large group of concerned property owners is meeting regularly with the attorney to determine what steps to take to revive the association and the integrity of the board. The obvious first step would be a vote by the property owners to replace the current board members and elect new members and officers. Next, the board would file all the proper forms to reinstate the legal standing of the POA. The bylaws would be revised to clearly define the duties of the board and the officers and to require some checks and balances in the duties.

 

 

CASE REQUIREMENTS

 

1. Apply the fraud triangle to this case. Speculate on the motivation/pressures, opportunity, and rationalization of Robert and

possibly other board members.   (10 marks)

 

2. Identify with full explanations at least 10 ‘‘red flags’’ for potential fraud in this case, and provide possible reasons for cheques being written to board

members      (10 marks)

 

3. Recommend with full details 10 specific internal control activities that could be put in place to correct the current situation and prevent similar

problems from occurring in the future.          (10 marks)

 

4. Identify and discuss the practical logistical issues of removing Robert and

the other board members.          (5 marks)

 

5. Evaluate the accountant’s behaviour? Include in your evaluation the

responsibility of the accountant.          (5 marks) APPENDIX A

 

Definition of a Property owners’ Association

 

POAs are common in single-family housing developments, condominiums, and townhouse complexes and serve as the governing body for the purpose of protecting the value and desirability of the real property. Most often, POAs are formed as non-profit corporations. When a person buys a property governed by a POA, the owner automatically enters into a contract with the association and agrees to obey all the rules adopted by the association. These rules address such issues as what materials and colours can be used for the house roofs, what colours you can paint your house, what kind of landscaping you can do, the size and height of structures you build in your back yard, and whether election and contractor signs can be placed in yards. 

 

The POA assesses fees on property owners. These fees are used to cover the costs to maintain common areas used by all the property owners. These common areas may be, for example, swimming pools, playgrounds, walking paths, and tennis courts. By adhering to the rules and paying the association dues, the implication is that amenities will be well maintained.

 

When a developer completes a subdivision and sells the first few houses, it is customary for the developer to create a property owners’ association. Some of the new property owners volunteer to serve on the board of the association. An election is held for the association’s president, vice president, secretary, and treasurer. Because these are unpaid positions that require much time, volunteers can be hard to come by. As a result, often the board members and officers are the same people. In addition to the board members and officers, an architectural control committee is established to approve or disapprove changes to the property.

 

The laws of the city in which the development is located govern POAs in that city. The next step is to create bylaws that set out the duties of the directors and officers and outline how the POA will operate. 

 

Operation of a Property owners’ Association

 

A frequent requirement is that the association provide times during normal business hours that records can be inspected by any POA member. Minimum records that must be maintained and retained may include:

 articles of incorporation, bylaws, and all amendments to these documents,  financial books and records, account records of current owners,  contracts between the association and other parties, minutes of meetings of the owners and the board, and tax returns and audit records.

Full of Hope Center Operations

 

Esther, chair of the Full of Hope Center Committee, and the Committee’s secretary, Ruth, talked almost daily about the operations of the Full of Hope Center. “At least the children seem happy and well cared for,” Esther reminded Ruth. “Yes,” Ruth agreed, “but if we cannot pay the bills and keep our help, we will not be open long to serve them. Pastor Michael thinks everything will work out, but I am not so sure.”

 

Background

 

The Full of Hope Center (Center) opened several years earlier when the church allowed a member to provide childcare services and pay rent to use the church facilities. The church’s administrative board reluctantly approved this arrangement, but the board specifically stated the church would provide no oversight of the childcare program or financial subsidy. Board members wanted to be clear that the church had no implied oversight or liability should something go wrong at the Center.

 

Although the Full of Hope Center established a satisfied clientele, three years ago (at the beginning of 2018) the Center’s founder decided to cease childcare operations for personal reasons. The Center met a community need for childcare, and Pastor Michael, the pastor of the church, was convinced that the church should keep the Full of Hope Center open as an outreach ministry. Some administrative board members were concerned about taking on the financial responsibility for the childcare facility when the church budget was already stretched. Others were concerned that closing the Center would cause ill will for the church in the community. 

 

Pastor Michael strongly asserted that the childcare facility would be financially self-supporting, even though he had no data to support his claim. Swayed by Pastor Michael’s position, the administrative board reluctantly agreed to integrate the Full of Hope Center into church activities with the stipulation that childcare finances be kept completely separate from the church budget. The board expected the Center to pay rent to the church for the use of facilities and utilities.

 

The administrative board formed a committee composed of four church members that met periodically to monitor Full of Hope Center activities. The first Full of Hope Center Committee (Committee) included four church members with Pastor Michael as an ex officio member, none of whom had childcare management experience. 

 

The Committee hired Miriam, a mother of four children, as the director of the Full of Hope Center, even though she had no previous employment experience as a teacher, childcare provider, or manager.

 

Recent Operations

 

Presently, the Full of Hope Center facility accommodates a maximum of 20 children at one time, although more children enroll and attend part-time. Sometimes, especially during school vacations, daily attendance is less than 20. Hours are from 7:00 a.m. until 6:00 p.m. each weekday, with lunch and snacks provided for the children. The fee is $500 per week per child, with payment due at the beginning of each week. However, fee payments often trickle in during the week as the services are provided. Each day, three employees operate the Full of Hope Center—the salaried director, one full-time employee, and one part-time employee.

 

The Full of Hope Center Committee

 

In the past, the Full of Hope Center Committee met once each month. At each meeting, Miriam gave a brief description of monthly activities, including the theme of decorations, games, and activities, but she never presented a financial report. Whenever Committee members questioned the lack of a budget and financial information, Pastor Michael always replied, “This is a ministry, not a business.” Asserting that there were no financial problems, Pastor Michael frequently pointed out, “The Full of Hope Center fulfills a real community need.” Further, he emphasized that as a church member, Miriam could be trusted. In response, Committee members dropped their request for financial information. As busy people with their own careers and families, they accepted the reports about the childcare ministry but became increasingly frustrated with the limited information that did not allow them to exercise oversight.

 

At the beginning of the third year of operations (January 2020) under church control, all four members of the Committee indicated they would not continue on the Full of Hope Center Committee. The church administrative board appointed two new members—Esther and Ruth. Esther, a stay-at-home mother, was new in the community and cheerfully willing to help with church activities. Ruth, a recently retired elementary school teacher, had time for volunteer activities. Esther agreed to chair the Full of Hope Center Committee and Ruth agreed to be secretary. Pastor Michael continued as an ex officio member. The board sought, but did not find, additional church members willing to serve on the Committee.

The Full of Hope Crisis

 

Soon after Esther and Ruth became involved, the Full of Hope Center stopped paying rent and utilities to the church. Miriam began complaining to the Committee that she was barely able to meet payroll and purchase supplies or food for the children’s lunches and snacks. She told the Committee that many parents were behind in paying their obligations to the Center.

 

Sensing that a crisis was looming, Esther and Ruth decided they must become more active in their oversight of the Center to make the Center viable. They were confident that financially sound operations would allow the Center to meet a growing community need for childcare. Further, if they could demonstrate to fellow church members and the administrative board that the Center was a success, they believed others would be willing to support the Center and participate on the oversight committee.

 

Esther and Ruth decided to learn more about Full of Hope Center operations and activities. They interviewed parents and were pleased to find that parents were happy with the childcare program. Through interviews and observations, they found all employees did an excellent job supervising children’s activities. They discovered that Miriam was involved in every facet of operations. In addition to working directly with the children, Miriam collected the fees paid by parents, supervised the activities of the Center, purchased supplies and food using charge accounts at local stores, paid all the Center’s bills, prepared snacks and meals for the children, and kept all records.

 

Esther and Ruth quickly determined that Miriam’s immersion in the Center was cause for concern. Miriam’s salary as director was slightly over minimum wage with no fringe benefits, and her days were long and frustrating. It was clear to Esther and Ruth that Miriam found the work stressful. The Center’s cash flow problems added to the stress. Esther and Ruth were particularly troubled by Miriam’s lack of previous experience in a comparable job, with no knowledge about business processes and controls.

 

To understand the cash flow problems, Esther and Ruth decided they should review a financial summary of past activities along with the Center’s budget. Ready to accomplish that goal, the two Committee members arranged to meet Miriam at the Center. Although they were astounded when Miriam indicated that the Center had no financial reports or budget, Ruth suggested that they could construct financial statements from cancelled checks and bank statements. 

Miriam told Esther and Ruth that the checks and bank records were at her home and she would make them available the next day. However, Miriam did not provide the bank records or checks as she promised. After repeated attempts to get the bank records, with no success, Esther and Ruth became suspicious. After a particularly tense confrontation, Miriam tearfully admitted to Esther and Ruth that she no longer had the information because she had destroyed the bank records, unaware that such information should be kept. Esther and Ruth then asked to see the check register, which Miriam promised to provide.

 

A few days later, Esther and Ruth examined the check register that Miriam finally gave them and found a record of checks and deposits for only the previous 12 weeks. Miriam had calculated no cash balances. When asked how she knew the cash balance, Miriam replied that she called the bank weekly to find the account balance.

 

Esther and Ruth were stunned and immediately set up a meeting with Pastor Michael. They told him about the lack of financial records. Both women forcefully asserted that Miriam should be terminated. Pastor Michael reacted more calmly and defended Miriam’s behaviour, emphasizing Miriam’s good qualities in dealing with the children and parents. Since Miriam was talented in supervising the children, and the parents liked her, he thought those strengths overcame her weakness at record keeping. He suggested that Miriam could be taught the business skills necessary to run the Center. Though unconvinced, Esther and Ruth chose to avoid a disagreement with Pastor Michael and a further confrontation with Miriam. They reluctantly agreed to retain Miriam as director of the Full of Hope Center, but they were resolute that she must run a financially viable operation.

 

Certain that she would receive no additional historical financial information from Miriam, Ruth worked to reconstruct Full of Hope Center finances from the sketchy information in the check register. She soon discovered the check register showed no checks recording Miriam’s salary.

 

Ruth also decided she should gather more information about the Center’s cash collection process. Ruth began visiting the Center daily to collect the cash receipts that she immediately deposited in the Full of Hope Center bank account. She thought that Miriam provided a receipt whenever a parent paid the weekly fee. Initially, Ruth noted no discrepancy between the cash that Miriam turned over to her and the receipt stubs in the receipt book. 

But, within a few days, Ruth noticed the cash collected did not match the number of children she observed at the Center during the week.  When Ruth asked Miriam if there was additional cash that had been collected, Miriam reached into a desk drawer and handed Ruth currency that totalled $1,000. Miriam explained that she failed to put the cash in the normal place when the parent paid. Ruth was uncomfortable with this situation and thought it prudent to investigate further. 

 

She scanned the weekly attendance record and the receipt book. She noted no cash receipt for a family she personally knew, even though their children were listed as attending that week. When contacted by Ruth, the family showed her a receipt for the payment, even though none appeared in the Center’s receipt book.

 

Although uncomfortable about confronting Miriam, Esther and Ruth knew they needed to speak with her about the Center’s cash collection procedures and her salary. Especially, they needed more details concerning the $1,000. When questioned, Miriam confessed that the Full of Hope Center had a past due Food Market grocery bill that she was paying with cash from daily receipts. 

 

Esther and Ruth next visited the Food Market office where they learned that the Center indeed had an outstanding bill of approximately $5,000. The unpaid Full of Hope Center bill had been almost $6,500 earlier in the year.

 

Within the same week, a letter from the IRS arrived at the church office. The letter included a notification that the Full of Hope Center failed to file a payroll tax return. Again, Esther and Ruth questioned Miriam. Upset, Miriam responded that she made all the tax deposits but did not know reports needed to be filed.

 

Within a few days, Miriam notified Pastor Michael that she would be leaving the Full of Hope Center in two weeks. She stated that her departure was due to the additional stress from dealing with Esther and Ruth and the Center’s financial problems. Esther and Ruth were neither surprised nor disappointed by Miriam’s decision, but Pastor Michael tried to convince Miriam to reconsider. 

 

During the final two weeks that Miriam was director of the Full of Hope Center, she told parents that she was starting a childcare service in her home. Parents related that Miriam said, “The church has lots of money but just will not support this Center adequately. That is the reason I am leaving.”

 

Additional Details Uncovered 

 

After Miriam left the Center, Ruth was able to obtain some additional financial information on Miriam activities during the past three years. 

 

The records revealed that in 2018 Miriam had a modest property that she purchased for $45,000. She had a mortgage on that same property in the amount of $40,000. Other public records indicate that Miriam also owned a property that cost $135,000 and the balance on the mortgage was $92,000 in 2019. Ruth further discover that in 2018, Miriam had a car that cost $4,500 and there was a loan taken out for that car in the amount of $2,750. Miriam also had $5,500 in savings with National Commercial Bank in 2018 and one year later, had $10,000 in savings at National Commercial Bank. 

 

She also has a credit card with National Commercial and had paid $1,875 to the bank for credit card payments in 2019. The car she currently drives cost $23,000 and the balance of the loan on that car was $13,275 in 2019. Miriam salary in 2019 included a salary of $25,325 and extra income from doing side jobs for the church in the amount of $3,400. Her living expenses have been estimated at $16,825 in 2019.

 

By 2020, she had savings of $16,500 and had made credit card payments in the amount of $2,540 in that same year. She still owned the same property but the balance on the mortgage was now $73,000. She still drove the same vehicle but the loan on the vehicle was now $7,850. Miriam bought a piece of land that cost $23,000 and a jet ski for one of her kids that cost $2,500 in 2020. Her compensation for 2020 included a salary of $28,250 with extra income of $7,000. Her living expenses were estimated at $18,725.

 

 

 

 

 

 

 

 

 

 

 

 

CASE REQUIREMENTS

 

 

 

1. Using the information presented in the document, explain the primary problem at the Full of Hope Center (8 marks)

 

 

2. One factor of the internal control environment when investigating fraud is “integrity and ethical values.” In what ways were integrity and ethical values slighted by Miriam? The Full of Hope Center Committee? Pastor

Michael? The church’s administrative board?          (10 marks)

 

 

3. Outline with examples four types of fraudulent activities that could have been perpetrated by Miriam.  Excluding the additional details uncovered at the end of the case study, develop, and support the argument that it is possible that Miriam did not commit fraud? (12 marks)

 

 

4. Using the net worth method, estimate the amount of the possible embezzlement by Miriam in 2019 and 2020. (10 marks)