Accounting Information Systems & Processes – ACC00718
Marks will be awarded for:
1. Understanding and discussion of the topic (30 marks).
You are expected to answer each of the questions contained in the assignment. You’re answer should fully address the requirements of each question and be in your own words.
Simply restating the contents of the text book, study guide or PowerPoint slides does not show individual understanding of the topic.
Your answers should contain enough discussion on the question so as to clearly demonstrate your understanding of the topic area and provide sufficient detail which answers the questions to a satisfactory level.
Assessment Two – 30 marks
Due 11pm on Sunday 26th April 2015 (Week 10)
Tony Moss, president of Greater Queensland Bank, received an anonymous note in his mail stating that a bank employee was making bogus loans. Moss asked the bank’s internal auditors to investigate the transactions detailed in the note. The investigation led to James Guy, manager of a North Queensland branch office and a trusted 14-year employee who had once worked as one of the bank’s internal auditors. Guy was charged with embezzling $1.83 million from the bank using 67 phony loans taken out over a three-year period.
Court documents revealed that the bogus loans were 90-day notes requiring no collateral and ranging in amount from $10,000 to $63,500. Guy originated the loans; when each one matured, he would take out a new loan, or rewrite the old one, to pay the principal and interest due. Some loans had been rewritten five or six times.
The 67 loans were taken out by Guy in five names, including his wife’s maiden name, his father’s name, and the names of two friends. These people denied receiving stolen funds or knowing anything about the embezzlement. The fifth name was James Vane, who police said did not exist. The Social Security number on Vane’s loan application was issued to a female, and the phone number belonged to a North Queensland auto dealer.
Lucy Fraser, a customer service representative who consigned the cheques, said Guy was her supervisor and she thought nothing was wrong with the cheques, though she did not know any of the people. Marcia Price, head teller, told police she cashed cheques for Guy made out to four of the five persons. Asked whether she gave the money to Guy when he gave her cheques to cash, she answered, “Not all of the time,” though she could not recall ever having given the money directly to any of the four, whom she did not know.
Guy was authorized to make consumer loans up to a certain dollar limit without loan committee approvals, which is a standard industry practice. Guy’s original lending limit was $10,000, the amount of his first fraudulent loan. The dollar limit was later increased to $15,000 and then increased again to $25,000. Some of the loans, including the one for $63,500, far exceeded his lending limit. In addition, all loan applications should have been accompanied by the applicant’s credit history report, purchased from an independent credit rating firm. The loan taken out in the fictitious name would not have had a credit report and should have been flagged by a loan review clerk at the bank’s headquarters.
News reports raised questions about why the fraud was not detected earlier. State...