412-W177 Question 4



Thevarious issues and challenges that may be anticipated include: basedon the fact that the C.E.O is loved by his co-workers and he is alegendary recruiter of young talent, it may be a challenge for thecompany to take a disciplinary action like firing him. Anotheranticipated challenge is that the company may experience financialdifficulties and this may result in the collapse of the company.Additionally, the public and other trading companies may not bewilling to carry out its business with a company that is experiencingfinancial losses(Hamilton1).

Theactions that may be taken to prevent this type of financial statementfraud include: a surprise inventory count should be carried out atoccasional intervals to find out the accuracy of the accountingsystem. Perhaps this would make the Chief executive Officer (C.E.O)to provide correct information to the headquarters because he will beaware that there is someone monitoring his work (Hamilton1).Furthermore, financial statements can be reviewed to compare priorand present periods and to find out any changes in inventory ratioswithin a given time period. The company can request the C.E.O to givean explanation for the variations in his statements. It isrecommended that the company should carry out a financial auditregularly to find out the accuracy of the information recorded in thefinancial statements (Hamilton1).Additionally, A C.E.O who can highly contribute to the collapse of acompany is eligible for a serious disciplinary action like toterminate his contract. This is because the main objective of anyfirm or company is to make a profit and an employee who contributesto a company’s financial losses does not qualify to be part of thecompany because his work does not aim at accomplishing the objectiveof the company.


Hamilton,C. InventoryFraud: Detecting, Preventing &amp Prosecuting.Retrieved from http://C:Documents and SettingsOwnerMyDocumentsDownloadsDocumentsInventory_Fraud_2.pdf