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Sunshine Fashion Fraud Essay

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Question #1 The fraudulent behavior found in Sunshine Fashion was due to lack of oversight and accountability at the local level, poor internal controls in all levels of the company, unqualified applicants placed in branch management positions, and no apparent repercussions for inappropriate behavior. There was no mention in the case study of any type of internal audit being performed other than the accounting department doing periodic random checks on inventory and accounts. The tone set by the main office was one of tolerance. “Typically, fraud risk management practices in an organization start with the Board and senior management setting the right tone at the top through an enforceable corporate ethics policy.” (Mahajan & Sharma, 2015, Pg. 32) The sales manager of Sunshine repeatedly made excuses as to why the fraudulent activity continued to be a problem, saying that they could not control every aspect of the numerous locations. They didn’t seem to utilize the regional offices enough in providing oversight and compliance checks. According to the flowchart, the regional …show more content…

According to the textbook, Auditing For Managers, this is a four stage process. First, controls will need to be implemented at the corporate level, which is referred to as the head office in Sunshine Fashions, and they need to apply to all levels of the organization. Second, each level and location will need to identify potential risks relevant to that area. Management in those locations need to have a good understanding of the risks identified. Third, controls may need to be tailored to the specific needs of that location as long as they are still within the boundaries of corporate policies. Fourth, these controls need to be tested and the corporate office should be made aware that processes and controls are valid. (Pickett & Pickett,

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