1. Outline an internal control program that could be installed that would prevent or at least disclose...
Fantastic news! We've Found the answer you've been seeking!
Question:
1. Outline an internal control program that could be installed that would prevent or at least disclose irregularities such as those identified in this case.
2. Outline an internal audit program that could be performed on a cyclical basis to determine if abuses such as those described in this case are occurring.
3. Where do you believe the basic cause of this situation is lodged?
4. As the external auditor for ACU, complete SWOT and Impact&Likeihood Grid exhibit for ACU
Transcribed Image Text:
GSH TERM-CONTRACTING IRREGULARITIES Background The Government Services Handling (GSH), frequently referred to as the housekeeper of the Federal Government," is an agency that deals in a vast range and variety of contracting and procurements. In 1978, GSH was rocked by a series of scandals within the Public Buildings Service (PBS) that exposed an elaborate conspiracy to defraud the U.S. Government. Centered in Washington, D.C., at the heart of this conspiracy were certain PBS-building managers in collusion with GSH contractors. The mechanisms used to commit the fraud were many, but misuse and manipulation of term contracts accounted for the majority of the abuses uncovered and losses incurred. Term contracts were first introduced into the PBS in 1973 as a method of performing commonly requested items of work associated with office renovations for occupying agencies. A term contract would normally be issued for a period of a year and would include line items for the types of work anticipated. Work orders were written against the contract when there was a need for that type of work. The theory was that term contracts substantially improved GSH's responsiveness to the requesting agencies and reduced overall cost compared with formally advertising each project. However, by 1978 these contracts were proving to be highly susceptible to fraud. In the midst of the expanding and growing revelations of fraud in the Washington, D.C., area, there was concern that similar abuses of PBS term contracts might have occurred in other locations where such contracts were used. As a result, term contracts were scanned nationwide, looking for similar indicators or patterns that had proven to be symptomatic of serious abuse and fraud in the ongoing Washington, D.C., investigation. It was found that many GSH regions exhibited some of the same patterns discovered in Washington. But GSH's Region 7, covering Texas, Louisiana, Oklahoma, and New Mexico, exhibited the greatest number of indicators as well as some patterns that had not previously been observed. Because of these observations, a separate internal auditing case was opened in Region 7. GSH TERM-CONTRACTING IRREGULARITIES Background The Government Services Handling (GSH), frequently referred to as the housekeeper of the Federal Government," is an agency that deals in a vast range and variety of contracting and procurements. In 1978, GSH was rocked by a series of scandals within the Public Buildings Service (PBS) that exposed an elaborate conspiracy to defraud the U.S. Government. Centered in Washington, D.C., at the heart of this conspiracy were certain PBS-building managers in collusion with GSH contractors. The mechanisms used to commit the fraud were many, but misuse and manipulation of term contracts accounted for the majority of the abuses uncovered and losses incurred. Term contracts were first introduced into the PBS in 1973 as a method of performing commonly requested items of work associated with office renovations for occupying agencies. A term contract would normally be issued for a period of a year and would include line items for the types of work anticipated. Work orders were written against the contract when there was a need for that type of work. The theory was that term contracts substantially improved GSH's responsiveness to the requesting agencies and reduced overall cost compared with formally advertising each project. However, by 1978 these contracts were proving to be highly susceptible to fraud. In the midst of the expanding and growing revelations of fraud in the Washington, D.C., area, there was concern that similar abuses of PBS term contracts might have occurred in other locations where such contracts were used. As a result, term contracts were scanned nationwide, looking for similar indicators or patterns that had proven to be symptomatic of serious abuse and fraud in the ongoing Washington, D.C., investigation. It was found that many GSH regions exhibited some of the same patterns discovered in Washington. But GSH's Region 7, covering Texas, Louisiana, Oklahoma, and New Mexico, exhibited the greatest number of indicators as well as some patterns that had not previously been observed. Because of these observations, a separate internal auditing case was opened in Region 7.
Expert Answer:
Answer rating: 100% (QA)
Audit and Internal Control Introduction Internal control consists of measures plans and methodologies integrated within an organization or a government agency Internal control aims at protecting its a... View the full answer
Related Book For
Posted Date:
Students also viewed these banking questions
-
In what ways do you believe the strategic planning approach of not-for-profit organizations would differ from that of profit-oriented organizations?
-
Do you believe the internal audit activity should be independent? Explain.
-
Do you believe the reasons to disclose by-segment financial information offset the reasons not to disclose by-segment financial information? Explain why or why not.
-
Damages require one person to pay money as compensation for another persons loss. Damages are therefore a private matter. Since the Charter is part of public law, damages cannot be awarded in...
-
Alfred Stein is about to invest $1,000. Alfred is a very cautious man and would like to have some expert advice on which of two projects is best for him. He has not told you of his exact cost of...
-
Write brief notes outlining some of the issues associated with loyalty programmes and customer retention initiatives.
-
How do you explain the fact that rates of return required by investors may be identical for two groups of totally different activities (oil and IT services for example) as long as they have the same .
-
Jason Tierro, an inventory clerk at Lexmar Company, is responsible for taking a physical count of the goods on hand at the end of the year. He has been performing this duty for several years. This...
-
16 of 24 Given that P(A) = 0.32 and P(B) = 0.68, what is the P(ANB) if events A and B are independent? A 1.00 B. 0.36 C. 0.47 D. 0.22
-
Create a Budget Analysis Report for the month of September, to include creating a Master Budget, and calculating the variance analyses between Actuals versus the Flexible Budget and versus the Master...
-
Jemima's Outfits has a store in Dixie Outlet Mall. It specializes in high-class ladies fashions and sells complete outfits for a uniform price of $275 each. The sales budget for 2007 was to sell...
-
For each one of the following statements, indicate whether the statement is true of false. a. A CPA firm should adopt adequate policies and procedures on client acceptance, but the only one that is...
-
Look at the sketch of three production isoquants in the figure below. What do the shape of these isoquants tell you about the relationship between capital and labour in this particular instance?...
-
The CPA firm of Gleim & Co. has been approached by the following potential clients: a. Columbus Entertainment Inc., which recently made news in the financial press when its board of directors...
-
The Topper Restaurant uses a flexible budget to estimate profit in each month. The restaurant expects to charge \($15\) per meal on average. Some costs are assumed to vary with the number of meals...
-
The following questions relate to several of the factors that affect the auditor's general planning decisions. Select the best response. a. Which of the following underlies the application of...
-
Question 8 Not yet answered Marked out of 1.00 Flag question Time left 1:19:06 Admission to the prestigious school had become so competitive that a high GPA is no longer enough to separate one...
-
Refrigerant R-12 at 30C, 0.75 MPa enters a steady flow device and exits at 30C, 100 kPa. Assume the process is isothermal and reversible. Find the change in availability of the refrigerant.
-
Network bandwidths have increased from about 10 Mbps to 1 Gbps in the last decade. However, the latency (time for a message to be transferred from one place to another) has not increased at this rate...
-
Explain what the O_FILE_APPEND_DATA flag is used for as a value for the dwFile ACCESS argument in Windows file I/O.
-
Write a pseudo C code definition of the wait For Request function referenced in Figure. This code skeleton illustrates the structure of a passive server process. int serverskt; /* The socket used to...
-
Bristle Brush Company operates in a state where corporate taxes and workers' compensation insurance rates have recently doubled. Bristle's president has just assigned you the task of preparing an...
-
Martinez Toys has examined the market for toy train locomotives. It believes there is a market niche in which it can sell locomotives at \($80\) apiece. It estimates that 10,000 of these loco-...
-
The April 21, 1997, issue of Forbes includes an article by Toni Mack entitled "The Tiger Is on the Prowl Instructions Read the article and answer the following questions. (a) What have been the...
Study smarter with the SolutionInn App