Luxury Auto Leases, Inc. of New Mexico, U.S.A., has offices in Tucumcari, Santa Fe and Albuquerque. Lisa Dockery, the company president has an office in Santa Fe and visits the other offices periodically for internal audits.

Ms. Dockery is concerned about the honesty of her employees. She contacted Back & Front, CPAs, and informed them that she wanted them to recommend a computer system that would prohibit employees from embezzling cash. She also told Back & Front that before starting her own business she managed a nationwide auto leasing company with over 200 offices and was familiar with their accounting and internal control systems. She suggested that Back & Front could base her requested system on the nationwide one.

Required:

A. How should Back & Front advise Ms. Dockery regarding the installation of a system similar to the nationwide one? Explain.

B. What should Back & Front advise Ms. Dockery regarding a system that will absolutely prevent theft? Discuss.

C. If Back & Front takes Luxury Auto Leasing as an audit client, what procedures should they perform to detect fraud? Would they guarantee that their audit could discover fraud? Why?