Cathy looked over the personnel records for her employee Susan once more. Cathy had supervised Susan at Seven Banners amusement park on the Gold Coast for eight months. Susan, a college student, had been a reliable and likeable employee at the park; she often worked at the gate admissions booth. But now Cathy worried that Susan might be stealing money from customers as they paid for their tickets.

In the last month, Cathy had noticed eight incidents where families were over-charged for admission all alleged oversights by Susan. The most recent incident happened that morning. As Cathy made her usual rounds through the park, she was approached by a customer with a question about his tickets receipt. The customer had paid for his familys admission with a credit card and received a standard receipt showing the total price of $305.50.

Seven Banners admission prices were as follows:

Adult $43.50

Child $35.00

The customer explained that his family of seven two adults and five children should have only cost $262.00, indicating that he paid for one extra adult ticket. He also showed Cathy his familys seven ticket stubs.

Cathy walked the annoyed customer back to the park gates. The customer led Cathy to the booth where he paid Susans booth. At the sight of Cathy and the customer, Susan seemed agitated and caught off guard. Before Cathy could explain the situation, Susan blurted out to the customer, Im so glad you came back I just realized that you were mistakenly overcharged. Let me credit your Visa for that.

Back in her office, Cathy thought how it was strange that if Susan had made an honest mistake in overcharging the customer that she could have later recognized that specific error. Seven Banners used an electronic ticketing system; employees need only enter the number of adults and children. Then, the system automatically calculates the total price and prints the appropriate number of tickets. If Susan had mistakenly entered 3 adults instead of 2, the customer would have caught the mistake right away because he would have had too many tickets. Cathy also wondered about Susans seemingly nervous behaviour.

Question 1 continued next page

Question 1 (continued)

In considering all of Susans overcharge incidents, Cathy noticed some commonalities: they were all paid with credit cards, and they were all large families (at least seven people). Cathy suspected that Susan purposely charged large families an extra ticket and then kept it, selling it to a cash-paying customer later in the day and then pocketing the cash. Susan was banking on the hope was that the large family would assume the inflated charge was correct since they would expect a large amount anyway. The five customers who caught the mistake were the only ones to double check the mathematics.

Cathy leaned back in her chair and sighed heavily. Through her window she could see the long lines of people waiting to get on Seven Banners newest roller coaster ride. How can I prove what I suspect? Cathy wondered.

Required:

1. What type of fraud could Susan commit?

(1 mark)

Question 1 (continued)

2. In this situation, identify 3 symptoms of fraud.

(3 marks)

3. What 3 methods can Cathy use to detect/investigate whether Susan is really committing fraud?

(3 marks)

Question 1 (continued)

4. What are 3 controls that Seven Banners could implement to prevent and detect this type of fraud in the future?

(3 marks)