Pascale Lapointe-Antunes, Brock University Deborah McPhee, Brock University Case Objectives and Use The case is primarily for use in graduate level human resource management or accounting courses. It can also be used in executive training. The case was classroom tested in human resource management and accounting, and student feedback has been incorporated where needed. The objective of the case is to introduce students to how fraud can be perpetrated in a small business where internal controls are not legislated. After solving the case, students will have a greater ability to:

Identify and define the various types of fraud;

Discuss the COSO framework for internal control, and define its components;

Use the fraud triangle to detect and deter potential frauds; Understand the role that needs to be played by HR to prevent and deter fraudulent financial reporting to secure incentive-based compensation;

Apply critical analysis of a workplace dilemma

Synopsis This case is based on an interview with real-life Amanda Walsh and the internal documents she shared with the authors. Amanda Walsh's first year as Vanderville Plastics Company's (VPC) controller has been quite tumultuous. She has discovered on her first day on the job in early February 2005 that VPC's financial situation is precarious, and has since witnessed a change in ownership, repeated requests for funding to the new owners to help alleviate VPC's severe cash flow issues, and more recently, the Chief Financial Officer's (CFO), Peter Giroux, sudden resignation. Amanda is since acting interim CFO and reporting to Michael Stratton, the Chief Executive Officer (CEO). A consultant has been hired by the new owners to better understand the causes of VPC's cash flow shortages, and he never seems satisfied with Amanda's answers. Michael does not want the consultant to speak to Amanda directly anymore and to make all of his requests through him. However, she has no choice but to answer one of the owners' questions when he calls her to enquire about a $1 million decrease in accrued liabilities in January 2006. Amanda discovers to her great disbelief that the new owners do not know about the recent payout of bonuses for the 2005 financial year.