The following description is excerpted from Coupon Accounting Abuse, Management Accounting, January 1993, p. 47. Its November 15, and Gary, brand manager for a major consumer products firm, is contemplating his yearend bonus. It is becoming increasingly obvious that unless he takes action, he will not achieve his brand profitability target for the year. Garys eyes fall to the expense estimate for the new coupon drop slated for later in the month. His hand trembles slightly as he erases the 4 percent anticipated redemption rate on his estimate sheet and replaces the figure with 2 percent. Gary knows from experi ence that 2 percent is an unrealistically low figure, but he also knows that neither the firms independ ent nor internal auditors will seriously challenge the estimate. This way, Garys product profitability report will reflect the increased revenue associated with the coupon drop this year, but the entire redemption cost will not be expressed until next year. That should put me over, he muses. A wry smile crosses his face. If the auditors question the rate, Ill give them a story about seasonality and shifting consumer patterns. They wont know enough about marketing to question my story. Eventually, of course, the real cost of the coupon drop will have to be expensed, and that will hurt next years profit figure. But, thats next year, Gary reasons, and I can always figure out a way to make it up. Besides, by the end of next quarter, Ill be handling a bigger brandif I can show a good profit this year. A brief description of coupons and proper accounting for coupons might help us to interpret the situation just presented. Coupons are centsoff privileges, such as $0.50 off when you buy a certain brand of yogurt. When a company offers coupons to consumers, it must estimate the redemption rate and record an expense and the corresponding liability. This is similar in concept to warranty expenses. Required: d. Do you consider this example to be management fraud or employee fraud? Describe how it fits the definition of your choice.