Timber Solution Ltd., a communications equipment manufacturer, recently fell victim to a fraud

scheme developed by one of its employees. To understand the scheme, it is necessary to review

Timber Solution's procedures for the purchase of services.

The purchasing assistant is responsible for ordering services (such as repairs to a photocopy

machine or office cleaning) after receiving a service requisition from an authorised manager.

However, because no tangible goods are delivered, a receiving report is not prepared. When the

Accounting Department receives an invoice billing Timber Solution for a service call, the accounts

payable assistant calls the manager who requested the service to verify that it was performed.

The fraud scheme involves Johnson Parry, the manager of plant and facilities. Johnson arranged for

a company, Bamber Services, to be placed on Timber Solution approved supplier list.

On several occasions, Johnson would submit a requisition for services to be provided by Bamber

Services. However, the service requested was not needed, and it was never performed. Bamber

Services would bill Timber Solution for the service and then split the cash payment with Johnson.

Questions

a) Explain what changes should be made to Timber Solution's procedures for

ordering and paying for services to prevent such occurrences in the future.

Timber Solutions Ltd. is expanding and needs to hire more personnel in the accounting office.

Leena Barker, the chief accounting officer, knew that her cousin Rose was looking for a job. Leena

offered Rose a job as her assistant. Leena will be responsible for Rose's performance reviews and

training.

Questions

b) List some problems with the proposed personnel situations in the accounting

department.

c) What suggestions would you make to improve internal control at Time Solutions

Ltd.