Tip-Tap Ventures' management was very enthusiastic when they launched their "first of a kind" product in the market. True enough, the sales volume rocketed for the first two years and employees' bonuses multiplied. Unfortunately, beginning on the third year, the customers' demand for enhanced product features and functionalities were not anticipated by the management. Relatedly the Board of Directors are concerned on the financials presented by Management that reflected an upward trends on profitability, liquidity and solvency ratios. Thus, the auditors are tasked to determine if the management is involved in financial fraud.

Required: Based on the foregoing and your assumptions (shall be specifically stated in your answer)

1. What are the types of financial frauds that the management would be involved? Give two and support your answer. (5 points)

2. Provide four relevant ratios and explain. (10 points)

3. Recommend two control process/procedures to prevent the identified type of financial fraud from happening. (5 points)