Monday, March 4, 2019
Inkwell Limited Essay
1. TERMS OF REFERENCE1.1 This report surveys and investigates inkstand Ltds method of method of accounting governing body in relation to establishing and exerciseting recommendations in run to conclude that its arrangement and molds ar deepen as hygienic as protected to downplay the try of sham. 1.2 The report investigates the main s retireholders of the cheek at large both internal and foreign as nearly as the knowledge it needs it has from the brass. 1.3 Recommended embodys and realises argon analyzed to repayher with the risk of infection of fraud towards the composition. 1.4 Lastly the report is instigate of the AAT take 4 fleece in bill.2. EXECUTIVE SUMMARY2.1 The report reviews the internal control deep down the accounting trunk of inkwell Limited and recommendations to upgrade them. Findings atomic number 18 cogitate that inkwell Ltd ought to employ enough, fully trained mental faculty with pertinent qualifications and produce full date as well as following play alongs policies. Training lag results in having competent supply which testament reduce confusion and enhance say-so of employees in their work. 2.2 The report recommends that accounting governing body ought to be improved so as to begin controls for the commerce operations of the organization equivalent password access, authorization and attendance insert by purchasing clock card so that the risk of fraud fecal matter be calumniated too. 2.3 The report recommends that inkwell Ltd ought to buy an electronic root which lead get along as a reserve during duration of force play cut such that bouncy information of the comp e very is ever much protected even if there is power cut.3. METHODOLOGY3.1 A research from books and pays was occasiond as reference in order to comeup with this report and it was ground on the case study. 3.2 A fraud ground substance was implementd to investigate the potential of fraud at heart the accounting tran scription and protecting controls in practice by analyzing them. 3.3 Reviewing the existing accounting arrangement over a period of three months to enable a beat summary to be produced was as well as wontd to plan and investigate the report.4. knowledgeableness TO THE ORGANISATION4.1 inkstand Ltd is a large lodge in Birmingham supply completed range of re-manufactured inkjet and laser tower cartridges to sm every last(predicate) retail merchants and large look at customers. It is a limited society established seven years past by devil of its controlling sh areholders, Paul Farnon and capital of Seychelles Dawson. So extinct-of-the-way(prenominal) it has revenue of over 16 million, 80% cosmos from sm tot everyy retailers epoch 20% is from large trade customers. It employs around 180 full epoch employees and 2 part m lag at the maneuver office. 4.2 inkstand Ltd has grown since the founders of it realized the need to provoke more professional considering expe rtise alike Finance Director and early(a) diverse clerks. The two of inkstand Ltds directors has roll in the hay of dealing with this type of business organisation from their forward companies they ease up worked for.4.3 The organization has relatively flat structure with two supervisors reporting to the directors and then further clerks reporting to their supervisors. The leadership style intentd is consultatory where combination of democratic and autocratic is involved. Appendix 1 expands the structure in full. 4.4 The accounts system is a centralized system consisting of 28 ready reckoners in head office site and 60 in shops/ ramificati cardinals where online shops are opened 24/7.The inventory control system is based around on out delay spreadsheet, the sage payroll system for payroll calculations and windows vista operating system is utilised. The password Go Green has been employmentd and currently in use to logarithm on wholly the computers of the comp both. In head office site every member of mental faculty has his/her own computer whether full/part time whereas in branches each computer and printer is shared by 3-4 member of mental faculty that are for part time.10% discount is inclined(p) against the appeal of a re swanment cartridges if old unrivalleds are brought by a customers. 4.5 outer regulation affecting the organization4.5.1 The Companys conduct 2006-This sets out the way in which financial narratives should be prepared so inkwell Ltd forget encounter to fall out with this Act to mitigate all attainable fines that might arise. 4.5.2 UK Accounting Standards-This defines procedures and approaches to the preparation of financial didacticss that the organization must take. They are either known as Statements of Standard Accounting Practices (SSAPs) or m championtary Reporting Standard (FRSs) depending on when they were issued. 4.5.3 foreign Regulations such as global Accounting Standard (IAS) and International monetary reporting Standards (IFRSs) issued by the International Accounting Standard Board (IASB)-Inkwell Ltd volition beget to follow these regulations to have confidence in accounting.4.5.4 The data Protection Act 1998-The fundamental prescript of confidentiality is connect to this act and this regulates how Inkwell Ltd processes and stores information of customers, suppliers and employees so as to minimize possible penalties. 4.5.5 Late Payment law-Inkwell Ltd ought to pay its suppliers on time as this is set out in the Late Payment of Commercial Debts Act 1998 so as to eradicate the possibilities of world sued and loosing reputation. 4.5.6 Health and Safety Legislation-Inkwell Ltd is make to teach its staff how to withstand more or little of the outcomes that are safety related since harmful substances (Ink) are used and the toner cartridges has somewhat devices that are affiliated with controlled luminosity and rays. Procedures of dealing with this matter are essent ial to protect wad against any harmful effect. 4.6 Inkwell Ltd-Key external stakeholders4.6.1 Customers-The customers of Inkwell Ltd are into two categories being small retailers and large trade customers who barter for re-manufactured inkjet and toner cartridges. They expect to be provided with timberland ease at discounted, reasonable prices. This is happening as they are given 30-60 days of realisation after a trial of three months of compensable with purchase order. Price lists and credit preconditions might to a fault be undeniable. 4.6.2 Suppliers-The Company is supplied with re-manufactured inkjet and toner cartridges. Suppliers testament require Inkwell Ltd to pay them on time but since Inkwell Ltd operates with relatively small number suppliers, payments period buns be across-the-board without complaint. Financial information shadow be unavoidable by suppliers to enable them to decide whether to work with Inkwell Ltd. 4.6.3 Financier/Bank-Producing serial of business plans enables Inkwell Ltd toraise enough finance from their depones to expand the business. Financial statements like Income Statement whitethorn be needed by the bank.5. THE ACCOUNTS part5.1 Inkwell Ltd has an Accounts Team based in the head office on an Industrial Estate in Birmingham where information from its branches is compiled and processed. All computers are accessed by the password Go Green and reporting does take rest home to the relevant authorities. The accounts subdivision is highly privileged to have top steering like finance director and control. 5.2 The purpose of Inkwell Ltds accounts plane section is to complete all activities relating to the production of the accounts including gross gross revenue and purchases ledgers, payroll and costing. This department has its own weaknesses place included in accompaniment 2 and structure in appendix 1. 5.3 The accounts department-Key internal stakeholders5.3.1 Paul Farnon, owner1(Managing Director)-As the o wner and managing director of Inkwell Ltd, Paul depart have to strive for the success of the company including managing accounts department. The way Farnon manages ordain trammel where the company is heading. Since Paul has held top position as the UK general gross sales manager in a major manufacturer of printers (Hewlett Packard), this reflects an advantage to the accounts department and company at large since he has experience. 5.3.2 Victoria Dawson,owner2(Sales Director)-As being other owner, Victoria is obliged to contribute in the success of the accounts department since she at at at one time worked as a Marketing Manager for Rymans,a major office supplies retailer in the same industry so Victoria give use previous experience to help accounts department especially in sales of the company. 5.3.3 Anil Gupter, owner3 (Finance Director)-Anil is also expected to deliver a good service looking at the fact that he did non changed his rank of being Finance Director unlike other directors when he moved from Epson, a large manufacturer of printer and printers cartridges to Inkwell Ltd.Anil was needed to have more professional accounting expertise since the production of the company was presentation that circulation of specie has expanded. Anils main responsibility is to manage all finance, legal and accounting procedures and system. Gupter has Bsc, FCMAqualifications. 5.3.4 Michael OPayne (Company Accountant)-Michael is responsible for managing the work of the accounting technicians and clerks cartroad the transactions accounting system comprising of purchase, sales and general ledger,costing,payroll and military force database management system. The fact that Michael has been the companys accountant ever since it was established, it meaning he understand and long-familiar with each and every transaction relating to accounts department. Michael has ACCA qualifications. 5.3.5 Michelle Labelle (General ledger & register clerk)-Michelles main roles is to hold off financial control over companys inventories, review daily reports from shop managers, enter all data into general ledger to produce trial balance. Labelle also monitors orders to suppliers placed by Purchase Manager.Michelle has no accounting qualifications but erst worked as trainee personnel officer in France. 5.3.6 Liana Khan (Purchase Ledger Clerk)-Liana is responsible for entering all suppliers invoices and credit nones into the purchase ledger and arranges payments to suppliers. Liana has foundation level 2 AAT qualifications and is corking in studying for her intermediate level 3 AAT. Khan is busy part time of 20 hours a week and has once worked as Sales Ledger Clerk. 5.3.7 Greg Morris (Sales Ledger Clerk)-Morris input all data into sales ledger and sends monthly statement to trade customers. He once worked for Rymans where Victoria Dawson was working. Greg was a purchase ledger clerk. He has no accounting/credit control qualifications but wishes to have one. Morris is employed on part time 20 hours a week basis.5.3.8 Alan Cook (Costing Technician)-Alan is responsible for operating Inkwell Ltds costing system since the company was formed. Cook has no accounting qualifications and not provideing to have one but before connector Inkwell Ltd he was a Purchase and Sales ledger clerk. 5.3.9 Sharon defend (Payroll & Personnel Database Clerk)-Sharons main responsibility is to run Inkwell Ltds two payrolls, a monthly payroll for management and salaried staff as well as a weekly payroll for periodic paid staff. She also issues all statutory forms unavoidable by HMRC and UK tax revenue authorities and lastly adjudge the personnel database. Sharon has BA (Hons) and AAT foundation level 2 accounting qualifications and giveing to study for her AAT intermediate exams. Ward once worked as a holiday company resort representative.6. REVIEW OF THE chronicle SYSTEM6.1 This report analyses the accounting system that are used by Inkwell Ltd and makes recommendations to enhance it. 6.2 The weakness have been identified with the aid of grind digest expanded in appendix 2.This section also investigates the system within the context of the financial reports the accounts system should provide to stakeholders like suppliers, run and whether it is suitable to meet their, and companys needs. 6.3 Working methods and practices6.3.1 The system in Inkwell Ltds accounts department comprises of 8 computers running on an compound basis and are all linked to the same printers. Inventory information is operated within excel and the payroll system uses sage payroll to measured the weekly and monthly wages and salaries.Quickcost is used for costing system. Monthly bank reconciliation statement and receipts is produced manually. 6.3.2 All work within the system is password sheltered, using a general password through the organization Go Green. 6.3.3 Weakness in the working methods and practices within the system at Inkwell Ltd are detail ed in the SWOT analytic thinking in appendix 2 as -Some of the staffs are part time so this can delay day to day work to be fully completed on time since they are not always present and there is no necessity in place for them to all be in the office at the same time. -Employing incompetent staff exposes the company to a great risk of performing poorly since it volition be hard to withstand the changes of the profession like being familiar with international standards.Working extra time by part time staff to catch up with the work will cost the company. This whitethorn also accumulate errors within Inkwell Ltd and stakeholders like bank, suppliers may resist dealing with them and the reputation of the company may perhaps downgrade gradually. -Having no assistants in the company reflects lack of plan and missing the bigger picture be capture once an employee is not around it means the work stops since there is no a reserve. Keeping cheques and coin in the premise for more than a n ight is a great risk. -Tendency of backing up the system once instead of twice provided that the insurance states that, this may result in loosing exact information to be used in various cases like tab and this will be regarded as failure to retain reputations. -The use of same password for the entire companytend to be a unknown uncovered because once one computer is logged on, automatically it is possible to log on the rest of the computers of which is unsafe to the side of Inkwell Ltd. 6.4 Recording retentiveness system6.4.1 Weaknesses in the record keeping system were recognized as component of the SWOT analysis in appendix 2. -Errors, assumption, inaccuracy may possibly be found for the reason that there is shortage of skillful staff to cover for those who are absent so employees with inappropriate skills will onrush to cover up therefore causing errors. -Reconciling monthly bank statement by hand may cause errors and it is quite slow to do that compared to using computer . -Insufficient information period makes it hard to use naked as a jaybird actual system like payroll so being self-doubting with the use of this reinvigorated system will automatically generate incorrect information through with(p) by employees. -Having no attendance time record like clock cards may perhaps lead to underpaying which can decline the engender of employees and at the same time employees may be overpaid and Inkwell Ltd will have to use a circulate of hard currency to pay overtime that were not deserved. 6.5 TrainingThe SWOT analysis in appendix 2 analyses the weaknesses within the system regarding cultivation as follows -Incompetent staffs are employed which can cause a massive confusion and inaccuracy particularly when workload set ahead and latest standards of profession are introduced. -Training periods are too short to maintain and attain new changes of the system like being familiar with the use of new payroll software thus causing lack of confidence upo n employees.7. INTERNAL CONTROL AND FRAUD ANALYSIS7.1 Internal system of control7.1.1 Within Inkwell Ltd controls resembling payments to staff is very informal. Dependence is habitually based upon trust. Formal controls will sustain the accounting system and diminish the gamble of fraud. 7.1.2 The SWOT analysis in appendix 2 analyses the weaknesses within the system as -Cash and cheques-leaving notes and cheques in the premises until the banking day will in spades attract larceny to take place since Inkwell Ltd is a broad company despite whether the money is placed in a pull through place. -Authorization-There are no effective authorization procedures put in placeregarding matters like attendance records and monitoring payments to suppliers. Approved payments were reversed by employees like Purchase Manager. -Access-Since one password is used by Inkwell Ltd, any member of staff could use this password for personal reasons. -Payments-Its very tough to let customers pay via inte rnet by giving their calculate/credit cards inside information 7.2 Fraud Analysis7.2.1 Even though there is no confirmation of fraud having taken place within Inkwell Ltd Ltd, fraud is likely to total within the system and proper(a) controls ought to be in place to put off them. 7.2.2 The SWOT analysis in appendix 2 analyses the weaknesses within the system as -Authorization-Some employees may tend to overstate hours worked and this is one way where fraud can occur due(p) to lack of having no attendance time records. Monitoring all companys expenditures like payments to suppliers are less monitored so fraud can find a way through this root as approvement was reversed by the Purchase Manager. -Password-Inkwell Ltds information may be extracted through having flexible access and then used to steal money from the company as critical information like bank details may be interrogated from the computers due to having same password.-Cash and Cheques-Leaving cash and cheques in the prem ises until banking day may provoke fraud because some of the employees might get tempted to steal due to the nature of being closer to a hand out of cash having a thought that it would not be identifiable. -Payments-Collecting payments over the internet can also lead to fraud as its quite risky to give debit/credit card details via internet because some people even employees may pretend as if they are Inkwell Ltd representatives by using unalike names from there take money for their own reasons not for company. 7.2.4 Each of these possible frauds, the contemporary controls in lay, and the recommendations to develop can be found within a fraud matrix in appendix 3.This matrix also comprises the level of risk to the business.8. RECOMMENDATIONS TO mend8.1 There are numerous recommendations that can be utilized to appear the weaknesses recognized over also in appendix 2. 8.1.1 Training-Training periods should be extended such that staff may be fully trained to use the system and ope rate it effectively. This will help them to gain confidenceand team spirit in their work and their daily work will move a bit faster which lead to high productivity. 8.1.2 Policies-Since policies are ethics to subscriber line decisions and accomplish rational outcomes and the source for employment contract with staff, all employees ought to comply with policies set to alleviate possible risks like losing vital information if the system backed once instead of twice. Regular meetings and workshops may facilitate to review the policies and mark the weak areas so that they can be strengthened. This will figure that aims and target are met which is a good thing. 8.1.3 Attendance-The use of clock cards may be useful to record the exact hours worked for. This will interrupt misstatement of time worked thus help the company not to overstate nor belittle payments to employees.8.1.4 Assistants and qualifications-Enough staff with relevant qualifications ought to be employed so that they can act as reserves when others are absent. This will make certain that external stakeholders are confident to invest in a company that is well equipped in terms of adequate and competent staff. 8.1.5 Advanced Accounting-The use of electronic accounting like pastel should be used to alternating(a) reconciling monthly bank statement and entering receipts manually, this will help to save time and minimize errors. 8.1.6 Access-Inkwell Ltd should set a policy which states that each computer should have its own password so as to restrict access to all the entire computers, this will guarantee that companys information is embraced.8.1.7 Approve-All approved payments especially including big pith ought to be thoroughly monitored, this will put off fraud of overstating what it has been approved where people will take advantage of that like what the purchase manager did by changing approved deal. 8.1.8 Banking everyday is the best way for Inkwell Ltd quite than counting until banking da y looking at the fact that Inkwell Ltd generates a lot of money on daily basis, so keeping cheques and cash in the premises is a risk. Security Company will also have to be hired to protect all properties like cash. This will guarantee safety in the company. 8.1.9 Payments-Payments from customers when they are away should be through with(p) through post where cheques are sent and should be crossed Account payee. Names, address and business rates reference should be written right and correctly. This will minimize delayed payments.9. COSTS AND BENEFITS ANALYSIS9.1 The recommendations after cost and benefit analyses to employ adequate, full time, qualified staff, purchase attendance record and bank every day. This has been completed as follows 9.2 COSTS9.2.1 Appropriate training staff is required for current account packages like payroll and personal database as well as training other accounts clerks like that one of sales ledger. Inkwell Ltd will have to choose the best refuge with reasonable prices to train its staff. 9.2.2 There would be an opportunity cost of staff attending the training in that way they would not be usable to complete their work but getting paid and therefore they are not generating chargeable hours. 9.2.3 Well qualified staff with relevant qualifications is required to act as assistants. New staff will have to be posted as clerks assistants. They will become a bit confused to operate in a new environment at depression and time will be traind as well but as time goes on they will adapt and adjust to a new working place.9.2.4 Inkwell Ltd will require clock cards to record the attendance of the employees and the swiping machine for these cards will have to be connected to the system though this may cause a bit of fracture in the offices. Inkwell Ltd should choose a quality machine that is simple-minded to use. 9.2.5 The electronic root is needed to help during power cut. Connecting it to the entire accounts department will cause inte rruption as all connections will have to be switched off for a epoch. Prices and the quality of the generator should be compared from different shops to choose the best one. 9.2.6 Security company with advanced equipments like cameras, alarms is required for protective cover services.Connecting the security system will as well cause disturbance in the offices. The cost, quality, dependability of the security companies should be compared to see which one is suitable for Inkwell Ltd. 9.2.7 Other staff may be hard put to see other being trained and this might cause less productivity, commitment, might because they will become jealous. Extended induction of new staff can also cost the company as they are not available for work while some preparations are carried on. Finally current training and extended induction will probably cause invitees dissatisfaction because there would be shortage of workforce thus declining reliability of clients to Inkwell Ltd.9.3 BENEFITS9.3.1 The bene fits the system will bring are less tangible, so harder to value but possible benefits have been quantified as follows 9.3.2 The first benefit to Inkwell Ltd is that there will be staff competence as employees will now have relevant skills and knowledge thus take to quality production and effectiveness. Self confidence will also be improved since they are flexible with their work. 9.3.3 The use of clock cards will enable the payroll department to be accurate in virtually times. This will also reduce queries from staff if their salaries are underpaid and time set for each employee will be utilized efficiently, unproven overtimes will no longer be found thus reducing cost for the company. 9.3.4 availableness of qualified assistants will then fill gap especially when others are not around due to reasons like sick leaves and this will help the production to keep moving. Clients will also be interested to be given professional service at any time.Relationship between two parties is enh anced due to good cooperation found. 9.3.5 The use of electronic generator will create chances of not loosing critical information during power cut. Inkwell Ltd will always have necessary information needed by internal and external stakeholders. 9.3.6 Having a security services means Inkwell Ltds properties are secure but not fully due to inherent risks of some assets like cash. The use of alarms and cameras will reduce the chances of employees stealing. The security company will also help in escorting the cash and cheques while in transit to be banked. 9.3.7 Inkwell Ltds reputation is enhanced since clients are provided with professional service from trained and knowledgeable staff and at the same time staff feel valued to the investment in training them, their morale is as well improved.APPENDIX 1-INKWELL (LTD)S ORGANISATIONAL complex body partAPPENDIX 2-INKWELL (LTD)S SWOT ANALYSISSTRENGTHSWEAKNESSES-Quick delivery from Inkwell Ltd no matter where the customer is. -Employees are paid on time because payroll and personnel database is presented to the bank by the 24th of each month. -There is nonstop trading by online shop since they operates 24/7 -Inkwell Ltd has directors with quality and fullexperience of dealing with type of business of printer cartridges. -More professional accounting expertise like accountant, financial director, clerks. -The use of centralized accounting system enables Inkwell Ltd to decide decisions quickly and economies of scale as fewer staff boilersuit are needed to complete work unlike if every branch had its own accounts employees. -Flexibility-employees are given chance of advising management in some areas like Alan Cook advised of variances from target. -Cheques are signed by any two of the companys authorized signatories. -The use of BACS to pay staff is useful since its quick-Giving staff commission is strength itself because their effectiveness and morale tend to improve. -There is a good credit control taking place since a ll customers that are overdue with their payments are contacted via telephone, written letter. -Good communication i.e. Michelle usually contact shop managers to know when the inventory gets above three days holding. -The use of advanced accounting packages like payroll will minimize the errors.-Shortage of staff as well as employing unqualified staff results in poor performance, productivity. Reputation of Inkwell Ltd is at high possibilities of being destroyed. -Short training periods are not suitable for a big company like Inkwell Ltd this will limit employees confidence in their work e.g. one day training is not enough. -Inkwell Ltds policies are not followed which means they lack direction for lesson backup is supposed to be through twice a day rather than once. Lack of attendance time record will results in overstatement nor understating figures of hours worked since no control is to be found to record hours worked. -Payments including big amounts are not well monitored, for example Purchase Manager changed what was approved by management that there were to be no increases in prices conceded this year at all but he reversed that, this reflects that follow up was not involved. -Some of the management become loath to attend other matters like that one Chapman where there was discrepancies involving big amount and he failed to attend the matter.-Procrastination of some vital areas-differences were caused because the list of people to have access to the general ledger was not yet set so everyone could access. -Somemanagement like Purchase Manager is short sighted because purchase order processing module had to be bought so that some details of some transactions may not be deleted but ray concluded it as a waste of money. -The use of one computer by 3-4 part time employees is too bad because it influences less productivity, efficiency since it cannot be used simultaneously so others will have to wait for other to finish and it discourages self independenc e in workplace. -Recording receipts and reconciling bank statement manually may possibly accumulate errors and consume a lot of time. -Tension between management like that one of accountant and Finance Director may discourages internal relationship and cooperation(team work).The company will suffer since by the time they are obliged to discuss something fundamental they will deliberately become pig-headed.OPPORTUNITIESTHREATS-Customers are helped to have no archives of poor payments so this may enhance the reliability of customers to the company and more customers will be attracted gradually. -There is an opportunity of training staff meaning by the time of completing those studies they will bring huge input that is acquired from outside. -Inkwell Ltd is given an opportunity by suppliers to pay a bit late and this will help Inkwell Ltd to use the money that was to be paid for other like to pay overdraft if there is any. This will also improve cash position-Data Protection Act 1998 -Inkwell Ltd is likely to face penalties of flunk to keep records since it has the tendency of not keeping records. -Family commitments-Some employees may have family commitments that force them to take some breaks like when family members e.g. when children are sick. This will mean task at work will have to wait especially when company does not have assistants. Some will even take sick leave. -The use of unqualified staff is a huge threat since customers may possibly report that they are not given complete service that match with what they have paid for. This may be reported to consumer affairs and Inkwell Ltd might be penalized.-Power cut may provoke the loss of vital information and Inkwell Ltd may fail to present relevant cute by external stakeholders e.g. banks so in this waythe company may miss so many chances of opportunities or either be penalized for failing to present information to be used for legal purposes. -There is possibility of theft to take place in the company s ince Inkwell Ltd is generating a lot of money. -Trading via online might possibly become because its a great risk since some may claim to become part of Inkwell Ltd so that they may receive money that was not entitled to them.APPENDIX 4-INKWELL (LTD)S TECHNICAL NOTES1) Income Statement-In the context of Inkwell Ltd this will show the owner of the business, sales revenue/income received as well all the cost incurred in the accounting period which will be deducted from the income to arrive at the profit of Inkwell Ltd.This will help the owner to make right decisions and analysis as costs and revenue that has huge impact in the income statement will be highlighted.2) Statement of Financial Position-Current, non current assets, short term liability and long term liability like loans will be laid down. All liabilities will be added and deducted from all assets for which the amount should be equal to the capital invested in the company by the owners and profit from Income Statement. This will help in terms of planning of how long will the liabilities be paid and when to sell non current assets, how to control receivables.3) Fraud Detection- The use of perpetual checking and investigating all discrepancies to conclude what could have went wrong can be one way of detecting fraud. Forensic accountants can as well be useful where investigations will be carried out scientifically. Effective procedures and strategies that are meant to eradicate fraud can be useful in the organization so owners and employees will not want to be associated with fraud cases.4) touch of fraud-Fraud can become strong usually if its done by the owners of the business, this will include theft of cash, inventory as well as time meant for businesses purposes, owners and employees may use business time for their personal activities and this will reduce profitability, production, and effectiveness in the company. Fraud can become a way of life for a business where trustworthy within the business i s eroded. Some will be scared of whistle blowing if they are not protected.