Question

In one of the case studies in the textbook, Bob Walker was the head cashier for a discount drug store who perpetrated his fraud scheme by issuing fictitious refunds. How was the fraud discovered?

1) The bookkeeper noticed an unusually large number of policy overrides by Walker.
2) The internal auditor developed a computer program that identified cashiers with an unusually high number of returns.
3) The store manager caught Walker pocketing cash.
4) An anonymous tip from the company's hotline came into the asset protection department.

Answer 1

Bob Walker's fraud was discovered by an internal auditor's specially developed computer program that spotted an unusual pattern of returns. This case study illustrates the importance of vigilant internal controls and auditing in the detection of fraudulent activities.

Step-by-step explanation:

The fraud scheme perpetrated by Bob Walker, the head cashier for a discount drug store, was discovered when an internal auditor developed a computer program that identified cashiers with an unusually high number of returns. This method allowed the auditor to detect the fictitious refunds Walker was issuing. The other options mentioned could also be plausible ways that fraud is typically detected, such as bookkeepers noticing policy overrides or anonymous tips coming in. However, in this particular case study, it was the development of a specialized computer program that exposed the fraudulent activity.

An employee in a similar scenario, where they are confronted with accusations of being a thief, might deal with the situation by appealing to a higher authority or explaining their actions by claiming they were done for a higher purpose, such as stealing money to pay for a sick relative's medication. This is an example of a technique discussed by Sykes & Matza, which involves justifying wrongful actions by portraying them as serving a greater good.