Goodner Brothers Case Essay

950 Words Apr 4th, 2015 4 Pages
Goodner Brothers Case

1. In most fraudulent acts three circumstances lead to such crimes being committed, and should be considered when carrying out risk assessment. These conditions are an incentive, an opportunity, as well as a rationalization; the three make up what is known as the Fraud Triangle. The three circumstances are present throughout the fraudulent acts of Woody Robinson. For instance, Woody had a rampant gambling addiction that was developed throughout college, which had led him to accumulate a debt of over $50,000, some of which was owed to his good buddy, Al Hunt. In addition he was behind on mortgage payments, had maxed out credit cards, as well as received threats from two bookies he was in debt to; all of which could
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Woody was later able to enter in his sales from the "throw-away" tires into the companies accounting system. Fraud is usually rationalized or a certain attitude is held by the criminal, as both are true for Woody. Woody was a gambler, and obviously had developed an attitude for a higher tolerance for or lack of realization of high risk situations. He also rationalized his crime when he told Al, "It's none of their business what I do in my spare time. Why should I tell them about this great deal I stumbled upon". Of course Woody was telling Al a lie, but in some he may have believed to be true. Along with his rationalization to Al, he believed stealing from the company due to his financial situation was the lesser of two evils.

2. As the auditor for Goodner Brothers I would naturally go down the line and carry out the necessary procedures for risk assessment. These procedures are as follows: inquiries of management, other entity personal as well as external parties, analytical procedures, observation and inspection, defining the nature of the entity, industry regulators and external factors, objectives and strategies, entity performance measures, and internal controls. While going through these procedures I would soon learn that the tire company was bringing in a lower gross margin than its competitors which had created a tense sales objective that emphasizes high volume on sales.

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