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Identify the three elements of unethical and criminal conduct recognized in the fraud triangle.

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Case Study – Part 2 Details from Textbook

Please see the attached documents. This was provided in Week 3 as well

Case Study – Week 6

Part 2 – ATC Ethical Dilemma I need just a little extra money

John Riley, a certified public accountant, has worked for the past eight years as a payroll clerk for Southeast Industries, a small furniture manufacturing firm in the Northeast. John recently experienced unfortunate circumstances. His teenage son required major surgery and the medical bills not covered by John’s insurance have financially strained John’s family.

John works hard and is a model employee. Although he received regular performance raises during his first few years with Southeast, John’s wages have not increased in three years. John asked his supervisor, Bill Jameson, for a raise. Bill agreed that John deserved a raise, but told him he could not currently approve one because of sluggish sales.

A disappointed John returned to his duties while the financial pressures in his life continued. Two weeks later, Larry Tyler, an assembly work at Southwest, quit over a dispute with management. John conceived an idea. John’s duties included not only processing employee terminations but also approving timecards before paychecks were issued and then distributing the paychecks to firm personnel. John decided to delay processing Tyler’s termination, to forge timecards for Tyler for the next few weeks, and to cash the checks himself. Since he distributed paychecks, no one would find out, and John reasoned that he was really entitled to the extra money anyway. In fact, no one did discover his maneuver and John stopped the practice after three weeks.

  1. Does John’s scheme affect Southeast’s balance sheet? Explain your answer.
  2. Review the AICPA’s Articles of Professional Conduct and comment on any of the standards that have been violated.
  3. Identify the three elements of unethical and criminal conduct recognized in the fraud triangle.


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