Chapter 4- Apply Your Knowledge
Mark Kershey, a former Smucker employee, was charged with defrauding the J.M. Smucker Company of
more than $4.1 million over a 16-year period. Charges were filed in October 2014. In 2015, Kershey was
sentenced to nearly five years in prison.
Requirement 1. What internal controls could have been used to prevent Kershey from carrying out the
false billing scheme?
There should have been separation of duties. Kershey should not have been allowed to approve the
invoices. An annual independent audit by the company's CPA might possibly select some of these
invoices for inspection and verification. The internal audit department at Smucker should audit off-site
employees.
Requirement 2. What factors might have contributed to the weak internal control environment
that allowed this scheme to exist for 16 years? (If an input field is not used in the table, leave the
field empty; do not select an answer.)
Lack of:
job rotation
proper approvals
mandatory vacation
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