Chapter 12
After graduating from college with your MBA, you decide to take your grandmas secret cinnamon roll recipe and open up a bakery. You grew up devouring your grandmas rolls, and you have convinced her to give you the secret. You are confident that your bakery will be the next big hit in the fast-food business.

You take out a business loan for the maximum amount your bank will give you, hire several employees, and open a beautiful store that is designed to look like your grandmas home. After eight months of hard work and diligence, you are crushed when you realize that your store manager has been stealing from you. One of your recent hires tells you that during her last shift, the manager, Stephanie, voided a sale of two-dozen cinnamon rolls, stamped the receipt as a return, and pocketed the money. Stephanie warned the new hire not to say anything and told her she deserved the money because she didnt get paid enough. Encouraged by your open- door policy, the employee confides in you.

1. Identify what symptoms this fraud will generate. In addition, identify how this fraud will directly affect your revenue and inventory accounts.

2. Explain the steps you should take to search for each symptom you identified in part (1). In particular, describe the computer queries and transactions that should be searched to find this fraud.

3. After you have identified several symptoms, do you have enough evidence to prove that she is guilty? What other evidence is required or useful in this case?

4. Besides searching for symptoms of the fraud, what other investigative steps can be taken to elicit a confession or otherwise prove the fraud?

5. What steps could have been taken to prevent this fraud from occurring in the first place?(1page minimum)

Chapter 13
In its 2001 annual report, investors of Adelphia Communications were startled to find a footnote in its financial statements that reported the company had guaranteed as much as $2.7 billion in loans to a private entity owned by CEO John Rigas and his family. As a result of the footnote, Adelphia lost more than 50 per- cent of its market value in little more than a week.

Question: Explain why you think the market value of Adelphia fell so dramatically with the footnote disclosure that the company had guaranteed loans to an entity owned by the companys CEO and his family.
(1page minimum)