Fred Lightfoot has been a highly respected and extremelycompetent employee of BlueChip Enterprises for many years. He was described as a dedicated workaholic,often at his desk 7 days a week, almost every week of the year. He has been responsible for all accountingand sales transactions. He has no familyand lives for his work; his only hobbies are watching horse racing andgambling.
Recently he was in a serious car accident caused byfatigue and too many drinks at the staff annual race day and dinner; as aresult he has spent many weeks in hospital.
A temporary accountant was hired to take over the jobin the absence of Mr Lightfoot. Hereported many disturbing procedural deviations from the company’s accountingand operations manual to the Managing Director, Robert Brown.
Mr Brown had been residing in Majorca, Spain with hisgood friends Pixie and Chris Skase and had left all the day to day running ofthe company to his trusted friend Mr Lightfoot.
The other accounting staff employed by BlueChipEnterprises had been replaced with new employees in Mr Brown’s absence. It wasdiscovered that they were not qualified and did not know of the existence ofthe accounting and operations manual or have any training in company policiesand procedures.
These employees performed their duties in the way MrLightfoot instructed them, without ever questioning anything he said, becauseof their lack of formal qualifications and training.
Both Robert Brown and the investigating accountant whowas subsequently engaged to investigate the matter were shocked to discoverthat Fred Lightfoot had embezzled more than $900,000 over a two year period bynot recording sales in the sales journal and subsequently diverting the cashreceipts.
What major factors do you believe may have contributedto the defalcation or misappropriation of funds?
Fred Lightfoot has been a highly respected and extremelycompetent employee ofBlueChip Enterprises for many years. He was described as a dedicatedworkaholic,often at his desk 7 days a week, almost…