HOLLATE MANUFACTURING CASE

HOLLATE MANUFACTURING CASE QUESTIONS

1.      
An integral part of understanding a client’s financial reporting environment is obtaining an understanding of the organization’s control environment, often referred to as “tone at the top”.  How would you characterize Hollate’s control environment (strong/weak)? Use specifics from the case in support of your assessment.

2.      
Fraud research indicates that three conditions must exist before a fraud occurs: (1) Pressure/Incentive, (2) Rationalization, and (3) Opportunity.  What do you think were William Blackburt’s incentives and rationalizations for committing fraud? What created the opportunity for fraud?

3.      
What do you believe were the factors that contributed to the breakdown in Hollate’s financial reporting environment for? What do you believe were the most serious control deficiencies at Hollate?

4.      
What changes would you make to Hollate’s internal controls to remediate or fix the deficiencies you identified above?  Be specific. frauD