Mary S. is the owner of a small flower shop. With only 12 employees, the environment is one of trust. Mary personally knows each employee, and most have worked at the shop since its opening. Although few controls exist, Mary is the only person allowed to sign checks. Mary's good friend, Steve, is very important to the business. Not only he is the head accountant, but he also helps maintain relationships with vendors. Steve is the proud father of three children, two sons and one daughter. Steve's son was soon to start college at an Ivy League school. Although immensely proud, Steve was worried about making tuition payments as well as providing for the rest of his family. After his son's freshman year, things began to get really tight. Not wanting his son to know that the family was hurting financially, he decided to talk to a vendor who was interested in doing business with the company. After accepting the first kickback, the second was easier. Soon Steve was able to pay for his son's tuition and more. He began buying expensive jewelry for his wife and taking extravagant trips. Because Mary was a personal friend, she inquired where the money was coming from. Steve told Mary that his wife had received an inheritance from an aunt. Because Mary trusted him, she believed his story. She did not become suspicious until one day she tried to contact a vendor directly. Steve would not allow her to do so and insisted that she talks to the vendor through him. Soon Mary discovered that Steve had taken a substantial amount of money and had taken advantage of their trusting relationship. Required: How could this fraud have been prevented? .

1. Mary S. is the owner of a small flower shop. With only 12 employees, the environment is one of
trust. Mary personally knows each employee, and most have worked at the shop since its
opening. Although few controls exist, Mary is the only person allowed to sign checks. Mary's
good friend, Steve, is very important to the business. Not only he is the head accountant, but he
also helps maintain relationships with vendors. Steve is the proud father of three children, two
sons and one daughter. Steve's son was soon to start college at an Ivy League school. Although
immensely proud, Steve was worried about making tuition payments as well as providing for the
rest of his family. After his son's freshman year, things began to get really tight. Not wanting his
son to know that the family was hurting financially, he decided to talk to a vendor who was
interested in doing business with the company. After accepting the first kickback, the second was
easier. Soon Steve was able to pay for his son's tuition and more. He began buying expensive
jewelry for his wife and taking extravagant trips. Because Mary was a personal friend, she
inquired where the money was coming from. Steve told Mary that his wife had received an
inheritance from an aunt. Because Mary trusted him, she believed his story. She did not become
suspicious until one day she tried to contact a vendor directly. Steve would not allow her to do so
and insisted that she talks to the vendor through him. Soon Mary discovered that Steve had taken
a substantial amount of money and had taken advantage of their trusting relationship. Required:
How could this fraud have been prevented?