But McNutt was puzzled. The bakery, that seemed so outwardly successful, was strapped for cash and struggling to pay bills. No one, including the company controller, Sandy Jenkins, seemed to be able to identify the problem. It just seemed that costs were increasing faster than revenues. Sandy had come on board in 1998 as a bookkeeper and had been promoted several times, ending up as controller in 2004 , earning an annual salary of $50,000, which he apparently didn't really need, since he had come into an inheritance. Sandy drove a brand-new Lexus, took lavish vacations, bought his wife fine jewelry, belonged to the country club, remodeled his home, and spent money like water. The inheritance had changed his life, taking him from a shy, introverted accountant to a high-roller, but he still kept his job at the bakery. McNutt's problem was solved by a new hire in the accounting department who questioned a voided check. That one clue led to another, and then another, which eventually led back to Sandy Jenkins. It started when jenkins, feeling underpaid, bought the Lexus and paid for it with a company check, covering his tracks by voiding that check in the system and writing another check to a legitimate vendor, which he then never sent. In the bank account, a check cleared for $20,000, and the accounting records showed a payment of $20,000. Emboldened by his success, Jenkins repeated his scheme, over and over, eventually skimming almost $100,000 a month from the bakery. Since neither McNutt nor anyone else audited the accounting records, nobody had any idea this was going on. All McNutt knew was that the company was strapped for cash. As the subterfuge unraveled, McNutt's forensic accountants found that Sandy Jenkins had managed to skim over \$17 million from the company over the course of ten years, using an unsophisticated scheme that could have been prevented by a few simple internal control procedures, such as the owner simply looking at the accounting records closely. For this discussion, answer the questions below: 1. What kind of internal controls could have prevented this from happening? 2. Why do you think this went on for so long and ended up costing the business so much money?.

1. But McNutt was puzzled. The bakery, that seemed so outwardly successful, was strapped for
cash and struggling to pay bills. No one, including the company controller, Sandy Jenkins,
seemed to be able to identify the problem. It just seemed that costs were increasing faster than
revenues. Sandy had come on board in 1998 as a bookkeeper and had been promoted several
times, ending up as controller in 2004 , earning an annual salary of $50,000, which he apparently
didn't really need, since he had come into an inheritance. Sandy drove a brand-new Lexus, took
lavish vacations, bought his wife fine jewelry, belonged to the country club, remodeled his home,
and spent money like water. The inheritance had changed his life, taking him from a shy,
introverted accountant to a high-roller, but he still kept his job at the bakery. McNutt's problem
was solved by a new hire in the accounting department who questioned a voided check. That one
clue led to another, and then another, which eventually led back to Sandy Jenkins. It started
when jenkins, feeling underpaid, bought the Lexus and paid for it with a company check,
covering his tracks by voiding that check in the system and writing another check to a legitimate
vendor, which he then never sent. In the bank account, a check cleared for $20,000, and the
accounting records showed a payment of $20,000. Emboldened by his success, Jenkins repeated
his scheme, over and over, eventually skimming almost $100,000 a month from the bakery.
Since neither McNutt nor anyone else audited the accounting records, nobody had any idea this
was going on. All McNutt knew was that the company was strapped for cash. As the subterfuge
unraveled, McNutt's forensic accountants found that Sandy Jenkins had managed to skim over
$17 million from the company over the course of ten years, using an unsophisticated scheme
that could have been prevented by a few simple internal control procedures, such as the owner
simply looking at the accounting records closely.
For this discussion, answer the questions below: 1. What kind of internal controls could have
prevented this from happening? 2. Why do you think this went on for so long and ended up
costing the business so much money?