Do credit checks on all potential customers. Abnormally high rate of Photographers an Pre-number coupons. 8. Photographers could send in unused coupons or fake coupons. customers using their coupons exclusive area. Photographers have exclusive rights Have a code on the coupon that the to customers in their specified areas. Coupons that do not look Customers not signing photographer has to call in to the company (or They could encourage customers to authentic. coupons or otherwise enter on a website) before authorization is leave the coupons at the photo studio verifying they had a granted to take the photo. so they are not lost or misplaced. If Customer complaints. sitting. a customer did not come in during For each photographer, analyze what percent of the 6-month period, the Photographers customers use their coupons looking for photographer could submit his send in coupons for abnormally high usage rates. unused coupon. non-current customers as they are not Require photographers to verify that customers If the coupon book is not left for required to verify if are current before each sitting. safekeeping, the photographer could customers are current scan a coupon, change the name to a before a sitting. Nor Do not pay for customers that are no longer customer who did not use their does the company current. coupon, print it, and send it in. verify that submitted coupons are for a current customer. 9. Heirloom can defraud the bank Abnormally high number of Bank does not verify Analysis of the list, such as by misstating the maximum customers 30-60 days overdue. data from Heirloom. An increase in the number or percentage of amount Heirloom can borrow. accounts on the list submitted to the bank Notes payable are in the borrowing with no comparable increase in sales. base until they are 60 days overdue. Comparison of monthly lists to see if the To maximize that base, Heirloom same names appear month after month. could lap customer payments. They could take a monthly payment on a current account and apply it to an account that is just about to go 60 days overdue. The inflated list could be used to support a higher than justified loan.
Do credit checks on all potential customers. 8. Photographers could send in unused coupons or fake coupons. Photographers have exclusive rights to customers in their specified areas. They could encourage customers to leave the coupons at the photo studio so they are not lost or misplaced. If a customer did not come in during the 6-month period, the photographer could submit his unused coupon. If the coupon book is not left for safekeeping, the photographer could scan a coupon, change the name to a customer who did not use their coupon, print it, and send it in. Abnormally high rate of customers using their coupons Coupons that do not look authentic. Customer complaints. Photographers an exclusive area. Customers not signing coupons or otherwise verifying they had a sitting. Photographers send in coupons for non-current customers as they are not required to verify if customers are current before a sitting. Nor does the company verify that submitted coupons are for a current customer. Pre-number coupons. Have a code on the coupon that the photographer has to call in to the company (or enter on a website) before authorization is granted to take the photo. For each photographer, analyze what percent of customers use their coupons looking for abnormally high usage rates. Require photographers to verify that customers are current before each sitting. Do not pay for customers that are no longer current. 9. Heirloom can defraud the bank by misstating the maximum amount Heirloom can borrow. Notes payable are in the borrowing base until they are 60 days overdue. To maximize that base, Heirloom could lap customer payments. They could take a monthly payment on a current account and apply it to an account that is just about to go 60 days overdue. The inflated list could be used to support a higher than justified loan. Abnormally high number of customers 30-60 days overdue. Bank does not verify data from Heirloom. Analysis of the list, such as An increase in the number or percentage of accounts on the list submitted to the bank with no comparable increase in sales. Comparison of monthly lists to see if the same names appear month after month.
rais12_SM_CH05.docx