Fraud and Allocation of Funds - Case Study Example

Accounting Management Number Issue The issue in question is fraud in relation to the allocation of funds and lack of accountability in the bakery sector by the departmental management.RationalizationAt first, the baker claims that he would like to be involved in the budgeting for raw materials that are used in his bakery sector. According to this, he tries to indicate that in one way or the other, not all the capital that is input into the bakery department is provided for use. He thinks that perhaps because the department makes a lot of profit yearly, the person in charge does not see the need of remitting extra money to be used as input into the department despite the fact that there may be increases in inputs to departments from the overall management with an increase in the profits from the relative departments.

The request of the baker to be involved in the scheduling of employees and the discussion over the costs of the labor force also indicates cases of fraud. According to him, he thinks that maybe there is more money given in order to fund more experienced labor but someone, and most probably the departmental manager uses the allocated funds to recruit less qualified labor at a cheaper cost bearing in mind that the department would still record high profits. The complaint that the departmental statement includes charges that are not related to the bakery also indicates that the baker is concerned by the fact that the departmental manager may be using the high profits from the bakery department in order to account for losses made in other sectors of the department.

According to reliable operating statements, it is prudent for all the sectors in a department to have their statement in order to help analyze the effectiveness and the progress of the sector RecommendationAs clearly observed from the baker’s complaint, it is clear that there may be cases of fraud and mismanagement of funds going pun from the management of the department. It is, therefore, recommendable that the baker must be involved in decisions to do with the choice of labor. Despite the fact that his sector records high profits, more experienced labor s required in order to help produce more.

It is only an increase in the profits from the preceding year that will mark the development and growth of the company. It is also recommendable that the baker must be involved in the making of the general statements for the department. The fact that there happen to be charged in his sector that are not related means that resources from the bakery sector are used to source from other sectors. In order for a company to grow, each sector and department has to be accountable for its expenses. This makes it easier to realize the weaknesses and be able to act upon them.

These reasons make it wiser to initiate a statement formation program that involves all the major parties in the department. The baker is one of them, he will be able to provide more reliable information on the progress of his sector and the various challenges that face them. He will as well be capable of ensuring that he is aware of all allocations towards his sector. By so doing, the sector will be in a position to grow even more.