| Course | FAM-5400 Finance and Accounting for Managers |
|---|---|
| Module | Module 3 |
| Paper type | Written assignment 3: fraud and internal control |
| Length | About 688 words, 5 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | Master of Science in Management |
| Updated | October 2026 |
Free sample paper for FAM 5400 Module 3
The Cullet Pile: Fraud Risk and Internal Control in a Glass Plant's Scrap Sales
Student Name
Master of Science in Management, Thomas Edison State University
FAM-5400: Finance and Accounting for Managers
Mentor Name
Month Day, Year
The Cullet Pile: Fraud Risk and Internal Control in a Glass Plant's Scrap Sales
The Case
Glassmaking produces broken and rejected glass, called cullet, which recyclers buy by the ton. At Millville, cullet was swept into a bin behind the shipping dock and collected by a local recycler, who paid cash or by check made out to whoever was on the dock. A new controller, comparing tons of glass melted with tons shipped as product, found that about 140 tons a year were unaccounted for. Investigation showed the shipping supervisor had been taking cash payments of about $60 a ton and recording none of them, roughly $25,000 over 34 months. The amount was small for a $38 million company, which is exactly why no one had looked. Keown et al. (2020) point out that a small firm's limited staff makes the separation of duties harder to achieve, the weakness this case exposes.
The Fraud Triangle
Cressey's fraud triangle, as presented in occupational fraud research, holds that fraud usually requires pressure, opportunity and rationalization (Association of Certified Fraud Examiners, 2024). All three were present. The supervisor had large medical bills after a family illness, a private pressure he did not disclose. The opportunity came from a process no one owned: scrap was not inventoried, the recycler's payments went to whoever was present and no one compared scrap tonnage with production records. His rationalization, given in interview, was that the cullet "was garbage the company would have paid to haul away."
Assessing Controls With COSO
The COSO internal control framework organizes control into five components (Committee of Sponsoring Organizations of the Treadway Commission, 2013).
The weakness lay at the start of the chain. Because no one had assessed scrap as a risk, no control activity existed to address it. The case illustrates COSO's point that the components work together: a strong reconciliation would have caught the loss within months, but no one designs a reconciliation for an asset nobody considers valuable.
| COSO component | Condition at Millville | Assessment |
|---|---|---|
| Control environment | Owners trusted long-serving staff; no code of conduct or ethics hotline | Weak: trust substituted for oversight |
| Risk assessment | Scrap never identified as an asset or a fraud risk | Missing |
| Control activities | No segregation: one person handled scrap, sale and cash; no receipts | Missing |
| Information and communication | Scrap tonnage not recorded; no reconciliation with melt records | Weak |
| Monitoring | No review of scrap revenue; the controller found the gap by chance | Weak until the new controller arrived |
Critique of the Framework for a Small Company
COSO is sometimes criticized as built for large public companies, with documentation demands a 190-person family business cannot meet. The criticism has some force: Millville does not need formal control matrices for every process. But the framework's principles scale well. Its core questions, what can go wrong, who could do it and how would we know, cost nothing to ask. Small organizations, the ACFE's global study reports, suffer proportionately larger fraud losses and are less likely to have basic controls such as management review, which suggests the framework's logic matters more, not less, in smaller firms.
Recommended Controls
1. Treat scrap as inventory. Weigh cullet when it leaves, record tonnage and reconcile it monthly with melt and shipment records.
2. Separate duties. The dock records weight; the recycler pays only by check or transfer to the company, invoiced by accounting; no employee handles scrap cash.
3. Contract the sale. Sign a written agreement with the recycler at an indexed price per ton, so revenue can be predicted and checked.
4. Strengthen the environment. Adopt a short code of conduct and a confidential reporting line. The ACFE's 2024 global study again found tips to be the leading way occupational fraud comes to light.
5. Monitor exceptions. Have the controller review scrap revenue against tonnage each quarter and report the result to the owners.
Conclusion
Millville's loss was modest, but the weakness behind it was not: an unassessed asset handled by one person with no records. Fraud follows opportunity, and COSO's value for a company this size is in making managers ask where opportunity exists before someone else finds it.
References
Association of Certified Fraud Examiners. (2024). Occupational fraud 2024: A report to the nations.
Committee of Sponsoring Organizations of the Treadway Commission. (2013). Internal control: Integrated framework.
Keown, A. J., Martin, J. D., & Petty, J. W. (2020). Foundations of finance (10th ed.). Pearson.
What the FAM 5400 Module 3 instructions ask for
Module 3 of FAM-5400, Fraud and Internal Control, covers two course objectives: critiquing the integrated framework of internal control and examining the relationship between fraud risk and controls. Again the task is a short paper. Expect to explain the COSO components, apply the fraud triangle and assess or recommend controls for a process or case, often with attention to how the framework fits smaller organizations. The case and company here are composites; the ACFE report and COSO framework are the standard sources, and Keown's finance text frames the cost of weak control. This assignment usually pairs a fraud case with a question about internal control, often asking you to apply COSO and the fraud triangle. Some versions add a second case for comparison.
How this FAM 5400 Module 3 example is built
The paper opens with a concrete case, quantified, then applies the fraud triangle with one fact per side. A table assesses the process against each COSO component and the following paragraph explains why the failure began with risk assessment. A critique section answers the common objection that COSO is too heavy for small companies, using ACFE findings on smaller organizations. Five recommendations follow, each aimed at a weakness in the table, and a short conclusion draws the general lesson. A critique section asks how well the COSO framework suits a small company with few staff. The recommended controls are listed with the weakness each one closes.
Reading the FAM 5400 Module 3 grading rubric
The scrap fraud paper is judged on how well the fraud triangle and COSO explain what went wrong at the dock. Mentors look for accurate use of COSO and the fraud triangle, an assessment tied to specific facts and recommendations scaled to the organization. The objective's word "critique" matters: papers that evaluate the framework's strengths and limits, rather than only describe it, earn more credit. Citing authoritative sources such as COSO and the ACFE, and linking each recommendation to a weakness, completes a strong paper. Recommendations that a small company could afford, with compensating controls where duties cannot be separated, show practical judgment. Fraud papers that propose controls a 190-person company can afford, such as weighing scrap at the dock and reconciling scrap sales monthly, earn more than lists of best practices.
FAM 5400 Module 3 help from the desk
Control papers lose marks for defining COSO's components without assessing a real process, for recommending every control in the textbook regardless of size and for skipping the critique the objective asks for. Choose one process and trace how it could fail. Map each COSO component to what you observe. Recommend controls that fit the company's staff and budget. Say where the framework helps and where it strains. A free first sample of your own FAM-5400 Module 3 assignment is available on request. Tie each recommended control to the specific weakness it fixes. Avoid recommending controls a ten-person office could not staff.
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FAM 5400 Module 3 questions, answered
Where can I find a free FAM 5400 Module 3 sample paper?
The glass plant scrap fraud paper above applies the fraud triangle, assesses the process against COSO's five components and recommends controls for a small company.
What are the five components of COSO internal control?
COSO groups internal control into five parts: the tone set by the control environment, the assessment of risk, specific control activities, the flow of information and communication, and monitoring. Millville was weakest at assessing risk.
What is the fraud triangle?
The idea that occupational fraud usually involves pressure on the person, an opportunity created by weak controls and a rationalization.
How is occupational fraud most often detected?
By tips from employees, customers or vendors, according to the Association of Certified Fraud Examiners.
Is COSO suitable for small businesses?
Its principles scale well, though small companies can apply them with simpler documentation than large public firms.