Pat Garrett was just promoted to construction manager at a development firm. He was responsible for dealing with contractors who were bidding on a multi million-dollar excavation job. time were rough. Several contractors had recently gone out of business, and the remaining contractors were viciously competitive. Each contractor was responsible for submitting financial statements of their company along in addition to their bid. Pat knew the development firm was carefully reviewing each company to ensure that it had the necessary cash flow to complete the project. the last contractor it hired declared bankruptcy prior to completing the project. that morning, four bids were sitting on Pat’s desk. The deadline was midnight, and the bids would be opened the next morning. the first bidder, William Bonney, was a tough but personable character that Pat had known for years. pat had lunch with him today, and after a few beers, William hinted that he had “inadvertently” left some cash payments of operating expenses out of his statement of cash flows so that his operating cash flows would look better. William told Pat that he was waiting on several clients to pay him for past jobs but that he knew he would be receiving the money shortly. After lunch, Pat thought carefully about what William had said and decided not to mention anything to his company. He knew that William’s company was reputable and would be around for a long time.
Respond to one of the following:
Was Pat’s company hurt in any way by this fraudulent action?
How could this action hurt Pat?
How can business protect against this kind of fraud?