Reference no: EM132481244 , Length: 3 pages

Question 1. Miriam Sata, the controller of the My Patriot Company, has gone over its inventory records many times and is concerned that one or more company employees has stolen large amounts of the company's inventory. However, she is not absolutely sure that any theft has actually taken place because large portions of the written and computer records are missing for unknown reasons. Still, rough calculations, based on total purchases and sales, show that perhaps 20% of the inventory is missing. Miriam spoke to her internal auditors and demanded that they give her an explanation, but they said no explanation was possible without the missing records.

Required: What should Miriam Sata do? Should she contact the police? Should she hire an external forensic accountant? How might a forensic accountant help in this case? Specifically, what could the forensic accountant do that the Miriam's internal auditors could not do?

Question 2. Upon hearing that you are enrolled in a fraud class, a manager of a local business asks, "I don't understand what is happening with all these major scandals such as the Goldenberg, Anglo Leasing, and Triton fraud. There are billions of shillings being stolen and manipulated. How can any good auditor not notice when billions of dollars are missing?"How would you respond?

Question 3. You own a local pizza delivery store. Chris Kemboi has been working for you as a manager for two years and has been a close friend of yours. Chris has the reputation of being a hard worker and has not taken vacation for the entire time he has worked for you. Last week, Chris left town to attend a family funeral. While he was gone,you received several phone calls that seemed suspicious. During these suspicious calls, a potential customer would call and ask for the manager. When you answered Page 2 of 2 the phone (representing the manager), the customer would ask for the "manager's special." When informed that there was not a "manager's special" offered this weekend, the caller would quickly hang up. This occurred several times. When Chris returned, you decided to spend an evening observing the order-taking process. It became apparent that Chris was skimming cash from the business. Chris would take the order for the "manager's special" without entering the sale into the computer. Christopher would then deliver the pizza and pocket the money.

Required:

i) Write a paragraph explaining why Christopher should be terminated from employment.

ii) Write a paragraph explaining why it is important that Christopher is prosecuted for his crime.

Fellow students in your forensic accounting class are having a hard time explaining steps to early identification, evaluation, and response to the risks of material misstatements due to fraud. What would you say to enlighten them