Reference no: EM132618134

You have been called in to investigate a suspected case of pilferage at CNH Manufacturing Company. In reviewing departmental costs for the previous year, the president and owner of the firm, Devika Madison, noticed a 36% increase in office supplies among all departments of the organization. However, the company has only experienced a 4% growth rate.

In an attempt to determine what was causing this large increase in office supply usage, the president went into the company records and found a number of invoices for each department that showed some unusual purchases (i.e., small electronics not typically used in the organization, purchases of a new printer every 2 or 3 months). The president sat down with each departmental manager and in every case the manager was able to identify the valid office supply invoices (i.e., containing items they authorized, received, and used) and the ones they had never seen before (i.e., containing items never authorized and never received). In each case, the "bogus" purchase invoices were approved for payment by the company purchase manager, Jack Simpson. Additionally, the documentation trail also indicated Jack personally signed for each of these shipments.

Additional information on your suspect, Jack Simpson, is as follows:

• 36 years old, divorced 10 months ago.

• 10 years with the company. Originally started as a factory line worker and has worked his way up to the purchase manager position.

• Recently started wearing "expensive looking" clothes and now drives a new silver BMW convertible.

• Recently started smoking. Some employees have also smelled alcohol on his breath first thing in the morning or right after lunch.

• Likes to socialize. On more than one occasion has picked up the entire bar tab for the Friday night employee "happy hour" after work.

• His last three vacations have been to Las Vegas. Many of the other employees in the office noticed he is not usually in a good mood right after he returns from vacation.

Potential Interviewees:

Devika Madison: President

Catherine Lavelle: Operations Manager

Derek Huseman: Chief Financial Officer

Departmental Managers:
• Rob Kutrain: Cutting
• Sandra Norris: Assembly
• Amid Birdsong: Finishing
• Dan Grady: Packaging

Departmental Purchasing Representatives:
• Lance Furlough: Cutting
• Brad Vaish: Assembly
• Cindy Sheets: Finishing
• Habib Mohammad: Packaging

Purchasing Department:
• Jack Simpson: Purchasing Manager
• Sarah Correll: Assistant Purchasing Manager
• Lana Livingston: Purchasing Clerk

Vendor sales representatives (for top five vendors to CNH):
• Emily Zircoff, DHP Wholesale Materials, Inc.
• Leroy Madison, Great Woods Office Supply
• Tiffany North, Cameo Chemicals Company
• Vahe Framski, Plumm Wholesalers, Inc.
• Macy Kirk, G&G Supply, Inc.

Assignment: Initial Fraud Case Analysis
Purpose
To assess your ability to analyze a fraud case.

Overview
In this assignment you are given a set of facts and asked to analyze a fraud case (case attached). You will build on this assignment for the remainder of the final project. You may support your arguments with information from the assigned articles as long as you cite the source using proper APA format.
Action Items
1. Read the Initial Case Analysis provided by your professor and evaluate the sources of information (case attached).
2. Prepare an analysis that responds to each of the following items:
a. Provide a detailed explanation of the business process as provided by the case. Contrast the processes in place with those that should have been followed. Explain in detail any deficiencies.
b. Develop a fraud theory based on the original facts and assumptions of the case.
c. Identify all internal and/or external documentary evidence that would be needed in this investigation. Fully explain your reasons for the inclusion of this documentary evidence.
d. Identify the individuals to be interviewed, the order in which they would be interviewed, and reasons why they would be interviewed.