Reference no: EM133183110
Question - Disaster is the procurement Director of Books (Pvt) Ltd a company. Over the years He had enjoyed the monopoly of the procurement process as the company (Books Ltd) had no procurement committee and that he signs for all the company payments. During a bear drink one day, Disaster learnt that David's company, Mutimukuru (PVT) ltd was selling stationery and that the company that buys a given limit will be given some discounts. Disaster wanted the discount and so arranged a lunch with David. He offered David USD$1 000, that would be paid into the wife of David's personal bank account if David agreed to supply stationery to Books (Pvt) ltd, Disaster's company. David accepted the offer, and the deal was done.
Disaster feeling that the company (Books Ltd) was not paying him enough for all the efforts he had put into his work, he registered a company with false identity documents .The name of the company was Blue Sky (Pvt).Disaster then proceeded to place orders for stationery at this company (Blue Sky) for Books ltd to pay.
In the beginning Disaster purchased the stationery from other reputable dealer and resold it to Books Ltd at a 50% mark up. However, as his lifestyle improved, he needed more and more money to maintain his lifestyle. He started to raise invoices from the Blue Sky Ltd for Books Ltd to pay without delivering any stationery to Books ltd. As head of the procurement, Disaster acknowledged receipt of the fictitious goods and approved payment thereof to the company.
During one of the transactions, a creditor's clerk Mary, at the finance section became suspicious of the volumes of stationery that Books Ltd appears to be purchasing. She made some enquiry and discovered the identity of the owner of the Company that was supplying the stationery.
Required -
1. Using the fraud theory carry out the investigation of the above case. For each CAAT used show the audit procedures and the expected results.
2. Mary is required by the investigator to write a witness statement. You are required to compile witness' statement for her.