Reference no: EM133314201
Question: Our team has been hired by the Board of Directors of ABC College to conduct a thorough investigation relating to a potential fraud. The BoD is suspicious because, despite having an increased number of student admissions, the college has incurred losses as shown in its financial statements.
In our investigation, we found out that certain expenses, that were claimed to have been incurred for the business of the college, were in fact used to cover up the funds taken out of the organization for illegal individual gains.
Just at the beginning of the investigation an anonymous letter was received by Mrs. Tachelle stating most recently a longtime construction company affiliate with the college was replaced by a new one. The letter also states that the CFO has ties with said company. The explanation given to the construction company was since the pandemic the upkeep for the college has costly to college. Hence, the decision to undertake new contracts at a cheaper cost was undertaken by the company.
In hindsight the college did contracted a new contractors but at a higher rate than before. During the course of this investigation various Analytical Anomalies were discovered. First Sign of Improprieties:
• New acquired contractors
• Termination of existing contractors contract
• Increase purchases of inventory
• Increase rate of acquiring inventory
Second Sign of Improprieties:
According to other heads of department. They were unaware of such changes as decisions such as these must go through a voting process before a final decision was made it was reported none such events had occurred in the past 5 years.
Other tell tale signs indicate that only CFO approved these changes. Instructions for the creation of inflated invoices for inventory came directly from him as well. These were done at the customer service level.
The Financial Manager denied giving approval of these contracts but yet his signature was discovered along with the CFO.
Q) Explain the Process for obtaining Audit/Forensic Evidence for proving each risk has resulted in fraud
- Understand the companies of policy
- Understand the ethics and compliance of the company (what duty was violated)
- Retain important documents that are directly involved in the investigation (state which documents were used and what details were discovered