Reference no: EM131560259

Tom Sonich is a Cleveland based employee for Raymond Technology Company. Tom was placed on a temporary assignment at Raymond’s plant in Dallas Texas for a period of nine months. The company’s policy is to permit an employee on temporary assignment to arrange for temporary living accommodations for a monthly amount not in excess of $5,000 per month. Most employees rent houses or apartments. Tom found a two bedroom apartment in Dallas for a monthly rate of $4,995 per month. He needed two bedrooms as his wife and children visited him monthly. Tom paid his landlord $4,995 each month and was promptly reimbursed this amount from his employer. A coworker at the Dallas office found out that Tom was paying this amount as rent and considered it quite high given the Dallas rental market for apartments and thought Tom might be engaged in fraud especially insofar as the monthly rent was just a little below the maximum permitted under the policy of $5,000. The coworker reported this on the company’s fraud hotline. You are an internal auditor for Raymond, and your supervisor has asked you to investigate this fraud allegation. a. What type of fraud could Tom be committing here? If fraud could be occurring, how is it being designed to work? b. How might you investigate whether fraud is occurring? What would you be looking for?