An Assignment Submitted by
Narrative Report
After a thorough investigation, it was revealed that two individuals, namely Mr. Smith, the associate director of purchase and Ms. Bad, his administrative assistant, implemented a fraudulent scheme using the corporate funds for their personal gains. The analysis of the evidence determined that these two individuals managed to buy items for personal use instead of the planned corporate purchases. This activity resulted in the loss of $8,795.60 of corporate funds. The investigation came to the conclusion that the main culprit of the fraudulent scheme was Mr. Smith due to his status as the associate director, the ability to use the corporate credit card, and his responsibility for the purchase documentation. His associate in crime was Ms. Bad, as the manager in Sterns, Mr. Jones confirmed that the purchases of HD television, laptop, GPS system, home theater system and a camera was bought with the help of Mr. Smith’s corporate card. As the main witness, Mr. Jones revealed that Ms. Bad used to pick up the purchased items, which makes her as a suspected accomplice of Mr. Smith.
Despite the fact that the investigation has obtained only the copies of the receipts of the purchased items bought by Mr. Smith, it is possible to claim that he used fraudulent scheme by abusing his power, as the evidence point to his and Ms. Bad’s involvement. It is suspected that the originals of the receipts were confined by either Mr. Smith or Ms. Bad in order to create a visibility of purchases. Instead, they managed to forge the copies of receipts. There are no other witnesses, except for the anonymous whistleblower, who may confirm the guilt of Mr. Smith or Ms. Bad. It is clear that the plant did not conduct the internal audit that would help to recognize the gaps in the database. According to Wells (2001), the companies that fail to implement audit and involve the independent auditors to check the employees and assets are more likely to be the object of internal fraud. At the same time, there is plenty of direct evidence, such as witness, copies of receipts, false documents, proving that Mr. Smith was the main culprit of the fraud. The circumstantial evidence, namely the access to the physical database, confirmed that Ms. Bad was Mr. Smith’s accomplice in crime.
Chronology
On June 12, in 2007 the plant Lakes Inc. received the anonymous tip regarding the fraudulent activity regarding expense claims. From August to November in 2009 the investigation was conducted determining that the fraud resulted in the losses of $8,795.60 due to the activity of two employees. The main issue was the receipt of the alleged purchase of a computer server, which was suspected to be falsified. In order to determine the status of the document stating that Mr. Smith bought the server, the investigation contacted the vendor, Sterns, where its manager, Mr. Jones confirmed the number of receipts claiming that Mr. Smith purchased HD television instead of a server. It was determined that Mr. Jones witnessed several other purchases made by Mr. Smith with the help of corporate card. The investigation confirmed that Mr. Smith and Ms. Bad falsified the receipt for the purchase of a server and the other items bought in Sterns, including camera, GPS system, home theater system, and digital camcorder. It has to be noted that Sterns is an approved vendor since 2005, which makes the witness and the original receipts shown by Mr. Jones a solid evidence. As in the past 10 months, there was no record of computer server bought for the plant, it became clear that Mr. Smith used the request to buy it as a chance to buy the items for his personal use. The main issue in the investigation is the inability to allocate the original receipts confirming the purchase of the items listed earlier. However, the loss of $8,795.60 and absence of any purchases made for this sum makes Mr. Smith and Ms. Bad the suspected criminals.
Misappropriation
Recommendations
Despite the fact that both Mr. Smith and Ms. Bad were terminated from the Lakes Inc., they are responsible for the loss of company funds in the sum of $8,795.60. Also, due to their fraudulent activity the work of the department is disturbed. In the result, the company lost time and money that makes a good case for the further lawsuit. Mr. Smith has to be sued for asset misappropriation fraud and corruption, while Ms. Bad can be sued as an accomplice and her direct involvement in forging the receipts and providing false documentation. The research of Vollmer (2016) revealed that in the last two years asset misappropriation became one of the most common fraudulent schemes performed by the employees, which emerged due to the failure of the organizations to use the internal audit or monitor the employees responsible for the corporate assets. It is recommended to conduct an internal audit of all departments and involve the independent party for this action. It will help to determine if there are any similar problems in the company.
References
Glodstein, D. (2015). Occupational Fraud: Misappropriation of Assets by an Employee. Journal of the International Academy for Case Studies, 21(5), 81-96.
Vollmer, S. (2016). How Audit Committees Can Help Deter Fraud. Journal of Accountancy, 221(5), 20-34.
Wells, J. T. (2001). Enemies Within: Asset Misappropriation Comes in Many Forms. Journal of Accountancy, 192(6), 31-45.
