ACCT 320 Analysis of Investigative Project Design
This aspect of the three-part assignment will relate to the case you described. Assume you are a fraud examiner available for hire. Provide a discussion of the approach you, as an investigator, would use to look into a lead received about the possible fraud. The discussion should include several steps and indicate what documents you anticipate will be available and important during your investigation, whether interviews of individuals will be involved, who those individuals might be, and how you might analyze the collected information.
Assume you have received a general lead, but not all of the facts you laid out in your case presentation. Think through what type of actions may have occurred or might be taking place during your investigation. What records might be a good source to investigate the situation? Oral evidence through interview of individuals can be helpful, but documents are necessary to confirm oral evidence. How can you relate oral evidence to documents you expect to find?
This investigative design should be provided in prose, i.e., narrative writing. For those with audit background, this would be much like an audit program or the expected path you anticipate the investigation to take. The Investigative Design can be posted as a separate document to the Investigative Project Design assignment folder in LEO, or as a single document below your Case Presentation paragraphs.
If you follow the latter approach, you will be able to view both the case description and your proposed investigative approach on the same document. This might be one and a half to two pages of narrative. When the submitted Investigative Design documents are reviewed, if posted with the case design, only the section about the investigation will be reviewed and graded.
A word of caution here! For the steps provided, there needs to be enough wording that a reader can understand what actions you plan to take during the investigation. This is about explaining to a supervisor how you plan to pursue this fraud. A supervisor, if approving your plan, would be committing your organization to spend the funds to support your efforts and the related expenses. Professionalism in this submission is important.
References and in-text citations are appropriate for this part of the three-part assignment. These sources fortify the merit of your approach to the case and often provide insights about the suitability of your approach to a specific case.
ACCT 320 Asset Misappropriation
Accounting fraud is a common evil vice that has seen down many companies globally. Some companies are operating below the profit margin not because they are not profitable but because some employees have decided to embezzle and drain the pocket of the company to satisfy self-interest through schemes possibly known them only such as false account reporting, preparation of materially false account records and journal entries.
Asset misappropriation is the fraud explored, where the employees that were entrusted to protect the assets of the company specifically cash decided otherwise, and instead used their position to embezzle and steal to meet their lavish needs. When the red flags were raised and management ordered for the forensic audit of the financial transactions, it was shocking to establish in 3 years, $5.4 million had been embezzled from the company account to two individual accounts.
The principal accountant for the company was the mastermind that drove the entire process, where he established a link with the officer that approves payment and two junior accountants who verified transactions and ascertained whether they are true or not. Ideally, the principal accountant operated a secondary account with the name of his wife and a fictitious business that was deemed to supply products to the company.
The principal accountant established when actual deliveries were made and payment processing was done, and at this time, he would link junior accountant to have fictitious orders processed and verified, then transmitted to the payment approval officer to recommend for the payments. When the payment was processed and money wired to the principal accountant, each junior accountant was given a kickback of 10% and while the payment approval officer was given 20%.
To avoid detection, expenses and assets were overstated by the amount that had been paid, and principal account being the one that oversaw the preparation of the financial statements, followed on these fictitious transactions keenly to ensure whatever had been embezzled, had securely been concealed in the balance sheet and income statement hence evading controls put in place in the organization.
Additionally, even though separation of duties was a control measure implemented by the organization, the principal accountant used his influence to influence two junior accountants and payment approval officer to bend to his wish, hence circumventing organizational controls.