ACC425_Project Two_Parnham

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Southern New Hampshire University *

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425

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Accounting

Date

Apr 3, 2024

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docx

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Uploaded by LieutenantNeutron13679

ACC 425 Project Two Template Phases 1. Apply each of the phases of interview planning to a fraud case. A. Phase One: 50 The information about the alleged fraud offers a primary overview but lacks specific details and concrete evidence of fraud. The lack of specifics, such as dates, amounts, or instances, makes assessing the claim's validity challenging. The absence of documentation for donations, merchandise on the store floor, sales, and a notable decrease in bank deposits raises suspicion but requires further investigation. The involvement of the four-floor employees and three sorting room employees suggests multiple perspectives on the organization's operations. B. Phase Two: 1. The actionable information in this fraud case includes the allegation that the director purchases items from the organization’s store at a significantly reduced rate and then resells them privately. We know there is a lack of documentation of merchandise movements, donations, and employee procedures. We know multiple employees are on the floor and in the sorting room. 2. Several gaps and uncertainties surround the alleged fraud. We do not know the nature and extent of the director's involvement in purchasing items at a discounted rate and reselling them. We do not know the frequency of transactions, the monetary value of the sales, or the identities of the purchases, either for fraud or legitimate business. We do not know the specific reason for the $100,000 decrease in bank deposits. A primary factor is that we do not know if donations have even been stolen from the organization.

3. We do not know that we do not any potential motivations behind the alleged fraud, if there are co-conspirators, or whether there is a history of fraud at the organization. We do not know that we do not know if there is a more significant issue, another type of fraud causing the bank deposits to fall short. We do not know that we do not know if there are any internal controls or organization structures outside of employee designation. 4. If the director purchases items from the organization at a significantly reduced rate and then resells them privately, then the store items would be decreasing faster than previously. Therefore, have you noticed that the rate of items leaving the store is faster than the number of customers shopping? If the director purchases items from the organization at a significantly reduced rate and resells them privately, then the director would have shown signs of a lifestyle change. Therefore, have you been aware of any significant changes in the director's life recently? If the director purchases items from the organization at a significantly reduced rate and resells them privately, then there has to be an individual to sell to. Therefore , have any individuals been coming by after hours to see the director? If the director purchases items from the organization at a significantly reduced rate and then resells them privately, then there would be missing inventory from the stocking room. Therefore, were you aware of any inventory that has gone missing or been put to the side by the director? If there is a lack of documentation of merchandise movements, donations, and employee procedures, then there would be no price or amount sold restrictions. Therefore, are you aware of instances where an employee did not charge for items or did not charge the total ticket amount?

If there is a lack of documentation of merchandise movements, donations, and employee procedures, then there would be no records of the types of merchandise or the value of the merchandise on the store floor. Therefore, how do you keep records of what was sold? Furthermore, how is the price of merchandise determined? If there is a lack of documentation of merchandise movements, donations, and employee procedures, then there would be no knowledge of consumer theft or false donations. Therefore, how does the company account for inventory in its financial documents? How does the organization confirm donations? C. Phase Three: If the director purchases items from the organization at a significantly reduced rate and then resells them privately. Then , the director had to take the items from the organization. Therefore, who saw the direct take items from the organization? To whom did the director sell the items? Who transported the items from the organization to the buyers? Where did the director take the items after removing them from the organization? Where did the sales happen? Where did the director put items in the store to be taken out of the store later? What made it easy for the director to take items from the organization? What was stopping the director from taking the items from the organization? When did the director take the items from the organization? When did the director buy the items initially? When did the director sell those items at a higher price? If there is a lack of documentation of merchandise movements, donations, and employee procedures.

Then, the director would have open access to take items from the organization. Therefore, who controlled the inventory from the storage room to the store floor? Who had access to the items while in the store? Who stopped customers from stealing while in the store? Who watched the employees as they sorted or worked on the floor? Where did the daily sales reports go at the end of the day? Where were the employees allowed access to the items? Where did deliveries or purchases come into the store? What stopped the employees from taking items from the organization? What processes did the employees follow when starting and ending their shifts? What kept the merchandise inside the store and not outside the store? What was the difference between sorting room merchandise and store floor merchandise? When did the employees have time to move merchandise around the store? When were there reasons for merchandise to be held in the sorting room? When did the employees have to stock the store floor? D. Phase Four: Start by interviewing the most peripheral members, moving into the most possible candidates for fraud. Third-party witnesses should be interviewed first, moving to the more knowledgeable members. It would be wise to begin with the customers and donors of the store, move to the higher management of the organization and the board members. The store employees on both the floor and sorting room, and finally interview the director. To initiate the interview, it is prudent to begin with an introductory question that sets a positive tone and facilitates the establishment of rapport. It would be essential to ask about the interviewee’s role within the organization and their key responsibilities (Wells, 2003). This allows the interviewee to provide a comfortable and familiar introduction but also provides

valuable insights into their perception of their role and responsibilities. It serves as an opportunity to observe non-verbal cues, such as body language and tone, which can provide early indicators of the interviewee’s comfort level and potential emotional state (Wells, 2003). This initial rapport-building question helps create a collaborative atmosphere, laying the foundation for a more open and productive discussion as the interview progresses (Wells, 2003). As the interview progresses, transitioning into informal questions is a strategic approach to encourage the interviewee to share relevant facts and information more freely (Well, 2003). Utilizing a mix of open, closed, and leading questions can yield a comprehensive understanding of the situation. Open questions, like “Can you describe the typical process for handling donations within the organization?’ invite the interviewee to provide detailed and unprompted information (Well, 2003). Closed questions, like “Did you personally handle any of the transactions in question?” can elicit specific, focused responses (Wells, 2003). Introducing carefully framed leading questions, such as “Were there any instances where you felt pressure to engage in these activities?” can gently guide the interviewee toward disclosing motivations or external influences (Well, 2003). The blend of questioning allows for more conversational and informative exchange and provides opportunities to validate information through different responses, contributing to a thorough exploration of the alleged fraud. This also allows you to decide if the interviewee is a suspect in the fraud (Wells, 2003). When the interviewee is considered a suspect in a fraud case, it becomes essential to transition the interview into assessment questions designed to gauge their attitude towards honesty and truthfulness (Wells, 2003). Employing a subtle approach, pose innocuous-sounding questions that indirectly assess the interviewee’s credibility. For instance, questions like “Can you share an instance where honestly played on maintaining a positive work environment?” or “How do you

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