Read the following information and then answer questions a & b below: Assume you are an internal auditor for a large, multinational, manufacturing organization with a division in Mexico. One of your responsibilities is to investigate allegations made on the company’s fraud hotline. When you arrive at work one morning you learn an anonymous tip was left on the hotline that alleges fraud involving the division manager. “Pat’s significant other is a fraudulent vendor,” was the anonymous tip left on your company’s fraud hotline. Pat is a division manager at your company. “Wow. I can’t believe this guy is so blatant,” you are thinking as you review some accounts payable invoices while following up on this anonymous tip. A quick search of the AP file reveals a total of three invoices like the one, all for identical amounts but on different dates. The division manager, Pat, has the authority to approve payment of invoices for less than $10,000. It is obvious to you that the manager has created a shell company. You happen to know that Pat’s significant other is named Kim, hence the name Kimco Marketing. There is no documentation to support these transactions other than the invoices, all of which are purportedly for marketing services. The manager’s office is not more than 30 feet away and Pat can be seen at the desk. You throw the invoices in a file, grab your buddy in the next office, and head for Pat’s office. After all, it doesn’t take a brain surgeon to know what’s going on here. Requirements: a.) Should Pat be confronted and interviewed now? Why or why not? b.) Compile a written list of the questions you would ask in the interview with Pat and the sequence in which they should be asked. Ultimately, your objective is to determine whether a fraud has been committed and if so, obtain a confession from Pat.
Read the following information and then answer questions a & b below:
Assume you are an internal auditor for a large, multinational, manufacturing organization with a division in Mexico. One of your responsibilities is to investigate allegations made on the company’s fraud hotline. When you arrive at work one morning you learn an anonymous tip was left on the hotline that alleges fraud involving the division manager. “Pat’s significant other is a fraudulent vendor,” was the anonymous tip left on your company’s fraud hotline. Pat is a division manager at your company.
“Wow. I can’t believe this guy is so blatant,” you are thinking as you review some accounts payable invoices while following up on this anonymous tip. A quick search of the AP file reveals a total of three invoices like the one, all for identical amounts but on different dates. The division manager, Pat, has the authority to approve payment of invoices for less than $10,000.
It is obvious to you that the manager has created a shell company. You happen to know that Pat’s significant other is named Kim, hence the name Kimco Marketing. There is no documentation to support these transactions other than the invoices, all of which are purportedly for marketing services. The manager’s office is not more than 30 feet away and Pat can be seen at the desk. You throw the invoices in a file, grab your buddy in the next office, and head for Pat’s office. After all, it doesn’t take a brain surgeon to know what’s going on here.
Requirements:
a.) Should Pat be confronted and interviewed now? Why or why not?
b.) Compile a written list of the questions you would ask in the interview with Pat and the sequence in which they should be asked. Ultimately, your objective is to determine whether a fraud has been committed and if so, obtain a confession from Pat.
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