3 3 a. Explain how the fundamental principles of the IESBA Code of Ethics apply to forensic assignments. (5 marks) b. You are a manager in the forensic investigation department of an audit firm. You have been approached by the financial director of Arnold Co to investigate a fraud. The finance director has identified a number of discrepancies between inventory records and the quarterly physical inventory counts which are performed. Their suspicions have been increased by the fact that the discrepancy always relates to the same product line and approximately the same number of items appear to be missing each time. Required Explain the procedures you would perform to determine whether a fraud has taken place and to quantify the loss suffered by the company. (5 marks) C. The purchase ledger clerk of Painswick Ltd has been channelling payments to suppliers into their own bank account by altering bank account details of the relevant suppliers on the BACS masterfile. In order to disguise this activity the purchase ledger clerk has: Posted the relevant invoices to the purchase ledger twice; one entry has been made correctly to the relevant expense account while the other has been debited to a suspense account Matched and removed the duplicate invoices and payments before the monthly reconciliation of supplier accounts is performed Required Based on the above example of a fraud, identify the procedures which would have enabled the forensic auditor to identify this fraud and quantify the loss to the company