Beal Hypermarket Case Mr. Zen is the sole owner and manager of Beal Hypermarket. You are the internal auditor of Beal Hypermarket. Mr. Sam is working as a supervisor in Beal Hypermarket. Real Hypermarket sells consumer goods to individual customers and has branches specad across the country. There are nearly ten cashiers operating different cash machines of the hypermarket. Recently Ms. Mary was recruited as one of the cashiers in the hypermarket. Her references and declaration were not checked properly. Mary is sister of Sam. Although Mary informed this in her employee declaration form but was overlooked by the HR.cam. The management was not wware about the relationship between Sam and Mary. Sam and Mary started taking money from receipts and were not receding the revenue on the books. This was possible as Sam was supervisor and had the admin password for controlling cancelled sales. Regular act of Sam and Mary made a major gap between inventory counts and cash registers. Sam is the favorite employee of Zen as he received employee of the year ward consequently for the past three years. Sam has the habit of giving expensive gifts to Zen in his birthdays and anniversaries. Another employce Nancy is not liked by anyone in the organization because she doesn't talk to anyone at the workplace. She is very reserve at the workplace. Your brother is working in a bank and Zen's wife is the branch manager of that bank. Recent meeting of internal audit department, purchase der ment and the management located few observations: a) Purchase department is controlled by only one employee, ie Mr. Ven. Ven is responsible for ordering the inventory, cash disbursements, keeping inventory counts and recording them at the end of the week. He is very honest and had no reported case of unethical practices since his tenure of more than 10 years. The intemal auditoris arguing against the will of management for having full trust and confidence on one person in such a critical post b) Mr. John is the security director of the hypermarket and has all the admin and security passwords. He has joined the firm last year and had excellent employment history with other firms. The management of the firm had many arguments and disagreements with Page 2 of 4 John since he joined the firm. Management has recommended the internal auditor of the form to pursue an IT audit and accept that John is guilty. However, the records show no trace of IT fraud in this type of scenario. c) HR department has pointed out that the inventory counts are giving misleading figures since twe employees joined the firm, Ms Mary and Ms Nancy, both in the cash department HR department gave their observations to have an employment check for d) John is blaming that Zen is having all master passwords and master keys for physical locks John is pointing out one aspect offroad triangle c) Nancy had a poor employment history and was caught in internal theft by her previous employer. She lost her job and had to serve a prison sentence of 6 months before joining Beal Hypermarket. This was overlooked by the HR department and the management during her recruitment and selection process. Every employee in the firm is now suspicious of Nancy. They foel that Nancy should be torminated from her job and immediately handed over to the police for further investigation SECTION - B (50% weight age) Tasks/Questions Tasks / Questions 1) As an internal auditor, identify key issues and threats faced by the firm? (5 marks) 2) Do you feel there is a fraud going on in the case firm? If yes, Identify the main person/(s) responsible for the fraud. (10 marks) Beal Hypermarket Case Mr. Zen is the sole owner and manager of Beal Hypermarket. You are the internal auditor of Beal Hypermarket. Mr. Sam is working as a supervisor in Beal Hypermarket. Real Hypermarket sells consumer goods to individual customers and has branches specad across the country. There are nearly ten cashiers operating different cash machines of the hypermarket. Recently Ms. Mary was recruited as one of the cashiers in the hypermarket. Her references and declaration were not checked properly. Mary is sister of Sam. Although Mary informed this in her employee declaration form but was overlooked by the HR.cam. The management was not wware about the relationship between Sam and Mary. Sam and Mary started taking money from receipts and were not receding the revenue on the books. This was possible as Sam was supervisor and had the admin password for controlling cancelled sales. Regular act of Sam and Mary made a major gap between inventory counts and cash registers. Sam is the favorite employee of Zen as he received employee of the year ward consequently for the past three years. Sam has the habit of giving expensive gifts to Zen in his birthdays and anniversaries. Another employce Nancy is not liked by anyone in the organization because she doesn't talk to anyone at the workplace. She is very reserve at the workplace. Your brother is working in a bank and Zen's wife is the branch manager of that bank. Recent meeting of internal audit department, purchase der ment and the management located few observations: a) Purchase department is controlled by only one employee, ie Mr. Ven. Ven is responsible for ordering the inventory, cash disbursements, keeping inventory counts and recording them at the end of the week. He is very honest and had no reported case of unethical practices since his tenure of more than 10 years. The intemal auditoris arguing against the will of management for having full trust and confidence on one person in such a critical post b) Mr. John is the security director of the hypermarket and has all the admin and security passwords. He has joined the firm last year and had excellent employment history with other firms. The management of the firm had many arguments and disagreements with Page 2 of 4 John since he joined the firm. Management has recommended the internal auditor of the form to pursue an IT audit and accept that John is guilty. However, the records show no trace of IT fraud in this type of scenario. c) HR department has pointed out that the inventory counts are giving misleading figures since twe employees joined the firm, Ms Mary and Ms Nancy, both in the cash department HR department gave their observations to have an employment check for d) John is blaming that Zen is having all master passwords and master keys for physical locks John is pointing out one aspect offroad triangle c) Nancy had a poor employment history and was caught in internal theft by her previous employer. She lost her job and had to serve a prison sentence of 6 months before joining Beal Hypermarket. This was overlooked by the HR department and the management during her recruitment and selection process. Every employee in the firm is now suspicious of Nancy. They foel that Nancy should be torminated from her job and immediately handed over to the police for further investigation SECTION - B (50% weight age) Tasks/Questions Tasks / Questions 1) As an internal auditor, identify key issues and threats faced by the firm? (5 marks) 2) Do you feel there is a fraud going on in the case firm? If yes, Identify the main person/(s) responsible for the fraud. (10 marks)