Case Study

Assume you are an internal auditor (or a fraud examiner) for a large, multinational, manufacturing organization with a division in Colombia. One of your responsibilities is to investigate allegations made on the companys 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. Sues significant other is a fraudulent vendor, was the anonymous tip left on your companys fraud hotline. Sue is a division manager at your company. Wow. I cant believe this guy is so blatant, youre thinking as you review some accounts payable invoices while following up on this anonymous tip. The invoice that caught your attention is shown in the appendix. A quick search of the AP file reveals a total of three invoices like the one in the appendix, all for identical amounts but on different dates. The division manager, Sue, has the authority to approve payment of invoices for less than $10,000. It is obvious to you that the manager has a created a shell company. You happen to know that Sues 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 managers office is not more than 30 feet away and Sue can be seen at the desk. You throw the invoices in a file, grab your buddy in the next office, and head for Sues office. After all, it doesnt take a brain surgeon to know whats going on here.

Required: You have to get ready to interview Sue. After reading the scenario above, your initial task is to brainstorm about how you will confront Sue about the fraud allegation. Next, compile a written list of the questions you will ask in the interview with Sue and the sequence in which they will be asked. Ultimately, your objective is to determine whether a fraud has been committed and, if so, obtain a confession from Sue. At the end of this class be prepared to interview Sue.

KEANCook 0 Kimco Marketing Marketing Specialists for the Mexican Region La Quemada 3909, Benito Juarez 03020 Cludad de Mexico NVOICE February 20, 2011 Pat U. Lyonsack E. Z. Pickens Conglomerate, S. A Andres Bello 29 Mexico City. Distrido Federal 11560 Mexico 52 55 5519 4698 invoice Number: 10001 Drafts (14) DATE 1/10/2011 1/22/2011 Market Research /1/2011Marketing Support Services DESCRIPTION AMOUNT 500.00 000.00 250.00 5 9750.00 Fieldwork TOTAL DUE Please remit the total amount due within 10 days Thank You No Holly Unlikely, Billing