Fraud Risk Assessment You're a fraud consultant recently hired by Flowvent; a global manufacturer of valves and controls used to help the flow of liquid chemicals at various chemical plants around the world. The company has recently experienced a large embezzlement and their audit committee has requested a fraud risk review to determine any additional risks or vulnerabilities they should be concerned about. Here are some additional facts about the company: 1. 65,000 employees 2. Headquarted in Newark, NJ 3. Offices in China, Brazil, and Manchester, UK 4. Currently acquiring a competitor in Brazil, who also has offices in China and India. 5. Purchasing is decentralized and performed by the local offices 6. Accounting is performed on multiple systems depending on the region. 7. Small internal audit department that mostly performs operational audits and Sox testing. 8. The company has a small IT department but lacks a sophisticated program. They've been hacked on two occasions over the past 6 months and once had their external customer facing system brought down so that orders could not be placed. 9. No compliance department but there is an internal legal group managed by the General Counsel 10. Internal sales force salaries comprised of base salary but large portion based on commissions 11. Previous 3 quarter's financials have been slightly below analysts' expectations and the stock is beginning to drop in share price. 12. External audit firm recently fired and replaced with new firm (Big 4). The previous firm was replaced after a disagreement with management on how to properly record revenue for percentage of completion projects. 13. Recent employee surveys highlight a fairly stressed high pressured work force. 14. A fraud risk assessment has never been conducted 15. Fraud investigations are performed by the human resources department and the local management teams. 16. There is a code of conduct that all employees must sign when they are originally hired with Flowvent; however, the Code is over 15 years old and has never been updated. 17. There is no formal fraud or compliance training provided to any of the company employees. 18. Flowvent is currently pursuing a very aggressive growth strategy in China and Brazil. 19. Flowvent sells a large percentage of products to Government owned entities in these countries. 20. A previous employee embezzled money from the company. The embezzlement occurred at one of the manufacturing plants after a Purchasing Manager entered a fictitious company into the Vendor Master File. He then submitted fake invoices totally over $3,700,000 during a four year period. He was caught after he bragged about his scheme to a neighbor whose son-in-law worked for Flowvent. Please perform a fraud risk assessment/checkup for Flowvent. Provide an overview of what you would look for and make any recommendations for improvements, strengths or weaknesses in their current program based on the information provided above. Use the materials from the course to help you frame your response. Include details on the steps used to perform the risk assessment. Provide recommendations for enhancements to internal programs and controls to address fraud and compliance risk in addition to the identification of external risk factors.raud risk assessment