Part III: Analysis of Information You have the Selling, General and Administrative (S, G and A) Expense Detail (W/P I-3) and Sample of Cancelled Checks (W/P I-4). Please consider your findings in Part I. and Part II., and also use W/P I-3 and W/P I-4 to answer the questions in Part III. A. The client has a problem. What is the problem? B. Who could have done this? Why do you think this? C. Consider the fraud triangle. Identify and define each part of the fraud tri- angle. Apply the fraud triangle to this situation. Try to speculate on motive, opportunity and rationalization. Green Tech Manufacturing Company Workpaper 1-1 12/31/2015 Initials J.A. K. Planning Comments Date: 1-15-16 d it be? ges of this recommendation. Memo from Jessica Kirner January 15, 2016 There has not been turnover in the top four client people: Marvin Green, Owner; Jacob Merriweather, Treasurer; Maeve Rehnhart, ac- countant; and Lucinda Washburn, factory manager. While talking at various times with these client people, I learned that a small piece of land was purchased from a nearby landowner, and the factory was expanded. In addition, some new equipment was purchased. This expansion is to allow a new product, Solar Panel Plus (Model X-4), to be produced. Builders are requesting this new solar panel, as it is easier to install than the other models. Marvin thinks the new products will be a great seller. He has a new office, which is the corner office. Jacob recently returned from three-month paternity leave to take care of his new baby. He was able to work from home, so he said he is mostly current with his work. Maeve is getting a divorce and has missed some work to attend at- torney meetings and court dates. Lucinda recently completed the second level factory manager-computer certification, so that she can run the new software related to the expansion. Green Tech Manufacturing Company: Fraud and the Independent Auditor 249 Green Tech Manufacturing Company 12/31/2015 Income Statement with Common-Size Information Workpaper 1-2 Initials J.A. K. Date 1-15-16 Unaudited Audited For Year Ending Common-Size For Year Ending Common-Size Income Statement 12/31/2015 12/31/2015 12/31/2014 12/31/2014 Sales Revenue $11,000,000 100% $8,000,000 Cost of Goods Sold Expense Gross Profit 100% $ 8,250,000 75% $5,920,000 74% $2,750,000 25% $2080,000 26% S, G and A Expenses $ 2,420,000 22% $1,520,000 19% Operating Income $330,000 3% $560,000 7% Interest Expense $121,000 1% 1949 $80,000 1% Income Before Taxes $209,000 2% $480,000 6% Income Tax Expense $ 62,700 196 $144,000 2% $336.000 45 Net Income $146 300 1% SG&A Expense Detail 250 Case Studies in Forensic Accounting and Fraud Auditing Green Tech Manufacturing Company 12/31/2015 Workpaper 1-3 Initials.A. K. Date 1-16-2016 Selling General and Administrative Detail Detail Amounts Account Descriptions 12/31/2015 Unaudited Subtotal 12/31/2015 Unaudited Corporate Headquarters Subnstal BEVE Audited Depreciation $100,000.00 $ 100,000.00 Office Building $100.000.00 Ulti $121,000.00 Heating and Cooling $47,000.00 Electricity 15.000.00 $183,000.00 Wabe $125,000.00 Repairs and Maintenance $16,000.00 Ace Supplies $50,000.00 XYZ Fumace and Air $35,000.00 Fred's Painting $32.000.00 $133,000.00 Nonstein Electrical $45,00000 Administrative Salaries and Benefits $550,000.00 Executive $282,000.00 Managers Customer Rep #300,000.00 $20.000.00 Support Training Enhanced Communications M and R Motivation Computer Strategies $1,222,000.00 $528,000.00 $40,000.00 Diversity Plus " $ 50,000.00 $30,000.00 $18.000.00 $ 138,000.00 $4700000 Travel Executive Customer Reps Entertainment Customer Meetings $37.000.00 Holiday Party $9.000.00 $46,000.00 $36,000.00 Professional Services Auditing $60,000.00 $75,000.00 $135,000.00 $102,000.00 Andrews and Andrews Tax Andrews and Andrews Legal Norris and Morris Claremont and Cimus Consulting Acme Consulting Environo Consultants ProProfits Business Power MAR Software Consulting Engineering Factory Synergy Chemstart Performance High Power Engineering Mechanix Water Tech Totals $42.000.00 $16,000.00 $ 42,000.00 $3700000 $16,000.00 $14.000.00 $ 33,000.00 $2,000.00 $35,000.00 $120000 $ 38,000.00 $ 65,000.00 $4,000.00 $50,000.00 $ 68,000.00 $45,000.00 $ 47,000.00 $53.000.00 $157,000.00 $37000.30 $213,000.00 $2.420.000.00 $320003 scanned copy of check paid by and received from the bank. (see workpaper series 1-4) Tichmark Legend Selected expenses as sample items to test. Traced vendor name and check amour Green Tech Manufacturing Company: Fraud and the Independent Audio 251 Green Tech Manufacturing Company Sample of Cancelled Checks For Year Ending 12/31/2015 (1) Front and Back of Check #2001 2-402/710 WA Date 1-15-2016 2001 com: industrial Road Tech Manufacturing Company Boomington, MN 55422 yee ACE Supplies, Inc. teen thousand and no/100 wer pipe repair second state bank 0041 1967 5607198002 2001 Pay to Order of Prime Bank farmington, MN For Deposit Only 00-376-0871 Date February 2.2015 $16.000.00 Ace Supplies, Inc. 26-15 Front of Check and Back of Check #2007 Green Tech Manufacturing Company. Industrial Road Boomington, MN 55422 Payee Acme Consulting hity eight thousand and no/100s Installation Assistance for New Computers Second state bank 31-0041 1967 5607198002 2007 Deposit Only 3/24/15 Capitol View Bank St. Paul, MN 179-675 Acme Consulting 2-402710 #200 Date March 13, 2015 $3000.00 Signed Mane Rehmat 252 Case Studies in Forensic Accounting and Fraud Auditing (3) Front and Back of Check #2017 Green Tech Manufacturing Company 1117 Industrial Road Noomington, MN 55422 2-402/710 #2017 Date: April 22, 2015 Payee Chemstart Performance Forty five thousand and no/100s Engineering Support for New Product Line Second state bank 31-0041 1967 5607198002 2017 Chemstart Performance Northfield Division #147-0099 Deposit Only 04-25-2015 $45,000.00 Signed Maeve Rehran Farmer's State Bank Northfield, MN (4) Front and Back of Check #2025 Green Tech Manufacturing Company 1117 Industrial Road Bloomington, MN 55422 2-402/710 #2025 Date: June 29, 2015 Payee MAR Software Consulting Fifty thousand and no/100s Consulting for New Factory Design Second state bank 31-0041 1967 5607198002 2025 MAR Software Consulting Capitol View Bank St. Paul, MN #179-675 July 5, 2015 Deposit Only $ 50,000.00 Signed Maeve Rehrhart Green Tech Manufacturing Company: Fraud and the Independent Auditor 253 (5) Front and Back of Check #2035 Green Tech Manufacturing Company 1117 industrial Road Bloomington, MN 55422 2-402/710 #2035 Date: July 30, 2015 Payee Norris and Morris Law Firm Thirty three thousand and no/100s Tax Advice for Potential Acquisition Second state bank 31-0041 1967 5607198002 2035 Pay to Order of Big First Bank Minneapolis, MN Norris and Morris Deposit Only #417-22-0954 August 5, 2015 533.000.00 Signed Maver (6) Front and Back of Check #2045 Green Tech Manufacturing Company 1117 Industrial Road Bloomington, MN 55422 2-402/710 #2045 Date: September 22, 2015 Payee Mand R Motivation Fifty thousand and no/100s Training for Executives Second state bank 31-0041 1967 5607198002 2045 Capitol View Bank St. Paul, MN #179-675 September 24, 2015 Deposit Only Restricted Endorsement $50,000.00 Signed Maeve Rehnhart 254 Case Studies in Forensic Accounting and Fraud (7) Front and Back of Check of #2051 Green Tech Manufacturing Company 1117 Industrial Road Noomington, MN 55422 2-402/710 #2051 Date: October 15, 2015 Payee Diversity Plus Eighteen thousand and no/100s Training for Managers Second state bank 31-0041 1967 5607198002 2051 Diversity Plus 10/18/2015 Central City Bank $18,000.00 Signed Maeve Rehehert St. Paul, MN ACCT# 88-19071 Deposit Only (8) Front and Back of Check of #2058 Green Tech Manufacturing Company 1117 Industrial Road Bloomington, MN 55422 Payee High Power Engineering Forty seven thousand and no/100 2-402/710 #2058 Date: November 5, 2015 $ 47,000.00 Engineering Outsourcing Second state bank 31-0041 1967 5607198002 2058 High Power Engineering Deposit Only November 7, 2015 Capital View Bank St. Paul, MN Deposit Only ACCT# 179-675 Signed Maeve Rehnhart Traced vendor name and check amount to SG & A Expense Detail (See W/PI-3) "Adapted from Vol. 8, No. 2, Special Issue, 2016, Journal of Forensic & Investig tive Accounting