Practical Problem 2 You decide to conduct an audit of the purchasing function for this division. But before you do, you decide to get some more information about the division and the employees. You find that Mr. Brackens has been an employee for more than twenty-five years, coming to the company night out of college. He has five employees that work for him, one is a manager (Angela Harkins) and the rest are buyers two senior buyers and three junior buyers. Harkins has been an employee for 15 years and the buyers have been working in the department for six months to ten years: Jim Rydel, Sr. Buyer (10 years). Ruth Bell, Senior Buyer (7 years), Ben Troupe, Junior Buyer (2 years): Rhonda Davidson, Junior Buyer (2 years). Rick Adams, Junior Buyer (6 months). Regarding purchasing policies, any purchase that is more than $10,000 must go out for a bid All bids must be approved by the manager of the purchasing department or higher. Only authorized vendors are allowed to bid. Vendors without a vendor number must be handled by special processing and approved by the director Junior buyers can authorize purchases of up to $5,000: senior buyers, S7,000, managers and directors, $9,000. You pull a listing of vendors who have been paid more than $100,000 for the years, 2000. 2001, and 2002 and find the following. 2002 0 JMC Vendors with $100,000 2000-2002 2000 Black IPS 47 844 1209% Warehouse Eqpmt 30,402 7 68% Lantern Co 38,089 9.62% Oak Hill Distributors 61 166 1546% Seros 37 090 9.37% Randazzo Supply 10.41% Adam Systems 50,470 12.75% AA Supply 67,194 16.98% 20 321 5.13% Top Q 0 0,00% Blues Pro 0 0.00% 395,765 100.00% 41189 2001 52,458 590% 44447 4.99% 78 682 8.84% 24 566 2.76% 48 843 5.49% 62,012 6.97% 52,198 5 86% 80 378 9.03% 78,019 8.77% 105,620 1187% 260.785 29 30% 890,019 100.00% 70 940 45,872 78 229 119,068 111,845 140 033 113,723 173,854 247, 172 408,323 1,511,061 0.00% 4.69% 3.04% 5.18% 7.88% 7.40% 927% 7.53% 11.51% 16.36% 27.02% 100.00% Total 100,312 145,789 162.643 163,961 205,001 215,046 242,701 261 295 272,194 352,792 669,108 2790,842 % of Total 3.59% 522% 5.83% 587% 7.35% 771% 8.70% 9.36% 9 75% 12.648 23 98% 100.00% Ad Sys Questions: 1. Is there anything that is suspicious on the summary? Explain your answer. Practical Problem 2 2. Do you have predication for fraud? Why or why not? 3. Would you conduct a surprise audit of the area? Why or why not? 4. How would you approach the area? 5. What are your next steps