Stevens Manufacturing Company Case (Part II)

You decide to conduct an audit of the purchasing function for this department. But before you do, you decide to get some additional information about the department and its employees. You find that Mr. Ryan has been an employee for more than 25 years, coming to the company right from college. He has six employees that report directly to hima manager, Alexa Nichols; two senior buyers and three junior buyers. Nichols has worked at SMC for 15 years and the buyers have worked in the department for anywhere from six months to ten yearsBill Kren, Sr. Buyer (10 years); Wendy Matthews, Sr. Buyer (7 years); Richard Lucas, Jr. Buyer (3 years); Theresa Morris, Jr. Buyer (2 years); Peter Denz, Jr. Buyer (6 months).

Regarding purchasing policies, any purchase that is more than $10,000 must go out for 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, $7,000; managers and directors, $9,000.

You pull a listing of vendors who have been paid more than $100,000 for the years, 2013, 2014, and 2015, and find the following:

Vendors with more than $100,000 of sales to Stevens Manufacturing Co.:

	2013			2014			2015			Total	% of Total
Backlast	47,844	12.09%		52,468	5.90%		-	0.00%		100,312	3.59%
MJ Equipment	30,402	7.68%		44,447	4.99%		70,940	4.69%		145,789	5.22%
Spotlight Co.	38,089	9.62%		78,682	8.84%		45,872	3.04%		162,643	5.83%
Finest Distributors	61,166	15.46%		24,556	2.76%		78,229	5.18%		163,951	5.87%
Serial Inc.	37,090	9.37%		48,842	5.49%		119,068	7.88%		205,000	7.35%
Roberts Co.	41,189	10.41%		62,012	6.97%		111,845	7.40%		215,046	7.71%
Alex Systems	50,470	12.75%		52,198	5.86%		140,023	9.27%		242,691	8.70%
PG Distributors	67,194	16.98%		80,378	9.03%		113,723	7.53%		261,295	9.36%
CQ Supplier	20,321	5.13%		78,019	8.77%		173,853	11.51%		272,193	9.75%
Super W	-	0.00%		105,620	11.87%		247,172	16.36%		352,792	12.64%
Brics Inc	-	0.00%		260,785	29.30%		408,323	27.02%		669,108	23.98%
Total	393,765	100.00%		888,007	100.00%		1,509,048	100.00%		2,790,820	100.00%

Questions:

1. Is there anything suspicious in this summary? Explain your answer.

2. Do you have predication for fraud? Why or why not?

3. What are your next steps?