The Branch Manager, ABC Bank, Al Khuwair Branch Date 12/10/2019 Dear Sir, Suspicious transaction in my Current Account No 1-0116-88-12576 This is to bring to your notice that the above current account held by me at your branch has been debited with an amount of OWR 10.000 as a cheque payment (cheque number 4213673) on 10 October 2014. I have not issued any such cheque amounting to OMR 10.000. The cheque leaf number 4213673 has been used by me to pay an amount of OMR 500 and has not yet been presented for clearance. Therefore, I kindly request you to investigate this matter immediately and rectify the error. Thanks & Regards Ahmed After receipt of the aforesaid complaint, branch manager immediately checked the relevant record and found that instant cheque debited to the account is with the forged signatory and does not match with the client's signature held on records. Branch Manager immediately reported the matter to its Head office for necessary action and guidance. Head Office immediately swung into action and marked the said fraud to its internal audit department for a thorough investigation and to report within a week period During the audit the internal auditor found out that the cheque with the forged signatory was submitted as a non-crossed cash cheque and has been paid over the counter by one of the new banking assistants. The banking assistant has failed to scrutinize the detail of withdrawer at the backside of the cheque leaf. Further the officer in charge for the counter staff had gone for lunch during the time of withdrawal and the authorization password of the officer has been used by another banking assistant to approve the payment. The daily audit on the transaction vouchers is done by the assistant branch manager on the previous day morning. When the internal auditor question about how he had not noticed the discrepancy the answer received from the assistant branch manager was shocking. The assistant branch manager informed that he will only scrutinize the payment and deposit slips with the transaction report during the daily audit. Requirement Assume you are the internal auditor appointed to investigate this issue; you are required to prepare a report to head of Internal Audit of ABC bank Task 01 Analyzing the internal control weaknesses behind the occurrence of above operations risk at the branch. Task 02 Explaining to management the major causes of fraud and recommending the major controls that should be in place to reduce fraud. Task 03 Advising the management to implement the fraud risk management strategy by discussing the elements of risk management strategy