Tom is a senior-level project manager at a small construction management company. The company is comprised of less than 20 individuals and has brought in revenue of over $5 million each year for the past five years. Due to the close working relationships of all coworkers, many of the day-to-day responsibilities are shared and there seems to be a lack of segregation of duties. This is especially true on the upper-management level. Tom is currently the acting CFO and works with the accountants in the preparation of financial statements.

Two other senior-level coworkers have noticed a change in Toms lifestyle and have become concerned regarding the source of his finances. He shows up to work in expensive vehicles, brags about his lavish weekend trips, and his choice in work attire has certainly upgraded over the past year. His coworkers are concerned because net profit is down and the firm keeps committing to large supply contracts with the same vendor. When confronted in a meeting, Tom is argumentative and dismissive, which are characteristics not seen from the Tom his coworkers have grown to respect.

The firm hires you to conduct an investigation into this. Below is a general outline of Toms spending for the year.

• In Excel, use the data below to create a Form 4822 similar to the one in Figure 6.2 of your textbook to determine Toms living expenses.
• Analyze the data and form an opinion on Toms spending.
• Is there enough evidence to determine that a fraud may be taking place?
• What areas within the company can you look at to determine whether fraud has occurred?

Total Yearly Gross Income: $130,000.00

Groceries and outside meals: $18,000

Clothing: $15,000

Laundry dry cleaning: $500

Education: $750 (student loans)

Recreation, entertainment, vacations: $25,000

Subscriptions: $750

Gifts and allowances: $6,000

Life and accident insurance: $1,800

Federal taxes: $30,000

Rent or mortgage: $3,500/month

Utilities: $3,750

Domestic help: $0

Home insurance: $1,500

Repairs and improvements: $5,000

Child care: $0

Gasoline, oil, grease, wash: $1,500

Tires, batteries, repairs, tags: $2,000

Insurance: $3,000

Auto payments (including interest): $0

Lease of auto: $18,000

Other personal assets: $10,000

All medical expenses paid by employers generous health plan.

Your well-written paper must be 3-4 pages, in addition to title and reference pages. One page must be the Form 4822.

Please assist me in solving this question and explain the possible fraud.

Thank you!