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You have been called in to investigate a suspected case of pilferage at CNH Manufacturing Company. In reviewing departmental costs for the previous year, the president and owner of the firm, Devika...

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You have been called in to investigate a suspected case of pilferage at CNH Manufacturing Company. In reviewing departmental costs for the previous year, the president and owner of the firm, Devika Madison, noticed a 36% increase in office supplies among all departments of the organization. However, the company has only experienced a 4% growth rate.
In an attempt to determine what was causing this large increase in office supply usage, the president went into the company records and found a number of invoices for each department that showed some unusual purchases (i.e., small electronics not typically used in the organization, purchases of a new printer every 2 or 3 months). The president sat down with each departmental manager and in every case the manager was able to identify the valid office supply invoices (i.e., containing items they authorized, received, and used) and the ones they had never seen before (i.e., containing items never authorized and never received). In each case, the “bogus” purchase invoices were approved for payment by the company purchase manager, Jack Simpson. Additionally, the documentation trail also indicated Jack personally signed for each of these shipments.
Additional information on your suspect, Jack Simpson, is as follows:

  • 36 years old, divorced 10 months ago.
  • 10 years with the company. Originally started as a factory line worker and has worked his way up to the purchase manager position.
  • Recently started wearing “expensive looking” clothes and now drives a new silver BMW convertible.
  • Recently started smoking. Some employees have also smelled alcohol on his breath first thing in the morning or right after lunch.
  • Likes to socialize. On more than one occasion has picked up the entire bar tab for the Friday night employee “happy hour” after work.
  • His last three vacations have been to Las Vegas. Many of the other employees in the office noticed he is not usually in a good mood right after he returns from vacation.

Potential Interviewees:
Devika Madison: President
Catherine Lavelle: Operations Manager
Derek Huseman: Chief Financial Officer
Departmental Managers:
  • Rob Kutrain: Cutting
  • Sandra Norris: Assembly
  • Amid Birdsong: Finishing
  • Dan Grady: Packaging

Departmental Purchasing Representatives:
  • Lance Furlough: Cutting
  • Brad Vaish: Assembly
  • Cindy Sheets: Finishing
  • Habib Mohammad: Packaging

Purchasing Department:
  • Jack Simpson: Purchasing Manager
  • Sarah Correll: Assistant Purchasing Manager
  • Lana Livingston: Purchasing Clerk

Vendor sales representatives (for top five vendors to CNH):
  • Emily Zircoff, DHP Wholesale Materials, Inc.
  • Leroy Madison, Great Woods Office Supply
  • Tiffany North, Cameo Chemicals Company
  • Vahe Framski, Plumm Wholesalers, Inc.
  • Macy Kirk, G&G Supply, Inc.
Answered Same Day Dec 26, 2021

Solution

Robert answered on Dec 26 2021
117 Votes
An Assignment on: Initial Fraud Case Analysis
Analysis of a fraud case
Ans (1)
There are three sources of information in this case. These are:
1. Company records
2. Purchase records, and
3. Bogus invoices.
Ans 2: (a)
The business process as provided by the case as follows
Step 1: Purchase request is made by respective departmental purchasing representatives.
Step 2: The request made in step 1 is passed on the department manager.
Step 3: Department manager would than verify & approve the request and send it to the purchase
department for further process.
Step 4: The purchasing department manager would sign & approve the request and send the
purchase request to various vendors, thereby call for quotations.
Step 5: Study the quotations & make the final purchase at best price i.e. the lowest price.
The above process was followed by the company but there some lacking in physical verification
& checking to be conducted by the managers. In addition the purchase invoices were not fully
studied and then approved for final purchase.
Ans 2(b)

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