Question

You are an associate at ABC LLP, a forensic accounting firm. Your company is retained by the Law Firm that is representing a client. The client, the former CFO of the Public Company, is being investigated by the SEC and FBI for running a large accounting fraud scheme and funneling money to his own account after allegedly falsely invoicing sales during 2013 and 2014. The Auditing Firm, which was recently terminated, audited the Public Company and issued opinion letters in connection with the Public Company’s 2013 and 2014 annual reports. You are just getting up to speed on the case, but the ABC Partner asked for you to help analyze the issue in connection with the Law Firm.

1. Identify at least five questions you would want to ask the SEC in order to better understand the allegations. Describe your understanding of what the SEC can, or cannot, share about the source(s) of its information. Provide at least three examples of the types of information the SEC can request.

2. Assume that you received a large data file reflecting invoices and purchase orders identified by date. Assume that the CFO provided to you, through his/her attorney, a large data file concerning the CFO’s own monetary transactions, which are listed by date.

a. Generate a step-by-step guide concerning how you would go about analyzing this information. (In other words, explain how you would transition from raw data to an analysis through forensic accounting techniques).

b. More specifically, assume that you would analyze this information using Excel: identify the formulas and methods you would use to analyze the data.

Answer 1

1. 5 Questions that are needed to ask


1. What is the alleged accounting fraud that has been occurred?Who are the parties involved?
2. How the fraud has taken place and the impact of the same?
3.What is the impact of the same and who are the parties affcted by the same?
4.What is the seriousness of such fraud i.e the punishment of the same as per SEC?
5.What are remidical measures as per the SEC, that are needed to be taken in order to prevent such fraud in future