Question

As a trainer for a forensic accounting firm, you have been asked to establish a matrix to provide the firm’s investigation teams with a “symptom” list to aid them in their assessment of potentially fraudulent actions. As part of this, matrix you have included a list of possible red-flag search results, which could be indicators of specific fraudulent activity that is occurring. How do I do a matrix for this?

Answer 1

Red Flag:- Search has uncovered vendor invoices that have alterations on the purchase order documents.

Potential Activity: Goods are being purchased for personal use

Type of fraud: Employee are committing purchasing fraud.

The Red flag noted during the investigation:

a) Duplicate payments to the same vendor with no backup documentation.

B)Excessive number of adjustment entries.

C) price increases by one vendor of 30% of year over year.

D) No original contractor documents available.

E) missing inventory and equipment.