Discussion

As a fraud examiner you need to be able to conduct an investigation.  Based on your readings and research, discuss how you would prepare an investigation for a case that involved hidden assets and unknown sources of income.   What specifically would you do in this case to prove that fraud occurred? 

 If I was a fraud examiner and needed to prepare an investigation for a case that involved hidden assets and unknown source of income, I would first review the financial statements that have been reported for the past five years. It's important to back track a couple years since you want to be able to see if their were patterns in regard to hidden assets and unknown sources of income that will allow for me to be able to get a start on following fraudulent activities. According to the Daily Herald (2012), "Keep a close eye out for unexpected charges on your financial statements." Therefore, if we suspect that the income of this company has increased way too much with actual proof then we can start to dig in further by double checking that their sales actually occurred or if they occurred through other forms but put in on the books to make their financial statements look stronger than they actually are. 

     Interviews are very important when conducting a fraudulent case like this since you want to be able to gather information from other employees that might be able to tell you about assets that aren't recorded because usually those assets are providing extra unknown sources of income. Another useful tactic is to be able to review the procedures that are put in place when it comes to purchasing or leasing assets since you want to be able to see if their are certain employees that can purchase assets without having to get approval from higher-ups. Andie Shawyer states (2007), "In order to generate an accurate and complete account of an event from a suspect, witness or victim, there are some practices which need to be avoided, such as the use of leading and misleading questions, complex questions containing more than one part." Therefore, these techniques are to be used during interviews to ensure that the information you're getting is legit and that you're following false clues that can waste your time which will make it easier to piece the clues together. 

     One procedure that will allow for me to rove that fraud occurred in this case would be actually account for each asset that the company has recorded in their books by matching them with physically to make sure that they actually exist with a proof of receipt to the purchase or lease of that asset. Reviewing the calculations of income done by the accountant will be important since if they were selling a product or a service, then their needs to be invoices that they provided their clients to make sure those transactions actually occurred. Ifeoma Udeh states (2013), "State the responsibility of management for establishing and maintaining an adequate internal control structure and procedures for financial reporting." Therefore, following the internal controls that are put in place to calculate the sources of income is key since you want to be able to ensure the way it's been done is actually one that works with their corresponding industry.