Question

Rebeca Pérez is the Controller of the firm Pérez Martínez & Asociados. She has been evaluating inventory reports over the past few months and thinks that one or more employees have been stealing large amounts of inventory that was for sale. Quickly, Rebeca asked the staff that manages the information systems to look for data that would help her solve this situation, however, they indicated that, mysteriously, much of the inventory information had been lost and they had no explanation for it. Rebeca talked to the company's internal auditors to ask about the missing reports and they were not aware of the situation either.

Based on the above, answer the following questions in paragraph form (5 to 6 sentences each):

1. What should Rebecca do? Should she call the police or should she hire an outside forensic accountant?

2. How can a forensic accountant help you solve this case? Look for outside information to elaborate on your answer.

3. What things can the forensic accountant do that an internal auditor cannot do?

Answer 1

ANSWERS

1. IN THIS CASE IT IS ADVISABLE TO APPOINT AN OUTSIDE FORENSIC ACCOUNTANT. BECAUSE NO SUPPORTING DOCUMENTS FOR IDENTIFYING THE THEFT ARE AVAILABLE IN THE COMPANY AND INTERNAL AUDITORS OF THE COMPANY FAILED TO DETECT THE SAME. IT IS CLEAR THAT THE AUDITORS AND MANAGEMENT ARE DOING THEIR DUTIES IRRESPONSIBLY . IF SHE CALL THE POLICE , IT WILL AFFECT THE COMPANIES REPUTATION .ALSO ITS DIFFICULT FOR THE POLICE TO DETECT THE ISSUES PROPERLY. SO FORENSIC ACCOUNTANT IS THE BEST CHOICE

2. A FORENSIC ACCOUNTANT USE ACCOUNTING TECHNIQUES AND INVESTIGATIVE TECHNIQUES TO SOLVE THE PROBLEM.SO ELABORATE. IN THIS COMPANY THERE ARE A LOT OF EVIDENCE REQUIRED AS A PROOF TO JUSTIFY THE THEFT. SO MERE CHECKING OF FINANCIAL RECORDS WILL NOT PROVIDE SUFFICIENT DETAILS.

INVESTIGATIVE ACCOUNTANTS CHECK PUBLIC DOCUMENTS AVAILABLE, CONDUCT INTERVIEWS OF THE PEOPLE THEY FEEL NECESSARY TO GET INFORMATION OR EVIDENCE,SURVEILLANCE AND ANALYZE EVIDENCE THOROUGHLY FOR PROVING THE FRAUD.THEY ALSO GATHER INFORMATION FROM TRUSTWORTHY SOURCES AND COLLECT ALL THAT INFORMATION ABOUT THE COMPANY. THEY NEED TO PROVE HOW ,WHEN AND HOW MUCH WAS THE THEFT CONDUCTED. ALSO FIND THE PERSON RESPONSIBLE FOR THE FRAUD . IN THIS CASE THEY CAN EASILY IDENTIFY THE FRAUD BY CLOSE MONITORING THE ACTIVITIES OF THE SUSPECT . IF THEY IDENTIFIED THE FRAUDSTER ,THE MAGNITUDE OF THE FRAUD CAN EASILY BE IDENTIFIED. SO THE PROFESSIONAL QUALITY OF THE FORENSIC ACCOUNTANT WILL HELP TO FIND THE EVIDENCE EASILY FROM INSIDE THE COMPANY.

3. A FORENSIC ACCOUNTANT USE ACCOUNTING AND INVESTIGATION TECHNIQUES TO EVALUATE THE FRAUD AND MISSTATEMENTS IN FINANCIAL RECORD. BUT AN INTERNAL AUDITOR ONLY USE ACCOUNTING TECHNIQUES FOR AUDITING BOOKS OF ACCOUNTS. INTERNAL AUDITOR WILL NOT CONSIDER THE EXTERNAL FACTORS BUT THE FORENSIC ACCOUNTANT GIVE IMPORTANCE TO EXTERNAL MATTERS. ALSO THE METHODOLOGY AND APPROACH USED BY BOTH OF THEM ARE ENTIRELY DEFFER EACH OTHER. ALSO INTERNAL AUDITORS MAY SOMETIMES BIAS THEIR FINDINGS FOR THE BENEFIT OF THE COMPANY. BUT A PROFESSIONAL FORENSIC ACCOUNTANT WILL NOT DO SUCH A THING.

THANK YOU.