Question

Write a 3-page paper based on your the Exotic Embezzlement case addressing the following: Use the readings and the fraud examination checklist to address the following questions:

1.      What sections of the fraud examination checklist were most helpful to the investigation and why? Please be specific in the way the techniques you used based on the checklist will contribute to the overall investigation.

2.      Identify the specific direct & circumstantial evidence used to support a prosecution of this case.  

3.      Identify the anomalies and red flags of fraud present at the business

4.      Could this fraud have been prevented or deterred?

Answer 1

1. Fraud triangle comprise of perceived opportunity, pressure and rationalization

Pine had the opportunity to embezzle as he was sole responsible for payroll accounting was trusted and had control over bank accounts. Also he had the pressure of supporting his three kids and high credit cards balances, Rationalized the situation in which he could create fake accounts

2. According to Steve Albrecht’s scale-High personal debt (personal characteristic), Too much trust (risk factor), Fraud opportunity when pressure is high, opportunity is more adn personal integrity is low.

3.According to Hollinger and Clark there are five interrelated sets - first being the economic pressure, second the young ones are more likely to theft, third every employer can be tempted to steal, fourth being join dissatisfaction and fifth being theft occurs because of shared formal and informal organization structure. They believe thefts are most likely to occur where employees are have more access, there is less control.

4. They conducted internal audit when the accountant had trouble reconciling the accounts.