What steps would you take to conduct your investigation?
To undertake my interrogation, I would speak with individuals Chad Wits closely collaborates within the desk to see if they are cognizant of the incidences mentioned in the issue, such as his opulent way of living. After that, I’ll examine the CFO’s task, such as whether he has the power to ratify huge amounts of operating costs and payments, and then I’ll examine all of the cash and non-cash money transfers he ratified. I’ll also investigate the corporation’s internal control system to see if there is an adequate overview of all money transfers that go through him. I would also examine the corporation’s documents for anything out of the ordinary and to determine whether the corporate transactions are appropriate. I will make inquiries regarding any sums or amounts that the CFO misused or misaligned in his previous establishment or the past in the present corporation. Lastly, I will inquire about the controls that are conducted by the CFO.
What information would you need to develop a fraud theory?
According to Dr. Cressey, the ability for deception occurred when three crucial elements merged: opportunity, pressure, and rationalization (AGA – Fraud triangle, 2019). Each of these three aspects is required and interconnected for an employee or individual to perpetrate fraud. I will need the following data to establish a fraud concept: 1) If there is pressure to perpetrate deception – in this particular instance if his extravagant way of life is demonstrated to be genuine, then that will be the origin of pressure. To support that standard of living, he feels compelled to perpetrate a deception. 2) If there is a justification for the deception, such as if he performs long hours and puts in a lot of energy but is not well recompensed or praised other than his high wage. He may rationalize that because he is not well recognized for his attempts and is not well compensated, it is acceptable for him to perpetrate the deception after all 3) Lastly, determine whether there is an opportunity for him to commit deception, such as if there are poor internal systems in place or if he is the exclusive authorizer of all controls or the preparer of all diary records (Corporate Finance Institute, 2020). It would be very simple to perpetrate deception and mismanage cash, resulting in corporation losses.
Does the information you currently have provide sufficient predication for an investigation?
I would conclude that the details I presently have do not offer an adequate predication for an investigative process on its own, but it is conceivable for the investigative process and would require additional proof to gratify the fraud triangle. The CFO cannot be proclaimed since he is engaging in dishonest actions in the organization because:
- He may be affluent and prosperous from his forefathers.
- He may have other outlets of earnings, such as other relatives.
- Workers who disagree with Chad’s intelligence may be inclined to fire him from his position or company.
Nevertheless, we could not presume that the actions that the CFO is undertaking and disclosed by staff members are signs of fraud for a variety of rationales and that the lavish lifestyle outside of the company can originate from a variety of channels, such as a powerful family context, shareholders riches, or side enterprises, etc. As a result, the data available about the residence, vehicle, and partying does not provide an adequate predication for the investigative process.
References
AGA – Fraud triangle. (2019). AGA – AGA. https://www.agacgfm.org/Intergov/Fraud-Prevention/Fraud-Awareness-Mitigation/Fraud-Triangle.
Corporate Finance Institute. (2020, December 17). Fraud triangle – Opportunity, incentive, rationalization. https://corporatefinanceinstitute.com/resources/knowledge/accounting/fraud-triangle/
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