Cardinal Wholesalers INC. A Fraud examination/ Auditing Case simulation

Cardinal Wholesalers INC. A Fraud examination/ Auditing Case simulation

Professional memo to Cardinal Wholesalers

To: Cardinal Wholesaler

From: Audit inspection company

Date: 2-2-2013

Subject: Fraud in vendor's payment

Thank you for trusting in our capabilities and providing us the opportunity to work with one of the best company of the country and with such experienced employees. As per your assigned task, our team has watchfully analyzed the financial reports of the company and has identified high percentage of fraud under vendor payment section of the company. During the course of our investigation, we have come across certain evidence that we like to share with you mainly to aware you with process of the fraud and the amount of loss that company has suffered because of these fraud Planning of this fraud was created by the employee that you recently fired because he was using company network for watching inappropriate content during the office hours. In order to meet his daily expenses employee was searching for new jobs but he was also aware of the fact that finding of the new job will take time, and time was short because month was ending and he desperately needs to arrange money to pay of his loans, children fees, and others. his frustration were getting on him, and in this he got an idea of earning extra income by making a fraud in the company and for this he convinced another employee of the company that was working under him when he was fired

Since he knows about the company vendors list he decided to create a dummy vendor and with the help of his partner, he will transfer the invoice amount in the account of dummy vendor. He used the quantity of vendors for his advantage, created a dummy vendor with the name of Shell Inc, and transferred the invoice of Tri-State trucking by the name of Shell Inc. Within a year, these two were able to make a fraud of $ 1,758,500 and according to their plan; income was equally distributed among them

Our team was able to discover a wide range of information about these frauds after we came across the invoices of Tri-State trucking company, and it was observed that this vendor was not being paid for the services it provided to the company. To confirm our suspicion we contacted the management of Tri-State trucking company and he confirmed that despite of various reminders we have not received any payment from your side, and they were planning to make a surprise visit at your organization.

In addition to this, during the course of our investigation we also came across fraud check that was submitted on the name of your company to dummy vendor. After reviewing the check process it was clear that he was literally a mastermind as he used all of his experience of working at your company to his full advantage, this is because making exactly same sign, and arranging ...