Q1. What data do you think might exist to show that a vendor is related to an employee? Which attributes would you focus on? Q2. How might you attempt to detect these connections between vendors and employees? Q3. If you were the employee committing fraud, what would you try to do with the data to evade detection? Q4. How many vendors have similar addresses to employees? Q5. What do you notice about the street vendor and employee street addresses? Q6. Are there any false positives (fuzzy matches that aren’t really matches)? Required: Submit all answers to the questions in a properly formatted Word document. Submit one Excel file with the tabs for each of the parts.

Potential fraud risks include (a) an employee initiating purchase orders (P.O.) for goods and services that are diverted for personal use and (b) an employee setting up a “phantom” vendor account, through which fraudulent invoices are processed and payments are made to the employee.

In these situations, fraud tests can detect if the same individual both enters and approves a P.O. or if an individual enters or approves multiple “split” P.O.’s, just under an authorized limit. Other evidence that can be discovered includes whether the delivery address for goods or services is the same as an employee’s, whether the goods being purchased are typically consumer items, or whether the vendor master file information (address, bank account, etc.) is the same as that of an employee.

Corporate Credit Cards

A common fraud risk is an employee using a corporate credit card for personal gain instead of legitimate corporate purchases or travel and entertainment expenses.

Fraud tests can detect purchasing cards (P-Cards) being used to acquire goods and services from vendors with suspect merchant codes (e.g., home supplies, personal entertainment, etc.) and corporate cards being used by employees on weekends or while the employee is on vacation. Additionally, tests can determine whether fuel is purchased in unusually large quantities, mileage charges are made in the same period as rental-car charges, and corporate-card transactions are approved by the card holder.

Payroll

Payroll fraud can consist of (a) “phantom” employees being set up on payroll systems; (b) excessive overtime payments; and (c) employees remaining on the payroll after death or termination.

Q2

Payroll

Payroll fraud can consist of (a) “phantom” employees being set up on payroll systems; (b) excessive overtime payments; and (c) employees remaining on the payroll after death or termination.

Q3

It is vital to an organization, large or small, to have a fraud prevention plan in place. The fraud cases studied in the ACFE 2014 Report revealed that the fraudulent activities studied lasted an average of 18 months before being detected. Imagine the type of loss your company could suffer with an employee committing fraud for a year and a half. Luckily, there are ways you can minimize fraud occurrences by implementing different procedures and controls.

Q4

Demystifying Valuation, Economic Damages + Forensic Accounting