Requirements:

1. Please see the attached case study. There are 4 sections of the study and questions for each section. Please make sure to provide detailed responses for each question and use the textbook, videos, and readings to assist you with your answers.

2. Please answer those questions for each section at least 4 pages in a new word document.

3. Please list the work citation and the work citation should be on the fifth/sixth page.

4. Font: Times New Romance 12, double space.

Attachment:- Microcomputer-Fraud-Case-Study-.rar

Answer the following questions from the given Case Study.
The Case topic is:
"Fraud Detection and Investigation: Microcomputer Consulting Services"

ABSTRACT: This nonfictional case of inventory fraud in a university setting exposes students to fraud detection and investigation. These skills are becoming increasingly important for auditors, as evidenced by the alarming rate of fraud. The accounting profession has acknowledged the seriousness of this issue with the issuance of SAS No. 99, Consideration of Fraud in a Financial Statement Audit, developed in part to improve detection of frauds by auditors.

The case raises many of the fraud-related issues faced by accountants: recognizing red flags indicative of fraud; the importance of a good system of internal controls; the profile of the typical fraud perpetrator; the fine line auditors walk when investigating a fraud; the need to develop an audit team with the appropriate level of expertise which may require members from a variety of disciplines (e.g., investigative, legal and forensic areas); and the difficulty of obtaining sufficient evidence to prosecute and convict perpetrators.

Part 1: The Initial Audit
Required:

1) What additional work could the Internal Audit Department perform prior to issuing the audit report?

2) What recommendations to the campus computing services director and the university administration would be appropriate for the MCS?

Part 2: The Plot Thickens

Required:

1) At what point should the Internal Audit Department suspect a fraud? What actions should be considered to ensure that professional auditing standards are met? Whom does the Internal Audit Department need to inform?

2) What red flags might have initially tipped off the internal auditors that this employee might be involved in a fraud?

3) In what ways does the MCS manager fit the profile of the typical fraud perpetrator?

Part 3: The Fraud Audit
Required:

1) What should have been the key points of the audit/fraud investigation report? What supportable audit conclusions could be drawn?

2) What additional steps might have been taken by the Internal Audit Department or Fraud Examiner to uncover evidence regarding the existence and the extent of the suspected fraud?

Part 4: Closure
Required:

1) Do you think the university should have brought criminal charges against the MCS manager? Why or why not? Besides the reason of insufficient evidence, why might a company be unwilling to prosecute a suspected fraud perpetrator?

2) What other work remains to be done by the internal auditors to bring this case to a close?

3) A confession by the MCS manager would have made this an "open-and-shut" case. Should the internal auditors have tried harder to obtain a confession, perhaps by relying more upon the university's legal counsel and law enforcement officers in the investigation?

4) Fraud researchers have coined the phrase "fraud triangle" to describe why people commit fraud. The three elements that make up the fraud triangle are pressure, perceived opportunity and rationalization; all three must be present for a fraud to occur. The pressure provides the motive to commit the fraud, and usually involves financial need. The opportunity typically presents itself in the form of weak or nonexistent internal controls. Fraud perpetrators must believe that they will be able to commit the fraud and remain undetected. Finally, fraud perpetrators must be able to rationalize or justify their fraudulent actions as morally acceptable.

One of the most common rationalizations is that the fraud perpetrator will pay back the stolen funds, so that the perpetrator is only "borrowing" the money for the moment. Apply the fraud triangle to this case and describe the pressure, perceived opportunity and rationalization that were present and that allowed the MCS manager to commit his fraud.

Answer rating: 100% (QA)

Part 1 The Initial Audit The Internal Audit Department could perform additional work to confirm that the university s inventory system is effective in detecting and preventing inventory fraud This wor... View the full answer