Question

The Squeaky Electrical Company store serves building con-tractors in all parts of Central Illinois. The company has one bookkeeper, Ester Ladrona, who is in charge of general bookkeeping, incoming payments on accounts from customers, payments to vendors, and also bank deposits. Tom Wilson, the company’s owner knows that Ester’s job functions involve a lack of a segregation of duties, but because of family politics in the family- run business, he has been forced to trust her. Over the previous 12 months business has steadily grown. Tom has a really good feel for the business after having run it for over 20 years, and so he’s always in close touch with the local economy and sales activity. The problem is that despite his certainty that sales have been steadily improving, his sales reports from the book-keeper has been showing steadily declines, to the tune of almost $ 10,000 per month. Monthly sales a year before were about $ 700,000 but have dropped below $ 600,000. Tom is certain that Ester is somehow embezzling funds. So he contacts Liza Matadora, an independent forensic accountant who specializes in fraud investigation.

Required
a. Where should Liza begin her investigation? What might be a good initial fraud theory?
b. How should Liza go about gathering evidence?



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  • CreatedFebruary 26, 2015
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