You are an internal auditor at Dunder Company. An employee of Dunder has phoned in an anonymous tip that a fellow worker, Jane, might be embezzling money.
Jane has been a trusted employee of the company for 13 years; she quickly moved through the ranks of the company because of her exemplary record, and she is now vice president in charge of treasury. Your internal audit team has conducted thorough audits of her department for years and found its control environment to be exceptional. In addition, she is a good friend of the CEO and CFO. They have tremendous confidence in her abilities and honesty, and she is being groomed to succeed the current CFO when he retires.
The person making the anonymous tip claims to have noticed large fluctuations in certain financial statement accounts. Accompanying these fluctuations are unexplainable debits and credits that were all entered by Jane. The person also alleges that Jane's behavior has been erratic. She is usually kind and patient, but recently, she has flown off the handle for no explainable reason.
She insists on balancing certain accounts herself because she claims that they are too critical to trust with anyone else. Finally, the informant believes that Jane's lifestyle as a single mother is well above what her salary can support.
Investigating allegations against such a trusted person in the company will cause considerable disruption.
If you investigate, you will have to proceed very carefully, especially since you have only the word of one employee who could have ulterior motives.
1. Describe the steps you would take to investigate this suspected embezzlement.
2. As a first step in your investigation, would you interview Jane about the problem? Why or why not?
3. How would you conduct Jane's admission-seeking interview in order to be most effective?