An Apple Computer manager, Paul Shin Devine, was sentenced to one year in prison and required to pay restitution of $4.2 million for receiving $2.4 million in kickbacks from Asian suppliers of iPhone and iPod accessories. The manager transmitted confidential information to the suppliers, which allowed them to negotiate favourable contracts with Apple.

The contact within the supplier, who was related to Devine by marriage, was charged in Singapore for "corruptly giving gratifications" to Devine. Apple found cached files on Devine's laptop related to emails. According to the court documents, he and his contact kept a detailed spreadsheet of their payments, and that spreadsheet was among the files found in the email cache.

The kickback scheme involved a chain of US and foreign bank accounts, as well as a front company to receive payments. The manager reportedly opened bank accounts in several countries in Asia to receive the kickbacks, and also received payments directly when travelling to Asia. The payments were referred to by code words such as "sample" to avoid detection by co-workers.

APPLYING YOUR PROFESSIONAL JUDGMENT

What types of procedures could an auditor perform to detect kickbacks?