Stephanie Adkins is an accountant who is trained in forensic accounting. She is an experienced fraud investigator. She was recently hired by Lake Side Hotels, a closely-held corporation, to investigate a company manager who is suspected of taking kickbacks from vendors.

Stephanie gave Lake Side her standard engagement letter stating that the scope of the engagement would be limited to investigating only one suspect. It did not guarantee findings or results.

According to the provisions of Stephanie’s engagement, she was to communicate directly with Bernie James, the company’s controller, and Amanda Peterson, the outside attorney.

At the first meeting of this team, Bernie indicated that Lake Side had received four separate anonymous tips about possible kickbacks. All the tips indicated that Laurie Miller, an evening manager, was taking kickbacks from food vendors. One tip named a particular vendor, the Mid States Beef Source, a company that supplies meat to the hotel’s restaurants.

Stephanie asked if Bernie had any documentation that supports Laurie Miller’s possible involvement in kickbacks. Bernie had no documentation but hoped Stephanie could help them substantiate the information from the anonymous tips. He was concerned that kickbacks would hurt the hotel financially.

Amanda, the outside attorney, said that she had already talked to several hotel employees and was convinced that Laurie was guilty.

Kickback schemes can be difficult to uncover, so Stephanie wanted to proceed cautiously.

Bernie wanted to confront Laurie immediately. He was convinced she would confess if he told her that he had evidence against her.

Stephanie asked what evidence Bernie had. Bernie said, “Only the anonymous tips, but I know she will confess if we bluff.” It was against Stephanie’s professional principles to lie and she said so.

“Detectives do it all the time on cop shows,” Bernie said. Stephanie insisted she would need to run the investigation her way or she wouldn’t be able to undertake this engagement.

In relation to this scenario, write responses to the following:

What steps might Stephanie follow to proceed with her investigation?

What mistakes, if any, have already been made in the investigation?

Answer rating: 100% (QA)

The step below applies to administrative investigations by international development agencies that do not have the power to enforce the law to force evidence from third parties through subpeona or oth... View the full answer