Case One During the last eight years John had consistently worked between 49 and 50 hours a
Question:
Case One During the last eight years John had consistently worked between 49 and 50 hours a week at his medical practice. Nevertheless, within two months of receiving a complaint for divorce from his wife Anne, and despite experiencing no change in his physical condition or ability to work, he had cut his work time down to only 30 hours a week, citing the change as a lifestyle choice, and had also stopped accepting new patients even though he had the capacity and ability to treat them. In the meantime, while gathering documents to provide to his divorce attorney, John noticed that one of his bank statements reflected frequent and sizeable cash withdrawals from a community account. He thought this was strange since almost all of the community’s living expenses were paid using bank transfers, checks, and credit cards. He also noticed that there were quite a few checks issued in large, round amounts but since his bank didn’t provide cancelled check copies, and neither he nor Anne maintained a check register, he didn’t know who the payee had been on those checks.
Case Two Emma and Jake had been married for 12 years. Jake had worked his way up the corporate ladder in a large company while Emma worked part time managing a local clothing store. The couple lived a very frugal lifestyle even though Jake’s salary significantly increased throughout the years. Eight years into their marriage, Jake took on a new position in his company that required him to travel more frequently and, as a result, Emma and Jake spent considerable time apart. While Emma was somewhat familiar with the community’s financial situation, within the last year she had started receiving phone calls regarding bank accounts that were not familiar to her, which she found unsettling but not too worrisome since Jake managed the administration of most of their finances. While most community expenses were paid by Jake because of his larger income, Emma also supported the community with her salary as well. When Emma took a closer look at the couple’s financial accounts, she realized that Jake had transferred money from their retirement account to newly opened accounts without her knowledge. She also noticed large and suspicious banking transactions in Choma even though the couple lived and worked in Kitwe. Emma decided to dig further into the account activity and discovered that the nature of the transactions seemed to support a lifestyle much more extravagant than the one they had been living together.
Case Three During an investment appraisal exercise, the senior management team of a national logistics company became aware that the management accounts of a subsidiary were incorrect, but was unsure if this was due to fraud or error. An HR expert’s investigation revealed that the accountant responsible for preparing the accounts was not suitably qualified or experienced to fulfil the role and the HR and due diligence processes in place were inadequate. No evidence of checks for references, qualifications or ‘Right to Work’ had been performed.
Required
1. In each of the cases above clearly state what will be your role as a forensic accountant and the end results you will be aiming to achieve, state the type of crime or irregularity in each of the above cases.
2. Explain how you will go about investigating each of the above cases as a forensic accountant.
3. State the charges that might be imposed on the persons involved in the scams, if any in each of the above cases if found wanting
Managerial Accounting An Introduction to Concepts Methods and Uses
ISBN: 978-0324639766
10th Edition
Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil