Case (2): Study and analyze a tax fraud and manipulation incident, then discuss the following theses

Case:

"Noor Technology" Company, a medium-sized company working in the field of software development and digital technology. The company was established 10 years ago and has achieved remarkable growth in the past five years. The company's financial manager, Mr. Sami, is responsible for all financial operations and preparing tax reports.

The company achieves annual revenues ranging from 20 to 30 million riyals. It has many international and local clients and most transactions are carried out through long-term contracts. Financial and tax reports are prepared internally without relying on external auditing companies.

Fraud Incident:

The Zakat, Tax and Customs Authority discovered that "Noor Technology" Company had submitted tax reports containing inaccurate information over the past three years.

The company was found to be hiding part of its revenues by registering large international revenues in the accounts of shell companies registered in foreign tax authorities. In addition, Mr. Sami inflated some of the company's operating expenses, such as travel and accommodation expenses, to evade paying the due taxes.

After auditing and investigation, it was found that Mr. Sami had received large financial rewards based on reducing the company's tax liabilities, indicating his complicity in the fraud.

Actions taken:

- Large fines were imposed on the company in addition to late tax dues

- The company's reputation was severely damaged, and a criminal investigation was opened against Mr. Sami and some members of the senior management.

Answer the following questions:

Question 1: What type of fraud is involved in the case?

Question 2: How can tax fraud affect the company's reputation and its relationship with regulators and customers? Discuss the social and economic impact of tax fraud on society in general?

Question 3: How could the company have prevented this tax fraud by strengthening internal control systems and adopting effective external audit practices? What preventive measures should the company have taken?

Question 4: What are the factors that lead to the spread of tax fraud? Discuss the role of corporate culture and preventive measures in reducing this phenomenon?

Question 5: What are the legal and ethical responsibilities of the CFO and senior management in the company in this case? How can internal organizational policies contribute to enhancing ethical and legal compliance in preparing tax reports?

Question Six: What are the benefits as a trainee from this situation