QUESTION $6$

$22$ marks

John Dlamini tasked the senior internal auditors to perform a process audit on the printing department of Extra Ltd$.$

The following information was obtained:

Joy Long was recently appointed as the new manager in the printing department. Joy is related to the chief executive officer $($CEO$).$ Because the CEO trusts her fully, he gave her full access to all the systems within Extra Ltd$.$

Study materials are forwarded to the printing department as pdf documents and are password protected. Joy recently requested that all passwords on documents be removed before sending the documents to her.

The policies and procedure manual were reviewed, and it was noted that the policies and procedures were outdated.

Joy explained to the senior internal auditor that because she is family of the CEO, she can do whatever she wants. She also believes that the company policies and procedures are not applicable to her.

Three employees in the printing department resigned since the appointment of Joy Long. The employees felt threatened by her and did not agree with her management style as Joy believed in manging through fear, shouting and fighting.

After discussions with an employee in the printing department, you obtained the following additional information:

$8$

AUI$2601/2/2024$

$$ The employee noticed that Joy sends out the pdf documents to customers from her personal email address, which is against company policy.

$$ Certain documents forwarded to Joy were never received by the printing department. When the documents were requested from Joy she explained that she is too busy and will forward the documents when she has time.

$$ The employee suspects that Joy is selling the electronic pdf copies to some of the students at a lower price than the printed copy.

$$ Everyone in the office suspects that Joy has a gambling problem and needs the extra cash to fund her gambling addiction.

REQUIRED

$6\mathrm{.}1$ With reference to the information given in the scenario, list the three common characteristics of fraud and provide an example from the scenario for each characteristic.

$6\mathrm{.}2$ Identify six $(6)$ warning signals that can be observed from the information in the question which could indicate the possible existence of fraud.

MARKS

$6\mathrm{.}3$ Describe the internal auditor's responsibilities during fraud investigations.

PART B

A person commits fraud knowing that it could result in some unauthorised benefit to him$/$her$,$ to the organisation, or to another person. Fraud can be perpetrated by persons either outside or inside the organisation.

REQUIRED

$6\mathrm{.}4$ There are common fraud schemes. Match column A $($fraud scheme$)$ with its corresponding definition in column B$.$ Your answers should be given in the following format: e$.$g$.5\mathrm{.}5\mathrm{.}1$ Skimming $-$ j

$\backslash$table$[[$No$,\backslash$table$[[$Column A $-$ Fraud$],[$Scheme$]],$Column B $-$ Definition$],[6\mathrm{.}4\mathrm{.}1,$Bribery,$\backslash$table$[[$a$.$ During the current year under$],[$review it was found that the assets$],[$of Extra Ltd were overstated and$],[$the liabilities understated.$]]],[6\mathrm{.}4\mathrm{.}2,$Skimming,$\backslash$table$[[$b$.$ During the process audit of the$],[$printing department of Extra Ltd it$],[$was noted that Joy receives$],[$kickbacks from the agents to ensure$]]]]$

MARKS

$(5)$

$9$

$\backslash$table$[[,,\backslash$table$[[$that their study material is printed$],[$before that of the other agents.$]]],[6\mathrm{.}4\mathrm{.}3,$Financial statement fraud,$\backslash$table$[[$c$.$ One of the employees in the$],[$payroll department created a ghost$],[$employee and approved a monthly$],[$salary to be paid to the ghost$],[$employee$.]]],[6\mathrm{.}4\mathrm{.}4,\backslash$table$[[$Information$],[$misrepresentation$]],\backslash$table$[[$d$.$ An employee in the finance$],[$department did not bank the cash$],[$daily as is required by the company$],[$policy$.$ Certain days she took the$]]]]$

PART B

A person commits fraud knowing that it could result in some unauthorised benefit to him$/$her$,$ to the organisation, or to another person. Fraud can be perpetrated by persons either outside or inside the organisation.

REQUIRED

$6\mathrm{.}4$ There are common fraud schemes. Match column A $($fraud scheme$)$ with its corresponding definition in column B$.$ Your answers should be given in the following format: e$.$g$.5\mathrm{.}5\mathrm{.}1$ Skimming $-$ j

$\backslash$table$[[$No$,\backslash$table$[[$Column A $-$ Fraud$],[$Scheme$]],$Column B $-$ Definition$],[6\mathrm{.}4\mathrm{.}1,$Bribery,$\backslash$table$[[$a$.$ During the current year under$],[$review it was found that the assets$],[$of Extra Ltd were overstated and$],[$the liabilities understated.$]]],[6\mathrm{.}4\mathrm{.}2,$Skimming,$\backslash$table$[[$b$.$ During the process audit of the$],[$printing department of Extra Ltd it$],[$was noted that Joy receives$],[$kickbacks from the agents to ensure$]]]]$

MARKS

$(5)$

$9$

$\backslash$table$[[,,\backslash$table$[[$that their study material is printed$],[$before that of the other agents.$]]],[6\mathrm{.}4\mathrm{.}3,$Financial statement fraud,$\backslash$table$[[$c$.$ One of the employees in the$],[$payroll department created a ghost$],[$employee and approved a monthly$],[$salary to be paid to the ghost$],[$employee$.]]],[6\mathrm{.}4\mathrm{.}4,\backslash$table$[[$Information$],[$misrepresentation$]],\backslash$table$[[$d$.$ An employee in the finance$],[$department did not ba