Six months ago, Bulan Bintang Berhad (Bulan-Bintang) closed one of its five factories due to deteriorating...

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Six months ago, Bulan Bintang Berhad (Bulan-Bintang) closed one of its five factories due to deteriorating market conditions. Bulan Bintang had announced that the company no longer employs all the factory staff on the closing date. While monitoring the monthly management accounts, Mr. Adam, as the company's internal auditor, conducted an analytical procedure on salary expenditure and found that the total monthly salary expenditure had decreased by 3% in the months after the factory closure. However, this percentage was lower than the expected reduction, given that 25% of the company's total staff had been declared unemployed. Preliminary investigations by Mr. Adam found that many staff who had been declared unemployed remained on payroll records, and payroll payments for these individuals were still made monthly. All salary payments are also credited into the same bank account. As soon as Mr. Adam realized that there was a possibility of fraud, he informed the matter to the managing director to immediately stop the payment, which should not have taken place. Bulan Bintang has contacted the audit firm Matahari & Co. and intends to investigate the above issue. Bulan Bintang Berhad further informed Matahari & Co that their senior accountant had been absent from work and could not be traced since the investigation began. Bulan Bintang suspects that the senior accountant was likely involved in the fraud. Bulan Bintang also asked whether Matahari & Co. could conduct the forensic investigations Required: a) Describe the three objectives of the forensic audit. (3 marks) b) State THREE (3) procedures that you need to implement to collect evidence of this investigation. (3 marks) d) Assuming that Bulan Bintang is your audit client, state the justification for accepting or rejecting the request for forensic investigation services. Provide arguments supporting your acceptance of such investigative services or vice versa. (4 marks) Six months ago, Bulan Bintang Berhad (Bulan-Bintang) closed one of its five factories due to deteriorating market conditions. Bulan Bintang had announced that the company no longer employs all the factory staff on the closing date. While monitoring the monthly management accounts, Mr. Adam, as the company's internal auditor, conducted an analytical procedure on salary expenditure and found that the total monthly salary expenditure had decreased by 3% in the months after the factory closure. However, this percentage was lower than the expected reduction, given that 25% of the company's total staff had been declared unemployed. Preliminary investigations by Mr. Adam found that many staff who had been declared unemployed remained on payroll records, and payroll payments for these individuals were still made monthly. All salary payments are also credited into the same bank account. As soon as Mr. Adam realized that there was a possibility of fraud, he informed the matter to the managing director to immediately stop the payment, which should not have taken place. Bulan Bintang has contacted the audit firm Matahari & Co. and intends to investigate the above issue. Bulan Bintang Berhad further informed Matahari & Co that their senior accountant had been absent from work and could not be traced since the investigation began. Bulan Bintang suspects that the senior accountant was likely involved in the fraud. Bulan Bintang also asked whether Matahari & Co. could conduct the forensic investigations Required: a) Describe the three objectives of the forensic audit. (3 marks) b) State THREE (3) procedures that you need to implement to collect evidence of this investigation. (3 marks) d) Assuming that Bulan Bintang is your audit client, state the justification for accepting or rejecting the request for forensic investigation services. Provide arguments supporting your acceptance of such investigative services or vice versa. (4 marks)

Answer rating: 100% (QA)

a Three Objectives of Forensic Audit 1 Identifying Fraud and Misconduct The primary objective is to uncover any fraudulent activities or misconduct wi... View the full answer