Tasks / Questions 1) As an internal auditor, identify key issues and threats faced by the firm? (5 marks) 2) Do you feel there is a fraud going on in the case firm? If yes, Identify the main person/(s) responsible for the fraud. (10 marks) 3) Which type of lack of internal control measure/(s) (preventive, detective or corrective) are applicable in this case. Use specific answer. (10 marks) 4) Which specific fraud triangle aspect is pointed out by John? Pinpoint any other fraud triangle aspects applicable for the case firm. (10 marks) 5) You want to conduct an IT audit before giving your recommendations. Which technique will be used by you and write proper sequence of events while conducting the audit? You can use some diagrams or pictures to reflect your findings. (5 marks) 6) Do you suggest any legal actions, penalties or fines against the employees found guilty (in question 2)? If yes, pinpoint those actions. Justify why these actions should be implemented. (5 marks) Beal Hypermarket Case Mr. Zen is the sole owner and manager of Beal Hypermarket. You are the internal auditor of Beal Hypermarket. Mr. Sam is working as a supervisor in Beal Hypermarket. Beal Hypermarket sells consumer goods to individual customers and has branches spread across the country. There are nearly ten cashiers operating different cash machines of the hypermarket. Recently Ms. Mary was recruited as one of the cashiers in the hypermarket. Her references and declaration were not checked properly. Mary is sister of Sam. Although Mary informed this in her employee declaration form but was overlooked by the HR team. The management was not aware about the relationship between Sam and Mary. Sam and Mary started taking money from receipts and were not recording the revenue on the books. This was possible as Sam was supervisor and had the admin password for controlling cancelled sales. Regular act of Sam and Mary made a major gap between inventory counts and cash registers. Sam is the favourite employee of Zen as he received employee of the year award consequently for the past three years. Sam has the habit of giving expensive gifts to Zen in his birthdays and anniversaries. Another employee Nancy is not liked by anyone in the organization because she doesn't talk to anyone at the workplace. She is very reserve at the workplace. Your brother is working in a bank and Zen's wife is the branch manager of that bank. Recent meeting of internal audit department, purchase department and the management located few observations: a) Purchase department is controlled by only one employee, je Mr. Ven. Ven is responsible for ordering the inventory, cash disbursements, keeping inventory counts and recording them at the end of the week. He is very honest and had no reported case of unethical practices since his tenure of more than 10 years. The internal auditor is arguing against the will of management for having full trust and confidence on one person in such a critical post. b) Mr. John is the security director of the hypermarket and has all the admin and security passwords. He has joined the firm last year and had excellent employment history with other firms. The management of the firm had many arguments and disagreements with Page 3 of 4 John since he joined the firm. Management has recommended the internal auditor of the firm to pursue an IT audit and accept that John is guilty. However, the records show no trace of IT fraud in this type of scenario