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Tallahassee Bean Counters: Fraud Investigation (TBC)
I think now you understand the TBC case and who is fraudulent guilty in this case. The Freddy Fix It is Fraud. Could you please only focus the investigation on the Freddy’s Fix Fraud this time? I have found that the fraud amount from Freddy is $46160 (please see the attachment of Freddy) Please use these numbers in your writing from this attachment (Freddy).Here is the writing format to follow on Freddy Fraud, and include all evidence and documentation needed to convince the jury of any suspect’s guilt including:» Who committed the fraud?» How was it committed?» How can you demonstrate intent?» What is the economic impact?» Demonstrate that the suspect benefited financially – follow the money!Keep in mind that you will focus just in Freddy part.Let me know if you need more documents to upload.To understand the family relationship between them :Parents: Jerry and Sarah Harris Roper. Niece to Phil Ackers as her mother is sister to Phil
Acker’s wife _Madelyn Harris Ackers_. Her uncle is Freddy Harris, brother of Phil’s wife.Freddy is related to Julie and Phil as Phil’s wife Madelyn is sister to Freddy.
Forensic and Investigative Accounting
Important Questions in Fraud Investigation
■ Who had the opportunity to commit fraudulent activity?
■ How and when was the fraud committed?
■ What was taken (how much money was lost)?
■ Where were the assets moved (how were the assets converted to the benefit of the perpetrator)?
■ Why was the activity intentional, rather than accidental, or the result of mistake or misunderstanding?
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Accounting anomalies often signal the presence of fraud.
Examples of accounting anomalies include:
■ Irregularities in source documents (e.g., missing documents, excessive voids or credits, common names or addresses of customers, increases in past due receivables, increased reconciling of items, etc.).
■ Faulty journal entries.
■ Inaccuracies in ledgers.
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Internal Control Weaknesses
Lack of segregation of duties
■ Lack of physical safeguards
■ Lack of independent checks
■ Lack of proper authorization
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Problem-Based Learning – Asking the
Questions to answer with respect to the potential or likely fraud circumstances in this case:
■ Who could have committed a fraud?
■ How could the fraud have been committed?
■ Evidence of intent (which can be shown by repeated instances of taking).
■ Economic impact
■ Evidence of conversion
Chapter 18 Forensic and Investigative Accounting 5
Tallahassee Bean Counters (TBC) Case Synopsis
■ You are CPAs hired to conduct a forensic investigation of a minor league baseball team, the Tallahassee Bean Counters (TBC). TBC has never been audited.
■ Franklin Kennedy (team owner) told employees the audit is required by the bank (which recently provided a mortgage loan for the new training facility)
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TBC Case Synopsis (cont.)
Kennedy privately tells your team of an anonymous note that leads him to believe someone in the company is committing fraud.
Envelope has a Tallahassee postmark and no return address.
Mr. Kennedy, I think there is something funny going on here at TBC. Numbers that do not add up, lots of whispers in
the hallways and closed-door discussions have me suspicious. If I were you I would check it out. –
A long-time friend.
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Since Kennedy lives in Boston, the franchise is run by his long-time associate Phil Ackers.
■ Kennedy thought things were running smoothly, but now he is not so sure.
■ TBC has no formal accommodations for whistle-blowers.
■ Employees are unaware of your team’s true purpose here.
■ Kennedy has asked your team to concentrate on the last five months (May to September) which coincides with the time period during which the training facility was constructed.
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■ Company revenues are generated by:
– Ticket sales
– Promotional fund-raising
■ Kennedy funds the team with start-up money at the beginning of the season until revenue from games begins to flow, then withdraws that money through the season.
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■ Operating expenses include:
– Equipment (bats, balls, etc.)
– Team travel
– Concession inventory
■ Franchise fees are paid by parent team, the Boston Sox
(also owned by Kennedy), on behalf of TBC.
■ Payroll timesheets compiled in-house but payroll function is outsourced.
Chapter 18 Forensic and Investigative Accounting 10
TBC Case Synopsis (Key Players)
Phil Ackers, company president – oversees fund-raising and supervised the building of the new training facility
Ben Hill, office manager – oversees daily operations
Michelle Shelton – management support and most bookkeeping, including A/P, cash receipts, and equipment purchase orders
Candace (Candie) Larson – receptionist, handles phones, and compiles time sheets
Julie Roper, assistant to the president – assists with donor relations and also responsible for concessions ordering, inventory, and A/R collections.
Chapter 18 Forensic and Investigative Accounting 11
■ You attend a night game and chat with employees (see text for details).
■ Your team performs a walk-through of each
You must determine whether fraud has been
committed. If so, gather and present
evidence sufficient to prove guilt of any suspect(s).
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Documents for Analysis
■ A handout of documents for analysis is included in the text, as well as in the Group Project folder
■ Review background and financial information provided
■ Brainstorm – how could fraud be committed and concealed?
■ Consider the fraud triangle
■ Review financial data and relationships with non-financial information
■ Look for unusual trends, postings, or transactions
■ Compile a list of additional information you would like
Chapter 18 Forensic and Investigative Accounting 13
TBC Case – Project Guidelines
■ Review assignment and procedures in text.
– I will provide feedback and guidance in the form of questions to be considered
Chapter 18 Forensic and Investigative Accounting 14
TBC Case – Preliminary Analysis
■ Preliminary analysis should include:
– Considering information from May to September, do you think fraud has been committed?
– If so, what is the most likely scenario and who are the most likely suspects?
– Ask yourself, “if this was a real-life situation, what evidence is needed to convince someone that a fraud is being committed? Who would I need to speak to? Where would I need to go to gather evidence?”
Chapter 18 Forensic and Investigative Accounting 15
TBC Case – Going Forward
■ Beyond the initial documents, your primary resource is…yes, me! Consider me as your private investigator that you have hired to assist you.
Chapter 18 Forensic and Investigative Accounting 16
TBC Case – Going Forward (cont.)
■ To access the additional information that you will need:
– Send an email describing:
» Who you believe can provide the information you want
» Very specifically, the information you are seeking
» If your request is for information outside the company, clearly tell me the person, entity, or process you want information about
chapter 18 Forensic and Investigative Accounting 17
■ You may ask for any type of LEGAL information, such as:
– Interviews with TBC employees, their families or associates, vendors, or anyone else
Information from public sources
Subpoena from a judge (must show probable cause)
■ For interviews, outline:
– Who you wish to interview
– Scope, purpose, or theme of the interview
– Specific questions and any plan you would follow for the interview
– See text for additional information or pointers
Chapter 18 Forensic and Investigative Accounting 18
■ Consider your requests for information carefully – excessive or frivolous requests will be charged 1% or more of your final grade, so think ahead!
Chapter 18 Forensic and Investigative Accounting 19
TBC Case – How to Start
■ Before requesting additional information, review the available documents & look for:
– Red flags
– Inconsistencies in accounts
– Suspicious factors with employees
– Weak internal controls or weaknesses in internal
– Potential suspects, missing assets, opportunities,
concealment, conversion, etc.
Chapter 18 Forensic and Investigative Accounting 20
TBC Case – Final Report
■ Final report – PowerPoint presentation and Executive summary (you may use attachments or appendices for supporting evidence and documentation)
– Your findings (as if presented to a lay jury)
– Include all evidence and documentation needed to convince the jury of any suspect’s guilt including:
» Who committed the fraud?
» How was it committed?
» How can you demonstrate intent?
» What is the economic impact?
» Demonstrate that the suspect benefited financially –
follow the money!
Chapter 18 Forensic and Investigative Accounting 21
TBC Case – Final Reminders
■ Remember this is a role-playing exercise
– You are interacting with employees of TBC and others outside, but connected to the firm
– Request specific information from specific sources, when applicable (in most cases)
– You can make reasonable assumptions about individual behaviors, based upon evidence
– Remember that information has a price, so be specific in your requests
Chapter 18 Forensic and Investigative Accounting 22
■ In addition to your group’s final presentation and executive summary, you will be asked to provide a brief summary of your
contribution to your group’s work and an assessment of the contribution of your teammates
■ Last note: Have fun!!!
Chapter 18 Forensic and Investigative Accounting 23
See all attachments to have more evidences.Thank you for cooperation.