Reference no: EM133388528

Option #1: Portfolio Project Option: Memorandum

For this Milestone assignment, continue the draft of the Memorandum that addresses the next group of elements:
1. Identify who, if anyone, will be interviewed and what questions should be asked.
2. Explain how Pattern Recognition and Frequency Analysis will help to identify the potential fraud.
3. Apply one of the following: The Fraud Triangle, Fraud Diamond, the Fraud Pentagon, the Fraud Scale Models, or the Triangle of Fraud Action when explaining fraud motivation for the perpetrators.
4. Evaluate characteristics and components of data to assess its completeness, and cleanse the data for a sample selection to analyze.
5. Assess the sophistication of the concealment strategies on which to base the fraud data analytics plan.
Make sure to address each element completely and comprehensively. Begin building the reference bibliography listing all the sources used to support the details and information in the memorandum.

Waterloo Company Fraud

Continue developing the Memorandum drafted in Weeks 4 and 6 by addressing the remaining elements:
1. Develop the fraud scenarios that will be used to define the fraud data analytics plan.
2. Recommend the internal controls and policies the company should enact to prevent future frauds of this type.
Also, complete the required Slide Presentation as described below.
Fraud Data Analytics Plan -- Scenario
The Waterloo Company's Chief Financial Officer (CFO) and Sales Director have worked for the company for over 10 years. They work closely together, became good friends, and regularly socialize outside of work. They and their wives meet for an expensive dinner to celebrate a job accomplishment. After this night out, the Sales Director suggests they use their corporate credit card to charge the meal to their company's account. The CFO agrees and the restaurant bill is charged as a corporate expense. They later discuss and refine a procedure for continuing these opportunities and conceal their actions.
By policy, the Sales Director is required to have his corporate credit card expenses approved by the CFO. The CFO agrees to continue to approve these fraudulent expenses. At first, they were charging only expensive dinners. But after a while, they begin to increase their activities to include corporate gifts and other luxury items shared among the two executives. When senior executives are involved in a fraud, the higher the values of the fraud involved but the more difficult it is to detect. The fraud continues for several years, where they use their seniority and executive power within the company to continue their fraud scheme unchallenged.
The fraud is uncovered when a newly hired accountant conducts a routine review of corporate credit accounts for policy compliance. The accountant questions some of the transactions such as a helicopter and boat charter. In these circumstances, the lower level employees may be reluctant to report suspicions against senior executives with the power to hire and fire. But the accountant decides to contact the company Vice-President directly to report the suspicious transactions. The Vice President contacts the CEO who calls for an in-depth examination and investigation, if necessary.
Part I. Fraud Data Analytics Plan, Memorandum
For this Portfolio Project, you have been hired as a fraud examiner by a company CEO to analyze a fraud problem (explained in the scenario above) that came to her attention. The Sales Director is suspected of making these questionable charges employees, but the CEO wants to know if any other employees are involved in the fraud scheme. The CEO also wants to know the amount the company has been defrauded. You have been asked to use fraud data analytics to examine the company's data, records, and other information.
Based on the facts of the scenario, prepare an 8-10-page memorandum (which will be drafted in your Portfolio Milestones in Weeks 4 and 6) detailing the fraud data analytics plan you will propose addressing the following elements:
1. Describe the fraud scheme in the scenario in detail, as one of the three (3) fraud categories: financial reporting, asset misappropriation, or corruption.
2. Evaluate reasons for using data analysis to detect fraud.
3. Evaluate the red flags identified in the fraud scheme.
4. Apply the fraud circle to develop a fraud scenario with cleansed data.
5. Build a fraud data profile to identify a potential fraudster.
6. Identify who, if anyone, will be interviewed and what questions should be asked.
7. Explain how Pattern Recognition and Frequency Analysis will help to identify the potential fraud.
8. Apply one of the following: The Fraud Triangle, Fraud Diamond, the Fraud Pentagon, the Fraud Scale Models, or the Triangle of Fraud Action when explaining fraud motivation for the perpetrators.
9. Evaluate characteristics and components of data to assess its completeness, and cleanse the data for a sample selection to analyze.
10. Assess the sophistication of the concealment strategies on which to base the fraud data analytics plan.
11. Develop the fraud scenarios that will be used to define the fraud data analytics plan.
12. Recommend the internal controls and policies the company should enact to prevent future frauds of this type.
Submission Requirements:
1. The narrative should be 8-10 pages in length, not including the required title and reference pages.
2. Organize the memorandum by sections that correspond to each of the required components listed above.
3. Include complete and comprehensive details in the Portfolio Project to demonstrate your understanding of the subject matter.
4. Cite at least six (6) peer-reviewed or scholarly references, to include the textbook,.
5. Format and write the memorandum to conform to APA standards