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To answer these questions requires that you install ACL™ Desktop Edition (full educational version) on your computer. To do so follow the instructions on the CD that came with the textbook. The ACL Project and ACL files used in the Bradmark case are located in the Bradmark Data Folder on the website. Download these files to your computer and click on the Bradmark 04 ACL icon. ACL will automatically open the case.

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Bradmark Comprehensive Case

Fraud Audit Issues—Chapter 12

Questions

To answer these questions requires that you install ACL™ Desktop Edition (full educational version) on your computer.  To do so follow the instructions on the CD that came with the textbook.  The ACL Project and ACL files used in the Bradmark case are located in the Bradmark Data Folder on the website.  Download these files to your computer and click on the Bradmark 04 ACL icon. ACL will automatically open the case.

Based on your analysis of Bradmark’s internal controls and audit tests covered in Assignments 1 and 2, perform tests that could reveal the existence of fraud in the company.  Design your tests around the Fraud Tutorials and the Fraud Detection Techniques discussed in the textbook.  Hand in a report describing the audit tests and your conclusions about the results of the test. To document your findings, include in your report ACL printouts showing details of test results and the command log.

Describe and perform tests to uncover the following fraud:

General Control Problem – Because of James Walker’s familiarity with the purchases system, he was asked by top management to temporarily oversee the initial running of the new system to ensure a smooth transition from the old legacy system.  After several months, Walker was offered a promotion to Warehouse Manager and given permanent responsibility for product purchasing.

This act by management placed Walker in a situation that allowed him to exploit inherent weaknesses in the system and perpetrate a fraud.  As part of the fraud Walker established himself as a fictitious vendor number 11663.   The fraud methodology involved using his uncontrolled access to the system to falsify purchase orders to his phony company and use voided receiving report numbers to simulate inventory receipts.  These two events trigger the system to create a voucher payable record.  By submitting vendor an invoice from his fictitious company, Walker effectively tricks the system into writing him a check.

 
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