Assignment: Fraud Deterrence, Detection and Prevention

Read the following case study and respond according to the instructions at the end:

During the past year, your company has discovered three major fraud incidents. The first was a S2.7 million theft of inventory that had been going on for six years.

The second was a S3.2 million kickback scheme involving the most senior purchasing agent. She had been allowing certain customers to overcharge for products in return for personal payments and other financial favors.

The third was an overstatement of receivables and inventories by a subsidiary manager to enhance reported earnings. Without the overstatement, his unit's profit would have fallen far short of budget. The amount of overstatement has yet to be determined. All three of these instances of fraud have been reported in the financial newspapers and have been embarrassing to the company.

In response to these incidents, the board of directors has demanded that management take -positive steps to eliminate future fraud occurrences." And that they are `sick and tired of significant hits to the bottom line and negative exposure in the press.- The responsibility to develop a program to eradicate fraud has fallen on your shoulders. You are to outline a comprehensive plan to prevent future fraud.

In outlining your plan, discuss the roles the following groups will play in preventing fraud:

• Top Management
• Middle Management
• Internal Audit
• Corporate Security
• Audit Committee
• Legal Counsel Respond to these questions:

1. Why is each of the groups above reluctant to take the responsibility for detecting and preventing fraud?
2. Who should be responsible?

Your paper must be in a Word document of three to five pages in length. Calculations are not required in this assignment but may be included in a table within your paper if you wish. Cite at least two resources supporting your responses, other than the course textbook.