Fraud Auditing

Andi Priatama Ramadhan

Fraud Case NIM. 041811333058
Accounting English Class

Interview Outline
Interview Outline
First one, we want to know how the Fraud Triangle in NW Supplies. Then we assess the opportunity first
Anomalies
from the internal control in the company with the following question:
Fraud Action
 What are your specific duties and authorities within the company?
Suggestion
 How you manage the segregation of duties and job role in sales cycle?
Benefit of Interview Skill
 Are there people in the company of your closest friends including family, friends, lovers, and the like?
 How the company's oversight of its business activities?
Next, we will assess the whether the company has pressure from financial and business also personal
pressure from John Hunter perspective with the following question:
 How is the company's financial condition currently?
 How much do you have personal obligations/debts?
 Is there a demand from the president or CEO? What are the demands?
We also assess the rationalization and attitude of suspect fraudsters with the question:
 How is Attitude employee and management at NW Supplies?
Lastly, we specify about the specific transaction that has big possibility fraud in the company with the
following question:
 At the end of the third quarter, your company made a large sales transaction with MDJ retail including
many units. How is the transaction agreement and approval process on September 27, 2020?
 Who is responsible for this transaction and has this transaction gone through the correct business
process? Also, what your relationship with the person in charge from MDJ retailer?

Anomalies
 NW Supplies is pursuing sales targets in the third quarter and the stock of goods that we can see in the
invoice there are thousands of equipment sold to MDJ Retailer up to reach $1,200,000 or equivalent to
17.6 billion rupiah.
 The division manager instructs the salesman to make a sales cut off at the end of the 3rd quarter with
an unusual return policy that is that the buyer in this case MDJ retail can return all the goods
purchased if they do not need.
 The discount of sales is unusual which is 30% off instead of normal discount policy with 2% - 10%
 This is an indication of a fictitious sale because it is as if they are selling goods but are returned which
aims to increase the sales account only.
Fraud Action
 Transactions made by NW Supplies are considered fraud because they make unsuitable sales and are
done deliberately to improve sales accounts.
 The sale is supposed to be we sell the goods to someone else and the person will enjoy the goods they
bought, and we will get the money. Instead, in this case, NW Supplies sold the goods to MDJ but MDJ
returned everything.
 NW Supplies is cheating here as if doing a sale, but they don’t because of a very strange return policy
and MDJ returns everything. This does not represent a sale and it is breaking a business process
 The thing that is not considered fraud is that they do this well and the procedures seem to be true,
ranging from sales, billing, and returns
Fraud Auditing
Andi Priatama Ramadhan

Fraud Case NIM. 041811333058

Accounting English Class

Interview Outline
Suggestion
Anomalies
Fraud Action  Set fixed and clear sales terms
Suggestion  Ensure that the controller and management are not affiliated with any relationship. It must be
Benefit of Interview Skill purely a working relationship.
 Ensuring segregation of duties between CFOs, Controllers, Accountants, and sales departments
Benefit of Interview
 Auditors can get deeper information through suspect person fraud because information is breath
and blood of forensic audit
 Auditors can map the flow of events and anyone involved through information from the source
 Through interviews and interrogations, auditors can directly assess suspect persons directly from
both physical and psychic therefore ends on the suspect's confession.