2024 – The information below is a quote from the Office of the Whistleblower at the Securities and Exchange Commission

The information below is a quote from the Office of the Whistleblower at the Securities and Exchange Commission: https://www.sec.gov/whistleblower/

Source: https://www.sec.gov/whistleblower/

Let’s assume you have been hired as the fraud manager for a privately-held company whose main business is administering the disposition of assets left in estates for wealthy individuals in accordance with their Last Wills and Testaments.  You have been asked by the audit committee to prepare an overall fraud prevention program for the business, including:

assisting the marketing department in preparing written materials for family members explaining how they can report suspected fraud in estate asset dispositions.

It is well known that family members don’t always get along while the disposition of assets in accordance with a Will is occurring.  It is an important service to the company’s clients that they know how to report potential fraud if they feel it may be occurring.

Questions:

Using private industry as a potential background for developing your fraud prevention and detection strategy, what type of external resource(s) would you recommend be established as soon as possible and included in the company’s marketing brochures as a value-added differentiating service with regards to reporting potential fraud that may be occurring in the asset disposition process?  Keep in mind, this is not a SEC or a Securities Act situation. 

 

Assume after implementing the external resource described in #1 above, it comes to your attention that Bob, a member of the Jones’ family, may be improperly benefitting from the disposition of his late Dad’s assets by selling certain assets for significantly less than fair market value before the formal auction of tangible assets.  Per other family members, Bob has been acting very strange since his Dad’s passing.  Large bags have appeared under his eyes, Bob has been very short and flown off the handle in just about every discussion or phone call with the other family members, and Bob is suddenly driving a brand-new Porsche after driving an old used Toyota for the last 15 years.

What steps would you start with to investigate this suspected fraud before interviewing either Bob or any of the family members?

After the first steps in your suspected fraud investigation are completed above, would you interview Bob?  Why or why not?

Describe in detail how you would conduct an admission-seeking interview with Bob.  Be specific.  See the hyperlink below to Interview Theory and Application prepared by the Association of Certified Fraud Examiners to help you prepare your detailed answer to this question.  This is obviously the most important part of your answer to this homework assignment:

http://www.acfe.com/uploadedfiles/acfe_website/content/review/examreview/02-inv-interview-theory.pdf