Final Assignment - Case Problems

Final Assignment - Case Problems

Fraud-Specific Contract Review

Part A

Sandra should continue her fraud-specific review because the investigation she undertook alerted her about the potential fraud Alpha Inc. might be subjected to. To have complete evidence about the honesty or otherwise with which Murphy Brothers did their job, Sandra should investigate and probe into the situation more diligently. It was with this investigation that she came across the material which backed the Sandra's doubts and suspicions that were raised by the anonymous call she received. The contract change order issued on February 1 after the anonymous call made Sandra realize something is definitely wrong and the company might have been subjected to the fraud through this contract. Although upon further probing of the change of order, Sandra was told from the independent professional advisor that the change is favorable, as the contract initially indicated the requisition of 165 degrees fire sprinkler heads which are not actually appropriate to be installed in the warehouse made for the recording of administrative data as well as computer back-up record. But yet the change in the contract was basically the replacement of 165 degrees fire sprinkler with 286 degrees sprinkler; which were already purchased and installed. This raises suspicion as why 165 degrees sprinkler were at the first place purchased when they were not favorable. Later, it was found that the archive was having mixed sprinklers when they were randomly checked, 20 were found to be of 165 degrees and other 30 were found to be of 286 degrees. The change charged Alpha Inc. $40,000 in excess, thus further investigation is imperative to determine whether it was just a costly error. Though the random sampling method with which Sandra determined that the warehouse is implanted with 165 degrees fire sprinklers as well indicates otherwise.

Contract rigging or Bid Rigging is a type of fraud that is suspected to have been used by the Alpha Inc. Contract Manager, John Green. It is likely that the bidding for this contract would have called for open bidding so as to present the process as fair and impartial, selecting Murphy Brothers for the lowest bid subsequently who would be the co-conspirators in the Bid rigging fraud undertook. Thus further fraud specific review of Murphy's contract is mandatory to determine precisely whether it really was just an error or conspiracy against Alpha Inc.; and if so then the conspirators who are involved should also be determined.

Part B

The discoveries that are made by Sandra are important and central to their investigation. The first discovery that was made by Sandra or the first clue that Sandra discovered which cemented Sandra's suspicion about some wrongdoing was the Contract Change Order that was issued on the February 1st. Now if we are to comment onto this discovery as why would Sandra think it as not speculative of the fraud, it is because she probed into regarding why the change order has been issued and the findings are positive enough to ward ...