Town Of Red Fern



Town Of Red Fern

Introduction

The forensic accounting report is comprehensive in its analysis of accounting data present at the Finance Department of the Town of Red Fern. The allegations of fraud and money laundering that have been placed on Mr. Rob Thomas, who was the fomer Deputy Treasurer of the town, have been done so after a careful analysis of available acocunting data. Additionally, the four sections into which the investigation is divided are Background, Scope, Findings, and Recommendations. However, several irregularities can be found oin the analysis of available accounting information and this seriosuly limits the credibility of the investigation process. This paper aims to analyze the various forensic accounting methods used to identify the irregularities in the specific case and critiques on the methodology and findings of the report while also highlighting possible weaknesses in the investigative model.

Claims of the Forensic Accounting Report

The forensic accoutning report alleges Mr. Thomas of mult iple charge of fraud and embezzlement. These chartges are presented below:

Mr. Thomas is alleged to have made four sets of payments from the town's bank account. The payment was made to the account of a buisness that is operated under Thomas' name. the total amount that was paid through the four payments equals $318,043.

Thomas misappropriated cash receipts that were concealed by accounting entries. The total amount misappropriated by Thomas was $12,195.

Thomas has also been charged of misappropriating cash receipts that were yet to be deposited into the bank account of the Town. In order to justify the missing cash, Thomas then substituted unrecorded receitps. The total amount misappropriated equals %85,778.

Thomas has also been aqcused of misappropriating bond interest coupons amounting to $58,750.

Thomas has also been acused of misappropriating funds from a bank account that was not authorized. The bank account, it is reported, was set up by Thomas mianly for the purpose of receiving revenue form the Engneering and Planning Departments of the Town. The total amount of misappropriated funds equals $13,400.

Inherent Weaknesses of the Forensic Accounting Report

Upon conducting a thorough review of the forensic accounting report, it may be concluded that sevreral allegations presented in the report are weak so that they lacl the adequate level of substance and credibility. For example, is has been highlighted that Thomas was acting solely on his own and committed all the frauds without any help from other officials in his department. It has also been added that the level of authority enjoyed by thomas allowed him a certain level of immunity from investigations so that he had a carte blanche to commit fraud without fearing legal repercussions. However, accounts conventions demand proper, verifiable and comprehensive inforamtion of all transactions so that little provision is left for fraud (Cecchini et al., 2005, pp. 37-48).

It can be highlighted here that, according to the report, internal audits were also conducted in ordet to verify the credibility of accounting data pertaining to the department (Freeman, 2006, pp. 11). An internal audit serves to asses the credibility of accounting data by cross-examining ...