A.

Question 1
The Perpetrators Department
Fraud offenders were most likely to be found in one of six departments:

Accounting (22%)

Operations (17%)

Sales (13%)

Executive/upper management (12%)

Customer service (7%)

Purchasing (6%)
(Retrieved from Association of Certified Fraud
Examiners (ACFE)

So we can see that the highest fraudster is from accounting department. Based on
this case, the person who was charged for embezzling money work as an
accountant in the Bandaraya Construction Berhad. Thus, he is highly potential to
commit fraud and fit the profile of the fraudster.

A Clean Record

Most of the fraudsters in the study had never been previously charged or
convicted for a fraud-related offense.

Only six percent of the perpetrators had been previously convicted of a fraud
offense. This finding is consistent with prior ACFE studies.

So we can see that the person in this case was a recent honors graduate from a
respected university who, supervisors stated, was a very trusted and loyal
employee. He do not have any criminal record thus based on the criteria given
above, he fit the fraudsters profile.

Warning Signs and Red Flags

The most common behavioral red flags displayed by perpetrators:

Living beyond ones means (36 percent of cases)

Experiencing financial difficulties (27 percent of cases)

Unusually close association with vendor/customer (19%)

Control issues; unwillingness to share duties (18%)

Wheeler-dealer attitude (15%)

Divorce/family problems (15%)

Irritability, suspiciousness or defensiveness (13%)

Addiction problems (8%)

Refusal to take vacations (7%)

Based on the statement above, the person in this case has one of the common
behavioral red flags displayed by the perpetrators. It is living beyond ones mean
which is the highest case occur based on warning signs and red flags criteria. In this
case, the accountant was purchased a Mercedes Benz and invests in a certificate of
deposit. By looking at his job, this lifestyle is not fit with him thus make him fit with
the profile of the fraudster.

A. Question 2
The Age Factor

More than half of all cases in the study were committed by individuals
between the ages of 31 and 45.

Generally speaking, median losses tended to rise with the age of the
perpetrator. This trend is also reflected in tenure at an organization.

Based on this case, the accountant age is around 23-27 because he is a fresh
graduate. So, by looking at this factor, the accountant does not fit with the profile of
the fraudster.

Question B
The fraud scheme that the perpetrators use is paying the false invoices. In short,
paying the false invoices means that the employees created false invoices and
created the bank account under a false company name to commit fraudulent act.
For this issue, the accountant created fictitious invoices from company Tiga
Serangkai Sdn Bhd and company Pakatan Bersama Sdn Bhd. He then wrote a
cheque to settle these invoices and deposited the cheque into a bank account he
had opened under the name of one of the companies.

Question C
1. The company should segregate the duties of the accountant.
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The company should ensure that the duties of the employees are varies
in nature so that the possibility of committing fraud will decrease. In this
case, the company should segregate the duties of the accountant who
provide cheques and the person who will deposit the cheque into a bank
account.

2. The company should properly safeguard its assets, record and data.
-

The management of the company should restrict the access to certain

data, records or assets to authorised personnel only. This will reduce the
tendency of fraud to occur because the employee cannot simply get
everything they want and make fraud easily.

3. The company should instil the employee with integrity and ethical values.
-

Awareness programs should be conducted by employees in order to

enhance the integrity and ethical value of the employees. Training also
should be given to employees to make them realise several techniques
how perpetrators commit fraud and how to prevent it from happen.

4. The company should make a proper authorization in conducting important

transaction.
-

Proper authorisation should be implemented by the management of the

company so that the possibility for committing fraud would be decrease.
In this case, the cheques written by the accountant should be authorised
by another person. For example, each cheque must be further signed by
accountant manager before deposited them into a bank account.

Question D
1. The company should create audit trail so that the previous transaction can
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be traced.
Audit trail will help the management of the company to monitoring
previous transaction of the company. If there are any suspicious
transactions attracting the attention of the management, it will be easier
to investigate rather than not provide an audit trail.

2. The company should employ an independent third party to consult the

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company such as a forensic specialist, audit or internal audit.

If the management of the company are suspicious with some transactions
occurred, and they wish to investigate it a little further, they can employ
an independent specialist to conduct the investigation. Compared to an
internal investigation, the results or opinions of an independent specialist
are much more reliable because they have no interest for themselves in
conducting the investigation.

3. The company should monitor any unusual activities by installing new or

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improving their fraud detection software

Continuous monitoring of the transactions or activities that occur in the
business process will ensure that there are less chances of fraud occurring
in the company. Any fraud detection software will also help them detect
fraud before it can be conducted.

4. Last but not least, the company should introduce a fraud detection hotline.
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The hotline is a phone number can easily report any fraud or any abuse.
The online should be able to protect the whistleblower who report the
wrongdoings. This will ensure the whistleblowers safety and make them
feel more secure to report any fraud or other wrongdoings.