The final project for this course is the creation of a fraud analysis and report. The final product represents an authentic demonstration of competency because in
today’s business environment, the ability to obtain electronic evidence is crucial in any fraud investigation. Professionals must know the proper way to obtain
and handle evidence in the prevention and detection of fraud. It is significantly important that the investigator has the ability to identify reliable evidence and
ensure the integrity of this evidence. This project will equip you with the knowledge to perform forensic investigations using various types of electronic data. You
will prepare a fraud analysis and a report to management discussing the fraud committed and the fraudsters involved.
The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final
submissions. These milestones will be submitted in Modules Three, Five, and Seven. The final project will be submitted in Module Nine.
In this assignment, you will demonstrate your mastery of the following course outcomes:
Examine the various ways information technology systems are used in committing fraud and how IT security is commonly breached or circumvented for
formulating recommendations to prevent future fraud
Evaluate the use of online resources in conducting effective fraud examinations and gathering evidence
Analyze financial data to detect specific types of fraud, distinguish between errors and actual fraud and interpret ambiguous and conflicting evidence
Utilize various software packages available for data extraction and analysis of financial statements that deduce the presence of fraud
Analyze data and other types of evidence collected for the documentation and composition of reports that provide conclusions and present results to
stakeholders
Determine appropriate courses of action in various aspects of fraud and forensic accounting that are aligned with professional codes of ethics
Prompt
Assume you have just been hired by a company’s internal audit department to examine a particular data set to determine whether there have been any
fraudulent disbursements/reimbursements. In addition to the circumvention of internal controls, you should look for fraudulent activity. Various data analysis
software could be used in your investigation, including Microsoft Excel and Access, and data mining software such as ACL or IDEA. Once the red flags for fraud
have been discovered, you should begin the process of identifying the potential fraudsters. Using internet databases and searches, identify behavior patterns or
data that would serve as evidence of the person(s) involved in committing the fraud.
You will prepare a fraud analysis through the completion of three milestones and then, as part of your final submission, generate a report to management
discussing the fraud committed and the fraudsters involved, as outlined in section IV below.Specifically, the following critical elements must be addressed:
I. Background
A. What type of fraud could be possible in the case study? What led you to your determination?
B. What approach would you use to begin a risk assessment of the situation? Why?
C. How might IT relate to the commission of frauds? How might IT relate to the specific fraud in this case?
D. How can reliable data be collected using online resources?
E. What are appropriate ways to collect data that will result in admissible evidence? Be sure to provide a thorough description of how data is
collected and what ensures it is considered admissible evidence.
F. What are appropriate ways to collect data while maintaining professionalism and integrity? Support your response.
G. What types of software are available to assist in analyzing large amounts of data, and how can they be implemented? How will the software
assist in analyzing large amounts of data, and how it could be implemented?
II. Development of Hypothesis
A. Using an analysis of the fraud triangle and potential red flags, what types of fraud could be occurring in the company?
B. What preventive or detective controls are present or absent that would safeguard against fraud? Support your response.
C. What is your fraud hypothesis? Why do you feel it is occurring at this company?
D. Based on your hypothesis, what are appropriate ways to collect evidence without violating professional standards such as the AICPA’s code of
conduct?
III. Testing of Hypothesis
A. What analytical tests could you perform? How do you confirm that the sources for your information are reliable?
B. What fraud risk inquiries are necessary? How could they be used to test your fraud hypothesis?
C. What additional evidence-gathering procedures could you perform based on the response to inquiries? Support your response with examples.
D. Analyze the financial information for anomalies and potential signs of fraud. What conclusions can you draw?
E. What data analysis tools did you use? Why did you opt for these tools in particular?
F. What online resources could you use to test the hypothesis, particularly related to the fraud suspect?
IV. Report to Management
A. What type of fraud was committed, and who is the suspect? Elaborate on the process that led you to these conclusions.
B. Through the use of the software package in your analysis, what did you determine to be the amount of misappropriation?
C. Describe, in detail, the effectiveness of the online resources used in collecting evidence and conducting the investigation.
D. What evidence proves that the elements of the fraud triangle are present? Support your response with examples.
E. How can internal controls, particularly IT-related controls, be updated/revised to prevent this fraud from occurring again?
F. Describe how the investigation adhered to professional codes of conduct.Milestones
Milestone One: Background
In Module Three, you will submit the Background section of your fraud analysis. After reviewing the case studies in Chapter 11 of Data Analytics for Auditing
Using ACL and choosing one of the four for your final project, you will identify the possible fraud in the case study selection. You will explain your approach to
risk assessment and define how IT might relate to the fraud. You will discuss the data collection in terms of admissible evidence and the professionalism and
integrity used to collect the data. Lastly, you will explore the different types of software that will assist you in analyzing large amounts of data. This milestone
will be graded with the Milestone One Rubric.
Milestone Two: Development of Hypothesis
In Module Five, you will submit the Development of Hypothesis section of your fraud analysis. You will identify the types of fraud that could be occurring. You
will examine preventive controls that might safeguard against fraud. Finally, you will state your fraud hypothesis. This milestone will be graded with the
Milestone Two Rubric.
Milestone Three: Testing of Hypothesis
In Module Seven, you will submit the Testing of Hypothesis section of your fraud analysis. You will explain the analytical tests you performed. You will identify
what fraud risk inquiries are necessary. Based on this information, you will determine what additional evidence-gathering procedures you will need to perform.
You will analyze the financial statements for potential anomalies and draw a conclusion. You will explain your use of data analysis tools and describe other online
resources that could be used to test the hypothesis. You will determine the appropriate ways to collect evidence without violating professional standards. This
milestone will be graded with the Milestone Three Rubric.
Final Submission: Fraud Analysis and Report to Management
In Module Nine, you will submit your final project. It should be a complete, polished artifact containing all of the critical elements of the final product, including
section IV: Report to Management. It should reflect the incorporation of feedback gained throughout the course.
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