Plasticell Pty Ltd Fraud Student Case Study

FRAUD EXAMINATION REPORT

TO:      MR. BARTON AND MR. JETSON

         CHIEF EXECUTIVE OFFICER

FROM:   XINGBEI ZHANG (43951449)

         EXAMINER OF FRAUD INVESTIGATION TEAM

RE:      INVESTIGATION OF POTENTIAL FRAUD

DATE:    NOV 11th, 2016

Ⅰ. Background

Plasticell Pty Ltd is an international company which has business in the United States, Australia and Philippine.

David Smithson, the Plasticell Purchasing Officer working in the Plasticell Philippines factory based in Manilla, lives in Manilla with his wife and children who are all citizens of the Philippines and he is a dual Australian/Philippines national. He is the exclusive handler and the only permitted one to contact several large vendors. David Smithson appears to lead a lavish lifestyle.

 According to the gossip from the other administrative staff, David Smithson is ongoing an affair with Jasmine Wright, a skilled bookkeeper of Plasticell retail office in Sydney who has cheque-signing authority. Jasmine’s husband is a disability pension and suffering depression which indicates Jasmine’s economic burden, however her budget looked well based on luxury life in her house.

There has been a suspicious sign that Jasmine Wright rejected anyone even the company owner Mrs Barton checking the books and the Byzantine interactive accounting software system and all the work of the books must be done by her which means Jasmine Wright makes her the only one access to the books.

Plasticell Pty Ltd Fraud Risk Response team received reports stating that David Smithson was giving improper favorable treatment to Promos Machinery and he is a part owner of it. Jasmine Wright is suspected embezzlement.

Therefore, the company’s management has decided to conduct a formal fraud investigation called ‘Operation Jasmine’ into the potential for fraud, which included reviews of relevant records and interviews of appropriate personnel.

Ⅱ. Executive Summary

The fraud examination commenced when Plasticell Pty Ltd Fraud Risk Response team received a call stating that David Smithson, the Plasticell Purchasing Officer working in the Plasticell Philippines factory based in Manilla, was giving improper favorable treatment to Promos Machinery which sells machinery parts to Plasticell as a vendor. He was claimed a part owner of Promos Machinery. In addition, an e-mail was reported which vaguely indicates interest relationship between David Smithson and Michael Brown, who is a UK expatriate sales representative with Promos Machinery.

 According to the gossip from the other administrative staff, David Smithson is ongoing an affair with Jasmine Wright, a bookkeeper of Plasticell retail office in Sydney who has cheque-signing authority. There has been a suspicious sign that Jasmine Wright rejected anyone even the company owner Mrs Barton checking the books in the Byzantine interactive accounting software system and all the work of the books must be done by her which means Jasmine Wright makes her the only one who has access to the books.

  The Fraud Examination Team reviewed the relevant documents and conducted interviews of key participants who we believed may have information regarding the embezzlement. The documents which the Team reviewed including:

 1.Profit and loss statements - 5 years

 2.Balance sheets - 3 years

 3.Income tax returns – 5 years

 4.Sales by the month – 3 years

 5.Monthly sales tax returns – 3 years

 6.General ledger

 7.Petty cash and company cash disbursement files, cancelled petty cash dockets

 8.Current aged accounts receivable by customer

 9.NSW Admin Bank statements, cancelled cheques and deposit slips- 2 years

 10.Company Maymex credit card statements – 2 years

 11.Expense reports (digital or paper)

 12.Cheque registers – 2 years

 13.Receipts and supporting documentation

 14.Year-to-date financial statements

 15.Calendars or schedules for employees

 16.Documentation from Chanel store, Pitt Street, Sydney

 17.Company ethics policy

  After obtaining sufficient documentation and some interviews, the Team interviewed Jasmine Wright. She confessed to her misdeed but her confessions are partly contrary to facts.

Ⅲ. Scope

The objective of the Fraud Examination Team was as follows:

• Determine the existence of possible fraud in the company

  The examination is predicated upon a suspicious sign that Jasmine Wright, a bookkeeper of Plasticell retail office in Sydney who has cheque-signing authority, rejected anyone even the company owner Mrs Barton checking the books in the Byzantine interactive accounting software system and all the work of the books must be done by her.

Ⅳ. Approach

Fraud Examination Team Members:

Shaun, Plasticell; IT forensic expert; locksmith; Toby Muir, accountant, Plasticell; Xingbei Zhang, accountant, Plasticell; The forensic accountant; The external accountant

Procedure:

As part of the examination of this matter, the Team took the following actions:

• Obtained, reviewed, and analyzed the reports including conducting an initial assessment of credibility of the whistleblower’s allegation

• Obtained, reviewed, and analyzed the mails delivered early each morning which contain cash transactions, credit card invoice and bank statement

• Obtained, reviewed and analyzed the another whistleblower telephone call from the same one and carried out computer-based investigations in NSW and Manila

• Checked Jasmine’s office including her computer, searched Jasmine’s drawers

• Obtained, reviewed and analyzed the company cheque books, petty cash and company cash disbursement files with the NSW Admin Bank, North Ryde to exam NSW Admin Bank transaction documentation covering the period September 2015- September 2016

Individuals Interviewed: 

The following individuals were interviewed in person by members of Fraud Examination Team:

•Jasmine Wright (bookkeeper employed in the large retail office)

Ⅴ. Findings

Based upon the documents reviewed, information collected, and interviews conducted during the course of the fraud examination, the Team finds as follows:

Did the Fraud Examination Team determine the existence of an embezzlement of Plasticell Pty Ltd?