Wayland Manufacturing Company Fraud Case

C. Fraud Hypothesis I believe that asset misappropriation by accounts payable fraud is occurring at Wayland Manufacturing Company due to a lack of proper internal controls. Making the company’s Chief Accountant responsible for additional day-to-day functions provides him with opportunity to commit by creating fictitious vendors with his information and then creating fictitious invoices. Newbaker can then conceal his fraud by approving the invoices for payment. Employees working at an organization for more than five years are more likely to commit fraud. Therefore, Newbaker’s six-year history with the company has made him trustworthy and very knowledgeable, which could indicate involvement in asset misappropriation. The high employee turnover could represent a past fraudster leaving before getting caught or employees refusing to continue with the asset misappropriation. In addition, the varying monthly accounts payable transactions ranging from the lowest being April 2014 and

Electronic confirmations are often used to verify bank balances, but they can also assist in the verification of a company’s vendors. Therefore, I am going to request confirmations from Wayland Manufacturing Company’s vendors after the client accepts my request. The electronic confirmations will prove each vendor’s existence as well as the accuracy of the accounts payable subsidiary ledger balances. Evidence collected from third-party sources must remain confidential and I maintain my integrity by only seeking evidence I am authorized to review. If I decide to request Cash electronic confirmations without consent, I am violating integrity, confidentiality, and professional due care (AU Section 330-The Confirmation Process 1998) (Arens, Elder, & Borsum 2013) (AICPA Code of Professional Conduct