You secured a summer internship with an American company that processes dental insurance claims for insurance companies. The company receives the insurance claims from dental offices, achieves authorization from the correct insurance company, and sends payment cheques. You do not deal with dental customers directly, instead, you work with insurance companies on one side and dental offices on the other. After two months with the company, you think several frauds may be occurring, and you feel the best way to search for these frauds is to investigate documentary evidence. Because hundreds of dental offices send insurance claims to your office, some may not be real dental offices. You contact the IT department and receive a set of files that represent the documents involved in transactions for the past three months. You receive the following three files: 1. ch08_dentists.csv 2. ch08_claims.csv 3. ch08_patients.csv
Question 1: Some dental offices may not employ real dentists and may be front companies that are sending claims out for work not performed. A real dental office should have a real office address with dental chairs, reception areas, and so on. Are any dental offices instead using post office boxes in their payment addresses?
Question 2: Real dentists should be sending claims to many different insurance companies. Because your company only represents a few of these companies, the sequential numbers on the claim sheets from a given dentist will rotate through all the companies that dentist is working with. If the numbers sent to you from a given dentist are sequential, you know that the dentist is only sending claims to you. Search the claims file for sequential numbers from any given dental office. Are any sending you sequential claims?
Question 3: A human adult has 32 permanent teeth. Your company requires that each claim list the patient seen (identified by “patient id”), the tooth worked on, and the type of work done. Because of the natural limitation on the number of cavities that could be filled on any one person, it is rare that a person would have more than a few cavities in three months of your audit (it is possible for a tooth to have more than one cavity). Using this field, calculate the total number of cavities submitted for each patient. Do any patients seem to be visiting the dentists too often?
Question 4: Patients normally need to live close to their dentists because receiving service requires a visit to the office. A good fraud search is to calculate the distance from each customer’s address to his or her dentist’s office using a geographic information system like Google Maps or MapQuest. For this question, simply determine if any patients live in different states than their dentists. Do any patients seem to have a long drive to their dentists’ offices? Include an explanation of the steps you undertook to reach your findings.
Tasks: 1. Provide a written response for each of the four questions. In each of your responses, include an explanation of the steps you undertook to reach your findings (16 marks).
2. Provide a summary that specifies the dentist/s you believe are submitting fraudulent claims. In preparing your summary, clearly specify the reasons to support your conclusions (4 marks). The submission should not exceed 2,000 words.
1.How can the fraud triangle be applied to explain Toshiba’s fraud and reveal the motives behind it? (http://www.acfe.com/fraud-triangle.aspx)
2. What are the issues at Toshiba from the point of view of its stakeholders (especially the investors)?
3. What are the ethical issues in this case? What would you do if you were in the same situation as the Toshiba employees?
4. What options are available for the company moving forward? How can it prevent such fraud in the future?
How can the fraud triangle be applied to explain Toshiba’s fraud and reveal the motives behind it? (http://www.acfe.com/fraud-triangle.aspx) 2. What are the issues at Toshiba from the point of view of its stakeholders (especially the investors)? 3. What are the ethical issues in this case? What would you do if you were in the same situation as the Toshiba employees? 4. What options are available for the company moving forward? How can it prevent such fraud in the future?
A list of account balances for Mr. Yen’s business (Yinan) at the end of the 30June 2013 reporting period is shown below. Produce the income statement for the reporting period, and the equity balance at the end of the year.
View Solution:
A list of account balances for Mr. Yen s business Yinyan
1. When a fraudster concludes that his or her fraudulent act is justified because of some prior action by the victim that caused harm to the fraudster, this is called: a. Conceptualization. Remediation. Retribution. Rationalization2. All of the following are among the top five personal characteristic “red flags” of fraud except: a. A deep- seeded desire for revenge. Feeling of being underpaid. Living beyond one’s means. Undue family and peer pressure3. All of the following are among the top five organizational characteristic “red flags” of fraud except: a. No clear lines of authority. No separation of duties between accounting functions. Placing too much trust in key employees. An autocratic leadership style4. The most common type of financial statement fraud is: a. Capitalizing expenses. Deferring goodwill write- offs. Overstatement of revenues. Manipulation of ending inventory5. The fraud diamond adds which of the following elements to the fraud triangle? A. Capability. Sensibility. Accountability. All of the above6. When an attorney argues that “Even if my client was motivated and had the opportunity to commit the crime, he does not have the capability to carry it out,” this is known as what type of defense? A. Rationalization defense. Knucklehead defense. Appeal to the compassion of the jury. None of the above7. In the fraud scale, the fraud triangle is modified by re-moving rationalization and replacing it with: a. Balance. Behavioral consistency. Integrity. Mediation8. According to economic theory, what motivates an individual to commit fraud? A. Fear. Coercion. Peer pressured. Self interest9. Which of the following is not a component of the formula for the calculus of fraud? A. Perceived gravity of the loss. Reward. Impact on the victim. Probability of getting caught View Solution:
1 When a fraudster concludes that his or her fraudulent
. Invigilation (______). a. Can typically catch fraudsters in the act. Can typically provide circumstantial evidence of a fraudsters’ guilt. Both a and B.Ed. None of the above2. The main benefit of calibration in an interview is (______). a. Confronting suspects so as to obtain a confession. Establishing rapport with the interviewees. Observing suspect’s behavior in the presence of non-incriminating questions. None of the above3. What is the best order for interviews? A. Begin with suspects and end with non- suspects. Begin with non- suspects and end with suspects. Begin with non- suspects and end with non- suspects. Begin with suspects and end with suspects4. Accepting a fraud loss without punishment or recovery from the perpetrator is (______). a. Never a good option because it sets a bad example. Always a good option because pursing perpetrators is generally fruitless. Is sometimes a good option in order to avoid embarrass-in publicity. None of the above5. Expert consultants (______). a. Are never subject to discovery. Are always subject to discovery. Are subject to discovery if they are expected to testify. Are subject to discovery if they are not expected to testify6. Manipulation or management of earnings by company officials is (______). a. An act of financial statement fraud. An act of financial statement fraud under the right circumstances. Never an act of financial statement fraud. Not an issue related to financial statement fraud7. Financial statement fraud is more likely to occur in (______). a. Small companies. Medium- sized companies. Large companies. The size of the company doesn’t matter8. Roughly half of financial statement frauds involve the (______) transaction cycle. A. Revenue b. Expenditure. Production. Finance9. Check washing generally involves (______). a. Fake checks printed by the perpetrator. Fake checks purchased on the black market. Paperless transactions. None of the above10. The type of fraud involving the receipt of substandard goods is typically (______). a. Employee fraud. Production fraud. Vendor fraud. None of the above11. For most types of office-based software, passwords can (______). a. Be cracked. Be obtained from the manufacturer. Not be cracked. None of the above View Solution:
1 Invigilation a Can typically catch fraudsters in the
A legal auditory observation includes which of the following? a. Secretly recording conversation in a meeting room. Listening to a conversation in a restaurant. Recording a telephone conversation without informing the person with whom you are talking. All of the above are legal auditory observations2. Public records can be used by a forensic accountant to support or refine a fraud hypothesis. A. True. False3. Each of the following is an advantage of searching public records except: a. The search can be done in secret. It is a legal source of information. Results cannot be replicated by others. Gaining access is fast and inexpensive4. Social networking web sites are resourcing a forensic accountant might use to obtain information about an individual’s family and other personal matters. A. True. False5. A pretext is the use of deception to obtain information about someone from another party who might not otherwise disclose such information. A. True. False6. The Fair Credit Reporting Act requires that consent be acquired prior to obtaining an individual’s credit information. A. True. False7. The covert taping of interviews is considered the most effective means of obtaining honest answers from an interviewee. A. True. False View Solution:
1 A legal auditory observation includes which of the following