Your department receives a tip that there may be fraud occurring at a local town hall. The tipster, who left an anonymous and detailed voice message, indicated that funds being collected for the town were inappropriately being diverted away from the town for personal use by at least one employee in the town hall.
The message included details of sample transactions where taxpayers made delinquent taxes payments to the tax collector’s office and had their tax accounts updated to reflect the payments received. Subsequent to receiving the payments, someone in the department of six individuals stole the payments intended for the town and didn’t include them in the deposits for the town. Payments received in cash were being substituted with checks received from other taxpayers to help conceal the thefts.
The caller also indicated that some of the hours recorded on the town’s payroll system for employees of the tax collector’s office did not reflect the hours actually worked by the employees.
The message ended with the caller stating that the town, in financial straits along with most every town, could not afford to be losing the amount of funds it was losing. Something needed to be done.
1 Describe why it is important upon receiving information that you should perform a preliminary fraud inquiry prior to launching a full-scale fraud investigation. What risks and benefits could the preliminary fraud inquiry generate? What risks and benefits could be generated if a preliminary fraud inquiry was not completed?
2 Could observation skills be utilized in this scenario, and if so, how could they be utilized?
3 What other fact-finding procedures could be performed?
4 Based on the call received, develop a plan that identifies what steps and measures you, as the fraud investigator, could take to conduct a preliminary fraud inquiry into the allegations in order to ascertain whether the tip received was valid. List each step or measure in the ideal order in which you believe each should be performed.
5 If you believe additional resources will be needed to assist you as part of your plan, identify what resources you suggest adding along with when each resource would be added and how they would benefit the procedures you would perform.
TEXT(S): Fraud 101: Techniques and Strategies for Understanding Fraud, 3rd Edition. Stephen Pedneault (2009). Hoboken, New Jersey: John Wiley and Sons, Inc.
Anatomy of a Fraud Investigation. Stephen Pedneault (2009). Hoboken, New Jersey: John Wiley and Sons, Inc