FORENSIC AUDIT REPORT OF XXXXX PRINT P LTD

Audit Team
M.No: 254418
CA K MANIKANDA
To

The Board of Directors

Xxxxx Print P Ltd

xxxxxx.

Sir,

Sub: Forensic Fraud Investigation audit report

The Scope of the Forensic Fraud Investigation audit is to find out the embezzlement at the
company We believe that the given recommendations shall improve the existing controls.
Further we hope that these recommendations are implemented as early as possible. We thank
the management for their cooperation in conduct of this audit. Should there be any
clarifications the management is free to revert to us.

CA K MANIKANDAN
Executive Summary
The fraud examination commenced when Mr.XXXX, CFO, received a telephone call from an
unidentified man who said that he had been a long-term supplier to xxxx Print P ltd for
paper. The caller said that ever since Ms ABC had taken over as Purchasing Manager, he had
been gradually “squeezed out” from doing business with print company. Ms ABC has been
employed in the purchasing department of xxxx Print P ltd since past 6 years She was
promoted to Purchasing Manager from last year.
The Fraud Examination Team reviewed selected purchases last one year and conducted
Interviews of key participants and company employees who we believed may have
information Regarding the misappropriation of assets. The Team reviewed purchasing
guidelines, personnel files of interviewees, and various financial documents relating to both
company and Ms ABC. And carried on the audit Determine the existence of a possible
misappropriation of assets of company, the examination is predicated upon an anonymous
telephone call alleging Improprieties on the part of M/s ABC purchasing manager.

Interviews and Docs obtained

Employees from purchase department were interviewed and along with stores department and
accounts payable team. And obtained the below documents for verification
1. Obtained, reviewed, and analysed records pertaining to the anonymous call described
previously.
2. Obtained, reviewed, and analysed companies financial documentation, including
purchase records, invoices, and cancelled checks.
3. Obtained, reviewed, and analysed records from the CCCC District court regarding of
case against Mr BCD spouse of Ms. ABC
4. Communication CFO of PPPP Papers
5. Conducted surveillance activity in order to determine whether the two key individuals
in the matter were involved in an illicit relationship.

Redflags

During the Interview with employees and examination of docs able to find out below redflags
1. Ms. ABC marriage life was not going well and they had financial issues also
2. 60% of purchase were made from PPPP papers during the period
3. While vouching it’s found that GRN no not mentioned for 2 bills
4. Ms ABC had regular meetings with marketing executive of PPPP papers throughout
the year.
Placing Trap
After receipt of anonymous call and discussion with CFO, a trap was placed one of the
existing market leading vendor was asked to associate in this. He was asked to give quotes
for the first time. There was 4 quotes for an order request again the order was passed in the
name of PPPP papers where conditions of the order was 2 weeks delivery time, moisture
should be at industry standards. But still the order was given to PPPP paper where the quality
and delivery time is being complained by employees many times.

Findings
The documents and information reviewed and interviews conducted by the Fraud
Examination Team during the course of the examination indicate that Ms. ABC, together
with marketing manager, did knowingly embezzle approximately Rs 180,000 from
companies Books over the years. During the fraud examination, the Team analysed financial
documents and conducted interviews to corroborate the statements of an anonymous caller.
The following is a summary of the evidence and information supporting the Fraud
Examination Team’s findings:

A subsequent receipt of anonymous call review of purchases made by companies Books for
last one year period showed that a continuously increasing share of the company paper
business was being given to PPPP Papers.

A discussion with CFO showed that he has issued a guideline that all the purchase above Rs
40000 should be made by bidding alone except for emergency purchase should have
permission
of Plant manager.

On Interview with Plant manager, store keeper and accounts payable manager revealed that
two invoices were paid with actual receipt of goods to PPPP paper amounting to Rs 1,60,000.
These matters were discussed taken to CFO of PPPP papers turns out to be his reply shocked.
Actullay the name is PPPP print papers and regarding that Two invoices there was no
payment received.
M.s ABC’s husband recently lost job and became drug addict and was caught by police and
the case was still pending in the district court.

Confession
Findings of the audit placed before Ms ABC and asked her about the that, when she realised
that she can’t escape anymore, she stared confessing, in teaming up with marketing manager
of PPPP print papers she created a bogus bank account and manged to pass it to vendor code
creation team. She created a emergency situation in the company looking like shortage in
need of paper, which gave her the change to override the existing protocols and made the
transaction. Amount got deposited in a bank account and shared among them. For the long
term relationship she made promise marketing manager of PPPP print papers that most of the
purchases will be made from you.
Recommendations and Conclusions
Emergency powers being exploited here reasons because of the lack of control, for
emergency transaction all the people who were related to transaction together get the
approval of CFO. It is the policy of company to report such matters to the appropriate
authorities and to assist in criminal prosecution. A full review of internal controls should be
conducted to determine how such Incidents can be detected in the future.